DEPARTMENT OF MANAGEMENT

INDEX

Chapter – I Introduction.............................................................................................................01
1.1 How Merger Works?.........................................................................................02
1.2 Types of Mergers…...........................................................................................03
1.3 Process of Merger………………………………………………………...…...05
1.4 Pros and Cons of Merger...................................................................................06
Chapter – II Review of Literature................................................................................................07
Chapter – III Organisation Profile................................................................................................11
Chapter – IV Research Methodology...........................................................................................25
Scope of the topic...................................................................................................25
Objective of the Study............................................................................................25
Source of Data........................................................................................................25
Chapter – V Data Interpretation & Analysis..............................................................................27
Chapter – VI Findings and Suggestions......................................................................................32
Chapter – VII Conclusion of the study.........................................................................................33

Bibliography............................................................................................... ....................................35
 INTRODUCTION

A merger is a business deal where two existing, independent companies combine to form a new,
singular legal entity. Mergers are voluntary. Typically, both companies are of a similar size and
scope and both stand to gain from the transaction.
Mergers happen for a variety of reasons. They could allow each company to enter a new market,
sell a new product, or offer a new service. They can also reduce operational costs, improve
management, change their pricing models, or lower tax liabilities. Ultimately, however,
companies merge to increase size, scale, and revenue. In other words, mergers help companies
make more money. Merger is an agreement that unites two existing companies into one new
company.
Usually, equal-sized firms with similar business goals come together to create a new entity which
is understood as the merger of equals. Many pre-deal assessments are a crucial part of the
process. Participating companies go over their existing market valuation, resources, capabilities,
costs and revenues before making up their mind.
They undergo integration if they are assured of seamless conduct of joined operations suited to
mutual goals. The deal is sealed after the participating firms enter into an agreement bearing
clauses that spell out the terms of the alliance. Usually, one party gives up its shares to integrate
with another.
Although mergers and acquisitions (M&A) are both strategic decisions, they are different from
each other. The former involves integrating individual entities into a single business
organization, and the latter occurs when one company purchases another.
Real-World Merger Examples:
1. Raytheon and United Technologies
In 2020, the Raytheon Corp. and United Technologies Corp formed a new company, Raytheon
Technologies Corp. It is considered as a merger of equals since these enterprises are the gems of
the aerospace and defence industry. Trading of Raytheon Company’s shares stopped a day prior.
Every share of Raytheon’s common stock was converted into 2.3348 shares of United
Technologies’ common stock. It was a rights offering in which existing shareholders are given a
choice to buy additional shares. After the completion of the integration, United Technologies
became Raytheon Technologies Corporation. Its common stock shares began to trade on the New
York Stock Exchange with the ticker symbol RTX. The merging firms combined 2019 pro forma
net sales of $74 billion and a global workforce of 195000.

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 2. Huntington Bancshares (HBAN) and TCF Financial
Bank mergers are also quite common in the business world. For example, in 2020, Huntington
Bancshares Incorporated and TCF Financial Corporation, a well-known US regional bank
holding company, underwent an all-stock merger. Together they formed a new corporation that
had a market worth of $22 billion. At the time of integration, the market value of Huntington
Bancshares was said to be $13.15 billion, while TCF’s stood at $5.3 billion. Also, Huntington
was reported to expect an 18% rise in its earnings per share by 2022.
In a merger there is usually a process of negotiation involved between the two companies prior
to the combination taking place. For example, assume that Companies A and B are existing
financial institutions. Company A is a high street bank with a large commercial customer base.
Company B is a building society or similar organisation specialising in providing home loans for
the domestic market. Both companies may consider that a merger would produce benefits as it
would make the commercial and domestic customer bases available to the combined company.
There will obviously be some complications and difficulties involved but there are also some
obvious potential synergies available. For example, company B might be able to use its home
loans experience to offer better deals to potential and existing mortgage customers of company
A. The two companies may decide to initiate merger negotiations. If these are favourable, the
outcome would be a merger of the two companies to form a new larger whole.

1.1 How Merger Work?

A merger is the voluntary fusion of two companies on broadly equal terms into one new legal
entity. The firms that agree to merge are roughly equal in terms of size, customers, and scale of
operations. For this reason, the term "merger of equals" is sometimes used. Acquisitions, unlike
mergers, or generally not voluntary and involve one company actively purchasing another.
Mergers are most commonly done to gain market share, reduce costs of operations, expand to
new territories, unite common products, grow revenues, and increase profits—all of which
should benefit the firms' shareholders. After a merger, shares of the new company are distributed
to existing shareholders of both original businesses.
Due to a large number of mergers, a mutual fund was created, giving investors a chance to profit
from merger deals—called The Merger Fund from Virtus Investment Partners. The fund captures
the spread or amount left between the offer price and trading price. It invests in companies that
have publicly announced a merger or takeover. The funds have returned 5.8% annually since its
inception in 1989 (as of 3/31/2022).

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1.2 Types of Mergers
There are various types of mergers, depending on the goal of the companies involved. Below are
some of the most common types of mergers.

