Mergers are never an easy option for any company. It is a
headache for both the employees and the owners. The employees are apprehensive
whether they will be laid off or not. The owners worried about the market
reception of such a move. But each knows that it is inevitable. The recent
merger of Aditya Birla group and Vodafone India is an expected move.
Vodafone was one of the market leaders in Indian telecom
industry and was only rivaled by the likes of Airtel, Reliance or state-owned
BSNL. Idea was quite popular in some places in the country but not as expansive
as Vodafone. But the recent entry of Jio has shaken these two by their very
core. The free voice calling and data-centric marketing of Jio has shrinked the
market place for the other players in the telecom industry and disrupted the
industry practices. Jio wishes to redefine the industry in its own terms by
using a data-centric approach. But the traditional telecom industry has always viewed
voice calls as the primary source of income.
These are hard times and hard times call for desperate
moves. Vodafone is merging its Indian telecom arm with Idea to battle the Jio
catastrophe. It is selling about 14% of its stake to Idea in a time of three
years to allow Idea an equal stake of around 35%. The resultant venture would be
run by Mr. Kumar M Birla with a CFO from Vodafone’s side and a CEO by mutual
consent. This would make the telecom industry to be ruled by 4 big players
namely Idea-Vodafone, Bharti-Airtel, Reliance Jio and BSNL.
But what can bring them back into the game? The brand had
two distinct personalities and the new merged venture needs to present itself
as a new fresh look. This is just the same difference between a new-born baby
wonder and an octagenerarian who had a bypass surgery. People will have a delight
to receive a new-born baby. The CEO will be responsible for the image upheaval
in the market. A merger can be a double-edged sword. It depends on the use
whether it hurts your opponent or you.
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