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Case Details

Case Code: BSTR530
Case Length: 18 Pages 
Period: 1990-2017 
Pub Date: 2018
Teaching Note:Available
Price:Rs.500
Organization :Idea Cellular and Vodafone India Limited
Industry :Telecom
Countries : India
Themes:  Mergers and Acquisitions
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Idea- Vodafone Merger: Consolidation in the Indian Telecom Sector

 

ABSTRACT

 
This case discusses the merger between India’s third largest mobile telephony company Idea Cellular (Idea) and the second largest mobile operator in the country, Vodafone India Limited (Vodafone). The deal announced in March 2017 was valued at around US$ 23 billion. The merger came in the aftermath of an unprecedented change that the Indian telecom landscape had undergone after the launch of Reliance Jio Infocomm Limited (Jio) in September 2016. The leading players in the industry, who were already facing financial challenges due to huge infrastructure costs and a high debt burden, faced more problems with the exodus of customers to Jio. To face the onslaught from Jio, the telecom operators went into consolidation mode, acquiring spectrum, small players, infrastructure, etc. With Jio growing stronger by the day with offers like free mobile handsets, and another competitor Airtel also looking at consolidation through acquisitions, Idea-Vodafone faced a tough road ahead. It remained to be seen whether the biggest ever merger in the history of Indian telecom would prove to be a game changer in the world’s second largest telecom market.
 
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Issues

The case is structured to achieve the following teaching objectives:
  • Examine the evolution of the Indian telecom market and its move toward consolidation. Evaluate the impact of the Idea and Vodafone merger on the industry.
  • Understand the rationale behind the merger of Idea and Vodafone and the potential synergies.
  • Identify the issues and challenges faced by the management of both Idea and Vodafone following the merger and explore the strategies they may adopt to overcome these challenges.
  • Understand the importance of deciding on Brand identity after merger; merging the brands and branding the merger.
  • Understand value creation for the shareholders through merger.
Contents
INTRODUCTION
INDIAN TELECOM SECTOR
THE SERVICE PROVIDER SAGA
PRICING CHALLENGES – ENTRY OF RELIANCE JIO
IDEA-VODAFONE MERGER
CHALLENGES
EXHIBITS

Keywords

Idea Cellular;Vodafone India Limited;Mergers and Acquisitions;Jio Infocomm;Consolidation;Telecom sector;Spectrum;Data plans;Higher tariffs

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