Conglomerate Merger
This is a merger between two or more companies engaged in unrelated business activities. The
firms may operate in different industries or in different geographical regions. A
pure conglomerate involves two firms that have nothing in common. A mixed conglomerate, on
the other hand, takes place between organizations that, while operating in unrelated business
activities, are actually trying to gain product or market extensions through the merger.
Companies with no overlapping factors will only merge if it makes sense from a shareholder
wealth perspective, that is, if the companies can create synergy, which includes enhancing value,
performance, and cost savings. A conglomerate merger was formed when The Walt Disney
Company merged with the American Broadcasting Company (ABC) in 1995.

Congeneric Merger
A congeneric merger is also known as a Product Extension merger. In this type, it is a combining
of two or more companies that operate in the same market or sector with overlapping factors,
such as technology, marketing, production processes, and research and development (R&D). A
product extension merger is achieved when a new product line from one company is added to an
existing product line of the other company. When two companies become one under a product
extension, they are able to gain access to a larger group of consumers and, thus, a larger market
share. An example of a congeneric merger is Citigroup's 1998 union with Travelers Insurance,
two companies with complementing products.

Market Extension
This type of merger occurs between companies that sell the same products but compete in
different markets. Companies that engage in a market extension merger seek to gain access to a
bigger market and, thus, a bigger client base. To extend their markets, Eagle Bancshares and
RBC Centura merged in 2002.
A merger is the voluntary fusion of two companies on broadly equal terms into a new legal
entity.

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Horizontal Merger
A horizontal merger occurs between companies operating in the same industry. The merger is
typically part of consolidation between two or more competitors offering the same products or
services. Such mergers are common in industries with fewer firms, and the goal is to create a
larger business with greater market share and economies of scale since competition among fewer
companies tends to be higher. The 1998 merger of Daimler-Benz and Chrysler is considered a
horizontal merger.

Vertical Merger
When two companies that produce parts or services for a product merger, the union is referred
to as a vertical merger. A vertical merger occurs when two companies operating at different
levels within the same industry's supply chain combine their operations. Such mergers are done
to increase synergies achieved through the cost reduction, which results from merging with one
or more supply companies. One of the most well-known examples of a vertical merger took place
in 2000 when internet provider America Online (AOL) combined with media conglomerate Time
Warner.

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1.4 Process of Merger
There are 12 steps in the M&A process according to Snow, 2011 as follows;
1. seek, collect and then analyze at an early stage with available data on the M&A targets
obtained or offered.
2. Establishing communications with shareholders or target M&A management
3. The buyer receives a brief note on the company offered by the buyer or commonly referred to
as a teaser or executive summary
4. When the buyer judges from the teaser that the M&A targets are feasible and suitable to be
forwarded to the next process, the buyer will sign a data confidentiality agreement to receive
more detailed data.
5. Analyze more complete data after the NDA has been signed
6. Send a letter of interest to the seller based on initial data and this is non-binding or unbound
7. Conducting management or shareholder meetings
8. Submitting a non-binding proposal, which states the indicated value of the asset offered
together with the required conditions
9. Perform due diligence
10. Negotiating, making and signing a sale and purchase agreement
11. The closing transaction or the transaction has been officially completed and the asset changes
hands
12. Post-closing adjustment and business integration

In implementing the investment strategy for mergers and acquisitions, buyers will be exposed to
risks both detected during the transaction process and risks that will only become known after
the transaction is completed. The definition of risk according to Uyemura and Deventer (1993)
is the volatility or deviation of net cash flow from a business unit. Risk is the uncertainty that
affects the system that affects fluctuations in the value and yield of an asset (Mun, 2006).
According to Jorion (2007), risk is the volatility of the uncertainty of the results obtained which
can be indicated by the value of assets, equity or income. Meanwhile, Manurung (2017) defines
it as a loss experienced by an institution due to unclear events that will occur in the future where
risks can be measured and minimized.

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1.3 Pros and Cons of Mergers
Here are some of the most common advantages and disadvantages of mergers from a business
perspective.
Pros
 They can turbocharge growth. As we mentioned earlier, mergers help companies
launch new products or enter new markets, often more cheaply or efficiently than they
would be able to do so on their own.
 They help companies achieve economies of scale. That is, mergers enable companies
to reach a size and scale that comes with cost reductions — essentially the business
version of buying in bulk.
 They give companies access to capital, as they’re essentially pooling their budgets and
resources together. Merging companies have the option of consolidating operations and,
by extension, driving more dollars to the bottom line.
Cons
 They’re costly and time-consuming. Mergers are complex legal transactions and there
are lots of steps both sides must take — and fund — before two companies can become
one.
 They’re stressful. Mergers are often associated with layoffs or significant changes in
existing workplace culture, so they can affect performance, turnover, and management
of the companies’ respective workforce.
 They don’t always pan out. There are a number of ways in which a merger can go
sideways. For instance, they’re subject to anti-trust laws. The federal government could
take legal steps to block a deal if it was concerned the new company would form a
monopoly and lessen competition in the market.

