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Vodafone Idea Merger: India’s Telecom Behemoth Will Be Fully Out Only After 4 Years

As per reliable sources, Vodafone’s technology vendor, TCS, is working non-stop to ensure that the user interface is operational before the formal launch of its joint services.

The collaboration of telecom giants Vodafone and Idea Cellular is a big news in the trade circles. Though the official announcement of this merger mas made in March 2017, the launch of its operations is now just a few days away. But it is the integration of the technology that may take up to 4 years because of the sheer volume of network and data integration that is required for a smooth functioning.

Vodafone Idea
The joint entity, called Vodafone Idea is the number one network operator in the telecom sector with the largest number of subscribers. Though it is expected to begin their joint operations next week their technologies may take a maximum of 4 years to come together.

Technology analysts who have been closely following the merger of the two telecom giants have stated that the size and the complexity of the data migration needed in the partnership, will take somewhere around 2 to 4 years to complete and stabilize. Also, the transformation will have to be done in phases, with the testing time taken into consideration and that will take time.

The day Vodafone Idea begins its services is being termed as ‘Day-Zero’ by their staff. It is being said that the company has set the dual goal of cost-cutting and return to profitability are their first targets.

The new company has identified certain key areas of focus for the same. Rationalization of its tower and its distributor network, reducing marketing and advertising expenditure, stopping the hiring of new employees, and removing offices that are no longer required after the integration, are some of the starting points. Already thousands of jobs have been let go. Currently, about 15,000 employees are working overtime to get the Day-Zero off without a hitch.

Vodafone Idea will be depending upon unlocking the synergising capex and substantial cost at the earliest. For any telecom company, its maximum costs are derived by its network. Therefore, optimizing it will bring in maximum synergy. IT integration, rationalization of the infrastructure and the operations, will add in the reduction of costs of the joint entity.

The Financial Projections
At the March 2017 announcement of their merger, Vodafone and Idea Cellular had estimated Rs.8400 crores as cost savings earned annually by the fourth year of their joint operation.

Both the companies had been struggling in the recent years to stay above the red zone. Their revenue had gone down by 20% and their RMS (Revenue Market Share) had fallen 400 basis points. Upon operations, Vodafone Idea will have a substantial share of 37% of the market, 430 million subscribers, with more than Rs.60,000 crores in revenue and a 1.25 lakh crore Rupees debt.

Last week, all the Government approvals were obtained. Now the wait is on to receive confirmation from National Company Law Tribunal to form Vodafone Idea, India’s largest telecom service provider. This merger will displace the current number one, Airtel, from its position.

This merger will help Vodafone Idea to compete against the reigning monarch Airtel and the newbie Jio. Presence of both had made the existence of other network providers nigh impossible. – My Smart Price

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