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 REVIEW OF LITERATURE

2.1 Singh and Kumar’s Study (1994), “The role played by BIFR in the revival of sock industrial
units through the medium of mergers”. With the help of three case studies, they concluded that
rehabilitation of sick company by merging with the health company is the most effective way of
their rehabilitation. All the three cases (namely Kothari General Food Corporation Ltd. With
Brooke Bond India Ltd., Challapalli Sugars Ltd. With KCP Ltd. And Sewa Paper Lid. With
Ballarpur Industries Ltd.) could be termed as successful mergers and BIFR seemed to have
fulfilled its assured objective of revival of sick companies. Another conclusion drawm was that
tax implications were singularly the most inviting feature for healthy company to merge with
sick company.
2.2 Ravi Sanker and Rao K.V(1998), ”Takeovers as a strategy of turnaround’ They analysis the
implications of takeovers from the financial point of view with the help of certain parameters
like liquidity, leverage, profitability etc. They observed that a sick company is takeover by a
good management and makes serious attempts; it is possible to turnaround successfully.
2.3 Anup Agraval Jeffrey F. Jaffe (1999), “The Post-merger Performance Puzzle”, they examines
the literature on long-run abnormal returns following mergers. The paper also examines
explanations for any findings of underperformance following mergers. We conclude that the
evidence does not support the conjecture that underperformance is specifically due to a slow
adjustment to merger news. We convincingly reject the EPS myopia hypothesis, i.e. the
hypothesis that the market initially overvalues acquirers if the acquisition increases EPS,
ultimately leading to long-run under-performance.
2.4 Canagavally R.(2000); “An Analysis of Mergers and Acquisitions” they measures the
performance in terms of size, growth, profitability and risk of the companies before and after
merger. The dissertation also investigates the share prices of sample companies in response to
the announcement of merger.
2.5 Beena P.L (2000), ‘An analysis of merger in the private corporate sector in India’ she
attempts to analyze the significance of merger and their characteristics. The paper establishes
that acceleration of the merger movement in the early 1990s was accompanied by the dominance
of merger between firms belonging to the same business group of houses with similar product
line.
2.6 Saple V. (2000), “Diversification, Mergers and their Effect on Firm Performance: A Study
of the Indian Corporate Sector”, he finds that the target firms were better than industry averages
while the acquiring firm shad lower than industry average profitability. Overall, acquirers were

7
high growth firms which had improved the performance over the years prior to the merger and
had a higher liquidity.
2.7 Vardhana Pawaskar (2001), “Effect of Mergers on Corporate Performance in India”, he
studied the impact of mergers on corporate performance. It compared the pre- and post- merger
operating performance of the corporations involved in merger between 1992 and 1995 to identify
their financial characteristics. The study identified the profile of the profits. The regression
analysis explained that there was no increase in the post- merger profits. The study of a sample
of firms, restructured through mergers, showed that the merging firms were at the lower end in
terms of growth, tax and liquidity of the industry. The merged firms performed better than
industry in terms of profitability.
2.8 Huzifa Husain, (2001), ‘Merger and Acquisition unlocking value’ he explains that takeovers
(hostile or non-hostile) may be beneficial to the shareholders if they unlock the hidden value of
a company. They also help the existing management to the more receptive to shareholders.
Economically, takeovers make sense if the ‘private market value’ of a company is higher than
the market capitalization of the company. Further if takeovers are used as a ploy to prevent
competition, it becomes harmful to the economy. Therefore, proper checks and balances have to
be put in place to ensure that takeover facilitation improves overall efficiency of the company.
2.9 Chitranandi A.K, (2001), “Trumps for M & A – Information Technology Management in a
merger and acquisition strategy” he try to found the success of merger and acquisitions depends
on proper integration of employees, organization culture, IT, products, operations and service of
both the companies. Proper IT integration in merger plays a critical role in determining how
effectively merged organizations are able to integrate business processes and people, and deliver
products and services to both internal and external customers of the organization. The study
suggests that to address the challenges, Chief Information Officers should be involved from the
earliest phase.
2.10 Mansur.A.Mulla (2003), “Forecasting the Viability and Operational Efficiency by use of
Ratio Analysis - A Case Study”, he assessed the financial performance of a textile unit by using
ratio analysis. The study found that the financial health was never in the healthy zone during the
entire study period and ratio analysis highlighted that managerial incompetence accounted for
most of the problems. It also suggested toning up efficiency and effectiveness of all facets of
management and GRA - GLOBAL RESEARCH ANALYSIS X 51 Volume : 1 | Issue : 4 | Sep
2012 ISSN No 2277 - 8160 put the company on a profitable footing.
2.11 Joydeep Biswas (2004), “ Recent trend of merger in the Indian private corporate sector”.
They research about Corporate restructuring in the form M&A has become a natural and perhaps
a desirable phenomenon in the current economic environment. In the tune with the worldwide

8
trend, M&A have become an important conduit for FDI inflows in India in recent years. In this
paper it is argued that the Greenfiled FDI and cross-border M&As are not alternatives in
developing countries like India.
2.12 Vijay Shrimali and Karunesh Saxena’s (2004), “Economic Advantages of Merger and
Acquision.” due to the imminent implementation of WTO Guidelines with effect from July 2005,
it was become mandatory for business organization to strengthen their R&D base. Consequently,
the size of the business organization matters most, merger and acquisition have, therefore,
become order of the day, an attempt has been made in the paper to provide a theoretical
framework of M&A, various examples of merger and acquisition in the world market and finally,
the economic advantage of M&A have been outlined.
2.13 Vanitha. S (2007), “Mergers and Acquisition in Manufacturing Industry”, she analyzed the
financial performance of the merged companies, share price reaction to the announcement of
merger and acquisition and the impact of financial variables on the share price of merged
companies. The author found that the merged company reacted positively to the merger
announcement and also, few financial variables only influenced the share price of the merged
companies.
2.14 Vanitha. S and Selvam. M (2007) “Financial Performance of Indian Manufacturing
Companies during Pre and Post Merger”, they analyzed the pre and post merger performance of
Indian manufacturing sector during 2000-2002 by using a sample of 17 companies out of 58
(thirty percent of the total population). For financial performance analysis, they used ratio
analysis, mean, standard deviation and ‘t’ test. They found that the overall financial performance
of merged companies in respect of 13 variables were not significantly different from the
expectations.
2.15 Pramod Mantravadi and Vidyadhar Reddy,(2007), “Relative size in Mergers and Operating
Performance” they explains that This research study aims to study the impact of m & A on the
operating performance of acquiring corporate in different periods in India, by examining some
pre and post merger financial ratios with chosen sample firms and mergers between 1991-2003.
The result suggests that there are minor variations in terms of impact on operating performance
following merger in different intervals of time in India.
2.16 Ryo Kawahara and Fumiko Takeda, (2007), “M & A and Corporate Performance in Japan”
This paper investigates how M & A affect corporate performance for three years after their
implementation. The corporate performance of 162 M & A that took place in Japan from 2001-
03 is analyzed by using Wilcoxon signed rank test. They find that overall effects of M & A on
corporate performance are statistically insignificant, compared to the corporate performance of
other companies within the same industry with similar pre-acquisition performance.

9
2.17 David C. Cheng, (2009); ‘Financial determinants of Bank Takeovers’ he found that several
studies have examined the determinants of bank merger pricing. Those studies focus on the
characteristics of the target and downplay the characteristics of acquirer. Their study found that
the purchase price is a negative function of the target’s capital to asset ratio. The only variable
used in their model is the ratio of acquirer to target assets.
2.18 Kumar (2009), “Post-Merger Corporate Performance: an Indian Perspective”, examined the
post-merger operating performance of a sample of 30 acquiring companies involved in merger
activities during the period 1999-2002 in India. The study attempts to identify synergies, if any,
resulting from mergers. The study uses accounting data to examine merger related gains to the
acquiring firms. It was found that the post-merger profitability, assets turnover and solvency of
the acquiring companies, on average, show no improvement when compared with pre- merger
values.
2.19 N. M. Leepsa & Chandra Sekhar Mishra (2009), “Post Merger Financial Performance: A
Study with Reference to Select Manufacturing Companies in India”, there intends to study the
trend in merger and acquisition (M&A) particularly with reference to manufacturing companies.
The present study is an attempt to find out the difference in post-merger performance compared
with pre-merger in terms of profitability, liquidity and solvency. The statistical tools used are
descriptive statistics, paired sample t-test.
2.20 Dr. Salma Ahmed & Yasser Mahfooz (2009), “Consolidation in the Sky - A Case Study on
the Quest for Supremacy between Jetlite and Kingfisher Airlines”, they made attempt to
descriptively analyze the rationale for consolidation in the Indian airline industry. The paper also
evaluates major changes in the business environment affecting the airline industry.
2.21 Ruhani Ali and Gupta G S (2010); “Motivation and Outcomes of Malaysian takeovers: An
international perspective” they examine the potential motives and effects of corporate takeovers
in Malaysia. The Mullar’s methodology, which involves the use accounting measures like size,
growth, profitability, risk and leverage, is employed for the study to analyze the performance
characteristics of takeover firms in the pre and post takeovers periods.

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 ORGANISATION PROFILE

Vodafone

Vodafone Group plc (/ˈvoʊdəfoʊn/) is a British multinational telecommunications company.

Its registered office and global headquarters are in Newbury, Berkshire, England.It
predominantly operates services in Asia, Africa, Europe, and Oceania. As of January 2023,
Vodafone owns and operates networks in 21 countries, with partner networks in 47 further
countries.Its Vodafone Global Enterprise division provides telecommunications and IT
services to corporate clients in 150 countries. Vodafone has a primary listing on the London
Stock Exchange and is a constituent of the FTSE 100 Index. The company has a secondary listing
on Nasdaq. The name Vodafone comes from VOice DAta FONE (the latter a sensational
spelling of "phone"), chosen by the company to "reflect the provision of voice and data services
over mobile phones".
History
The evolution of Vodafone started in 1981 with the establishment of the Racal Strategic Radio
Ltd subsidiary of Racal Electronics, the UK's largest maker of military radio technology, which
formed a joint venture with Millicom called 'Racal', which evolved into the present Vodafone.
As a Racal Telecom brand: 1980 to 1991

Vodafone's original logo, used from 1991 to 1997

In 1980, Ernest Harrison, the then chairman of Racal Electronics, agreed to a deal with Lord
Weinstock of the General Electric Company to allow Racal to access some of GEC's tactical
battlefield radio technology. The head of Racal's military radio division, Gerry Whent, was
briefed by Ernest Harrison to drive the company into commercial mobile radio. Whent visited a
mobile radio factory run by General Electric (unrelated to GEC) in Virginia, US, the same year
to understand the commercial use of military radio technology.[9]
Jan Stenbeck, head of a growing Swedish conglomerate, set up an American company, Millicom
Inc, and approached Gerry Whent in July 1982 about bidding jointly for the UK's second cellular
radio licence. The two struck a deal giving Racal 60% of the new company, Racal-Millicom Ltd,
and Millicom 40%. Due to concerns of the British government about foreign ownership, the
terms were revised, and in December 1982, the Racal-Millicom partnership was awarded the
second UK mobile phone network licence.[10] Final ownership of Racal-Millicom Ltd was 80%

11
Racal, with Millicom holding 15% plus royalties, and the venture firm Hambros Technology
Trust holding 5%. According to the UK Secretary of State for Industry, "the bid submitted by
Racal-Millicom Ltd … provided the best prospect for early national coverage by cellular radio."
Vodafone was launched on 1 January 1985 under the new name of Racal-Vodafone (Holdings)
Ltd, with its first office based in the Courtyard in Newbury, Berkshire, and shortly thereafter
Racal Strategic Radio was renamed Racal Telecommunications Group Limited. The first non-
Vodafone employee to make a UK mobile phone call was comedian Ernie Wise, from St
Katharine Docks, London on 1 January 1985. On 29 December 1986, Racal Electronics issued
shares to the minority shareholders of Vodafone worth £110 million, and Vodafone became a
fully owned brand of Racal.
On 26 October 1988, Racal Telecom, majority held by Racal Electronics, went public on
the London Stock Exchange with 20% of its stock floated. The successful flotation led to a
situation where Racal's stake in Racal Telecom was valued more than the whole of Racal
Electronics. Under stock market pressure to realise full value for shareholders, Racal demerged
Racal Telecom in 1991.
Vodafone Group, then Vodafone Airtouch: 1991 to 2000

On 16 September 1991, Racal Telecom was demerged from Racal Electronics as Vodafone
Group, with Gerry Whent as its CEO.
In July 1996, Vodafone acquired the two-thirds of Talkland it did not already own for
£30.6 million. On 19 November 1996, in a defensive move, Vodafone purchased for
£77 million Peoples Phone, a 181-store chain whose customers were overwhelmingly using
Vodafone's network.[21] In a similar move the company acquired the 80% that it did not already
own of Astec Communications, a service provider with 21 stores.
In January 1997, Whent retired and Chris Gent took over as CEO.[23] In the same year, Vodafone
introduced its Speechmark logo, composed of a quotation mark in a circle, with the Os in the
Vodafone logotype representing opening and closing quotation marks and suggesting
conversation.[24]
On 29 June 1999, Vodafone completed its purchase of American service provider AirTouch
Communications, Inc. and changed its name to Vodafone Airtouch plc. The merged company
commenced trading on 30 June 1999.[25] The acquisition gave Vodafone a 35% share
of Mannesmann, owner of the largest German mobile network. [26] To gain antitrust approval for
the merger, Vodafone sold its 17.2% stake in Mannesmann's German competitor, E-Plus
Mobilfunk.[27]

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On 21 September 1999, Vodafone agreed to merge its US wireless assets with those of Bell
Atlantic Corp to form Verizon Wireless.[28] The merger was completed on 4 April 2000, just a
few months prior to Bell Atlantic's merger with GTE to form Verizon Communications, Inc.[29]
In November 1999, Vodafone made an unsolicited bid for Mannesmann, which was rejected.
Vodafone's interest in Mannesmann had been increased by the latter's purchase of Orange, the
UK mobile operator.[30] Gent would later say Mannesmann's move into the UK broke a
"gentleman's agreement" not to compete in each other's home territory. [31] The hostile takeover
provoked strong protest in Germany, and a "titanic struggle" which saw Mannesmann resist
Vodafone's efforts. However, on 3 February 2000, the Mannesmann board agreed to an increased
offer of £112 billion, then the largest corporate merger ever. [31] The EU approved the merger in
April 2000 after Vodafone agreed to divest the 'Orange' brand, which was acquired in May 2000
by France Télécom.[32]
Vodafone Group plc: 2000 to present

The headquarters of Vodafone Romania in Bucharest

On 28 July 2000, the Company reverted to its former name, Vodafone Group plc.[33]
On 17 December 2001, Vodafone introduced the concept of "Partner Networks", by
signing TDC Mobil of Denmark. The new concept involved the introduction of Vodafone
international services to the local market, without the need of investment by Vodafone. The
concept would be used to extend the Vodafone brand and services into markets where it did not
have stakes in local operators. Vodafone services would be marketed under the dual-brand
scheme, where the Vodafone brand is added at the end of the local brand. (i.e., TDC Mobil-
Vodafone etc.)[34]
Vodafone sponsored the Premier League team Manchester United F.C. in football from 2000
until the 2005-06 season.[35]

13
In 2007, Vodafone entered into a title sponsorship deal with the McLaren Formula One team
(previously Vodafone sponsored Scuderia Ferrari in 2002 until 2006), which traded as
"Vodafone McLaren Mercedes" until the sponsorship ended at the end of the 2013 season. [36][37]
On 1 December 2011, it acquired the Reading-based Bluefish Communications Ltd,
an ICT consultancy company.[38] The acquired operations formed the nucleus of a new Unified
Communications and Collaboration practice within its subsidiary Vodafone Global
Enterprise,[38] which was to focus on implementing strategies in cloud computing, and strengthen
its professional services offering.[38]
In April 2012, Vodafone announced an agreement to acquire Cable & Wireless
Worldwide (CWW) for £1.04 billion.[39] The acquisition gave Vodafone access to CWW's fibre
network for businesses, enabling it to offer unified communications to enterprises. On 18 June
2012, Cable & Wireless' shareholders voted in favour of the Vodafone offer. [40][41]
On 2 September 2013, Vodafone announced it would be selling its 45% stake in Verizon
Wireless to Verizon Communications for $US130 billion.[42] With the proceeds from the deal, it
announced a £19 billion Project Spring initiative to improve network quality in Europe and
emerging markets, such as India.[43][44]
In June 2017, the company took measures to prevent its advertising from appearing within outlets
focused on creating and sharing hate speech and fake news. [45]
In January 2020, Vodafone confirmed that it has pulled out of Diem Association (known as Libra
Association at the time), the governing council for the Facebook-created global digital currency
initiative.[46]
Operations
Following a period of worldwide expansion which began in 1999, in the 2010s Vodafone entered
a period of retrenchment and simplification of its operations. [47] Its operating companies are in
Europe, Africa, India and Turkey, while in other continents and countries it has partner
agreements with local network operators. [3]
Egypt

In November 1998, the Vodafone Egypt network went live under the name Click GSM, and was
rebranded to Vodafone in 2002.[48]
On 8 November 2006, the company announced a deal with Telecom Egypt, resulting in further
co-operation in the Egyptian market and increasing its stake in Vodafone Egypt. After the deal,
Vodafone Egypt was 55% owned by the group, while the remaining 45% was owned by Telecom
Egypt.[49]
On 29 January 2020, Saudi Telecom Company (STC) and the Vodafone Group signed a
Memorandum of Understanding for the sale of Vodafone's entire 55 percent stake in Vodafone

14
Egypt to STC. With the sale, Vodafone will be exiting Egypt (as a telecom operator) as the rest
of the 45 percent stake in Vodafone Egypt is owned by Telecom Egypt. Telecom Egypt has said
that it has no plans to sell its stake. [50]
On 21 December 2020, Vodafone announced that its discussions with STC regarding the sale of
Vodafone's 55% shareholding in Vodafone Egypt have been terminated and that Vodafone
would stay in the Egyptian market. [51]
South Africa (Vodafone)

On 3 November 2004, the company announced that its South African affiliate Vodacom had
agreed to introduce Vodafone's international services, such as Vodafone live! and partner
agreements, to its local market.
On 9 October 2008, the company offered to acquire an additional 15% stake in Vodacom Group
from Telkom. The finalised details of the agreement were announced on 6 November 2008. The
agreement called for Telkom to sell 15 per cent of its 50 per cent stake in Vodacom to the group,
and demerge the other 35 per cent to its shareholder. Meanwhile, Vodafone has agreed to make
Vodacom its exclusive sub-Saharan Africa investment vehicle, as well as continuing to maintain
the visibility of the Vodacom brand. The transaction closed in May/June 2009.
On 18 May 2009, Vodacom entered the JSE Limited stock exchange in South Africa after
Vodafone increased its stake by 15% to 65% to take a majority holding, despite disputes by local
trade unions.
In April 2011, Vodacom rebranded with the Vodafone logo.
Ghana

On 3 July 2008, Vodafone agreed to acquire a 70% stake in Ghana Telecom for $900 million.
The acquisition was consummated on 17 August 2008. The same group-led consortium won the
second fixed-line licence in Qatar on 15 September 2008. [57]
On 15 April 2009, Ghana Telecom, along with its mobile subsidiary OneTouch, was rebranded
as Vodafone Ghana.[58]
Libya

On 24 February 2010, the group signed a partner network agreement with the second-largest
operator in Libya, al Madar.[59]
Cameroon

On 23 September 2016, Vodafone extended its activities to Cameroon by signing a partnership

with Afrimax, a 4G-LTE telecommunications operator in Africa. Vodafone Cameroon Launched
a "Youth Program" in the Universities to support and encourage the Cameroonian

15
students.[60] The partnership ceased to operate in September 2017 following the withdrawal of
its license by the government.[61]
Middle East

Bahrain

On 29 December 2003, Vodafone signed a Partner Network Agreement with Kuwait's MTC
group. The agreement involved co-operation in Bahrain and the branding of the network as
MTC-Vodafone.[62]
Qatar

In December 2007, a Vodafone Group-led consortium was awarded the second mobile phone
licence in Qatar under the name "Vodafone Qatar". Vodafone Qatar is located at QSTP, the Qatar
Science & Technology Park.[63] Commercial operations officially began on 1 March 2009. [64] In
February 2018 Vodafone Europe agreed to sell their stake in the Qatar joint venture.[65]
On 25 November 2019, Vodafone in collaboration with Inseego Corp. introduced the 5G MiFi
M1100 in Qatar. It is the first commercially available 5G mobile hotspot in the region. [66]
United Arab Emirates

On 28 January 2009, the group announced a partner network agreement with Du, the second-
largest operator in the United Arab Emirates. The agreement involved co-operation on
international clients, handset procurement, mobile broadband etc. [67]
Oman

In January 2021, Vodafone obtained a license to establish and operate public telecommunications
services in Oman. In September 2021 Vodafone in Oman signed an agreement with Ericsson to
deploy, operate and maintain 4G and 5G core and radio access (RAN) greenfield
network[68][69][70] and an agreement with Netcracker Technology to deploy Netcracker Digital
BSS.[71] Vodafone will be the third operator in the Sultanate of Oman. [72][73]
The Americas

Canada
Vodafone network Partner in Canada is Rogers Wireless.
Chile
On 11 May 2008, Vodafone sealed a trade agreement with the Chilean Entel PCS Chile, in which
Entel PCS has access to the equipment and international services of Vodafone, and Vodafone
will be one of the trademarks of Entel for the wireless business. This step will give the Vodafone
brand access to a market of over 15 million people, currently divided among two
companies: Telefonica Movistar, and Entel PCS.[74]

16
Brazil
In August 2013, Vodafone has started the MVNO operation in Brazil, as a corporative M2M
operator.[75]
United States
In the United States, Vodafone previously owned 45% of Verizon Wireless in a joint
venture with Verizon Communications, the country's largest mobile carrier. Vodafone branding
was not used, however, as the CDMA network was not compatible with the GSM 900/1800 MHz
standard used by Vodafone's other networks and as Vodafone did not have management control
over Verizon Wireless. In 2004, Vodafone made an unsuccessful bid for the entirety of AT&T
Wireless; however, Cingular Wireless, at the time a joint venture of SBC Communications
and BellSouth (both now part of AT&T Inc.), ultimately outbid Vodafone and took control of
AT&T Wireless (the combined wireless carrier is now AT&T Mobility).[76]
In 2013, Vodafone was considered for acquisition by U.S.-based AT&T.[77][78] Ultimately, the
deal did not move forward.[79]
Asia

Japan

In 1999, J-Phone launched the J-sky mobile Internet service in response to DoCoMo's i-
Mode service. It became Japan's third-largest mobile operator and was the first one to introduce
camera phones in Japan. On 17 March 2006, Vodafone announced an agreement to sell all its
interest in Vodafone Japan to SoftBank for £8.9 billion, of which £6.8 billion would be received
in cash upon completion of the deal. Vodafone Japan later changed its name to SoftBank Mobile.
In November 2010, Vodafone divested its remaining Softbank shares. [82]
India

On 28 October 2005, the company announced the acquisition of a 10 per cent stake in
India's Bharti Enterprises, which operated the largest mobile phone network in India under the
brand name Airtel.[83] Then on 11 February 2007, the Company agreed to acquire a controlling
interest of 67% in Hutch Essar for US$11.1 billionIn May 2011, Vodafone Group Plc bought the
remaining shares of Vodafone Essar from Essar Group Ltd for $5 billion.[86] In October 2013, it
was reported by Reuters that Vodafone planned to invest as much as $2 billion (£1.2 billion) to
buy out minority shareholders in Vodafone India. [87]
By late January 2017, Vodafone Group's unit in India and Idea Cellular Ltd were in preliminary
talks to merge.[88] And on 20 March 2017, Vodafone announced that it was merging its Indian
business with Idea, India's third-largest network, to create the country's third largest operator
with almost 270 million customers,[89] accounting for 16% of the Indian cellphone service

17
market.[90] Vodafone would own 45.1 percent of the new operator and Idea's parent company,
the Aditya Birla Group, 26 percent. The Telecom ministry (DoT) cleared the Vodofone–Idea
merger on 9 July 2018. On 31 August 2018, Vodafone Idea became a legal entity and the largest
telecom service provider in India. [92] On 7 September 2020, Vodafone Idea unveiled its new
brand identity, 'Vi' which involves the integration of the company's erstwhile separate brands
'Vodafone' and 'Idea' into one unified brand. [93][94][95]
Other Asia

On 3 November 2003, Singapore became a part of the community as M1 was signed as partner
network.[96] Then in April 2005, SmarTone changed the name of its brand to 'SmarTone-
Vodafone, after both companies signed a Partner Network Agreement.
On 10 February 2008, Vodafone announced the launching of M-Paisa mobile money transfer
service on Roshan's (Afghanistan's largest GSM operator) network: Afghanistan was added to
the Vodafone footprint.[99]
Nar Mobile in Azerbaijan was signed as a partner network on 22 July 2009, [101] while Chunghwa
Telecom of Taiwan was signed on 12 November 2009. [102]
In September 2011, it was announced that Vodafone and Smartone would not renew their
partnership in the Hong Kong market. Vodafone instead entered into an agreement
with Hutchison Telecom, who operate the 3 brand.[103] In the same year, M1 also ended their
partnership in Singapore.[104]
At the beginning of September 2014, the Vietnamese mobile operator Vinaphone signed a
strategic co-operation agreement with Vodafone. [106]
Europe

Vodafone Hungary was formed as a subsidiary company in July 1999. [107] The acquisition
of Mannesmann AG, completed on 12 April 2000, created subsidiaries in Germany and Italy,
and increased the Group's indirect holding in SFR. The Vodafone brand in Italy was introduced
as Omnitel-Vodafone in 2001, which became the primary brand in 2002; finally the current
name Vodafone Italia was introduced in 2003, dropping "Omnitel" altogether. [108]
In 2001, the company acquired Eircell, the largest wireless communications company in Ireland,
from Eircom.[109] Eircell was subsequently rebranded as Vodafone Ireland. In February
2002, Radiolinja of Finland joined Vodafone as a partner network. [110] Later in December 2002,
the Vodafone brand was introduced in the Estonian market following the signing of a Partner
Network Agreement with the Estonian subsidiary of Radiolinja. [111] Radiolinja's Finnish service
was rebranded as Elisa in April 2004 following its parent company Elisa Corporation's decision
to unify all consumer-facing brands under a single name;[112] this was followed by Radiolinja's

18
Estonian service in February 2005 in anticipation of the later juridical merger
with Uninet [et].[113][114]
In June 2005, the Company bought the Czech mobile operator Oskar [122] which was rebranded
as Oskar-Vodafone.[123]
In 2006, the Company rebranded its Stoke-on-Trent site as Stoke Premier Centre, a "centre of
expertise" for the company dealing with customer care for its higher-value customers, technical
support, sales and credit control.[128] On 22 February 2006, the company announced that it was
extending its footprint to Bulgaria with the signing of Partner Network Agreement with Mobiltel,
which is part of the mobilkom Austria group.[129]

The headquarters of Vodafone Ireland in Dublin

On 5 October 2006, Vodafone announced the first single-brand partnership with Og
Vodafone which would operate under the name Vodafone Iceland,[134] and on 19 December
2006, the company announced the sale of its 25% stake in Switzerland's Swisscom for
CHF4.25 billion (£1.8 billion). After the deal, Swisscom would still be part of the community as
a Partner Network.[135] In December 2006, the Company completed the acquisition of Aspective,
an enterprise applications systems integrator in the UK, signalling Vodafone's intent to grow a
significant presence and revenues in the information and communication technologies (ICT)
marketplace.[136]

19
The Vodafone Lion on the Löwenparade in Munich, Germany
In 2019, Vodafone Group created a legally separate organisation comprising its European mobile
towers. At the same time it was reported that the mobile towers business could be valued at about
£10 billion.[152] The mobile towers business was named Vantage Towers on 24 July
2020.[153] Vantage Towers is headquartered in Düsseldorf, Germany with towers infrastructure
in Germany, Spain, Greece, Portugal, Czech Republic, Romania, Hungary, Italy and Ireland
comprising a total of 68,000 towers.[
Oceania

Australia

In October 1993, Vodafone Australia's network went live. In December 2004, Vodafone
Australia agreed to deploy high-speed MPLS backbone network built by Lucent Worldwide
Services using Juniper hardware.[156] In October 2005, it began launching 3G technology in
Australia.[157] On 5 September 2008, Vodafone purchased Australia's largest bricks and mortar
mobile phone retailer Crazy John's adding 115 retail stores to its local operations. [158]
On 13 July 2020, VHA merged with TPG to create TPG Telecom Limited.[162]
Fiji

Vodafone shop at Nadi Airport, Fiji

In July 1994, Vodafone Fiji's network went live. In July 2014, Vodafone sold its 49%
shareholding of Vodafone Fiji to The Fiji National Provident fund. Under the terms of the deal,
Vodafone Fiji retained its branding under a Partner Market Agreement. [163]
New Zealand

The headquarters of Vodafone New Zealand in Auckland City

20
In 2019, Vodafone announced the sale of its New Zealand division to a consortium of investors;
while Vodafone New Zealand is now independently owned, it retains a licensing agreement to
continue use of the Vodafone name and logo in exchange for fee payments. [167][168]
Mobile money transfer services

In March 2007, Safaricom, which is part owned by Vodafone and the leading mobile
communication provider in Kenya, launched mobile payment software developed by
Vodafone.[183]
By February 2008, the M-PESA money transfer system in Kenya had gained 1.6 million
customers.[184] By 2011 there were fourteen million M-Pesa accounts by which held 40 percent
of the country's savings.[185] Following M-PESA's success in Kenya, Vodafone announced that
it was to extend the service to Afghanistan. [186] The service here was launched on the Roshan
network under the brand M-Paisa with a different focus to the Kenyan service. M-Paisa was
targeted as a vehicle for microfinance institutions' (MFI) loan disbursements and repayments,
alongside business-to-business applications such as salary disbursement. The Afghanistan
launch was followed in April 2008 by the announcement of further a further launch of M-PESA
in Tanzania, South Africa[187] and India.[188]
In February 2012, Vodafone announced a worldwide partnership with Visa. [189]
Health services

In November 2009, Vodafone announced the creation of a new business unit focused on the
emerging market (the application of mobile communications and network technologies to
healthcare).[190] One of its early success stories is with the Novartis-led "SMS for Life" project
in Tanzania, for which Vodafone developed and deployed a text-message based system that
enables all of the country's 4,600 public health facilities to report their levels of anti-malarial
medications so that stock level data can be viewed centrally in real-time, enabling timely re-
supply of stock. During the SMS for Life pilot, which covered 129 health facilities over six
months, stock-outs dropped from 26% to 0.8%, saving thousands of lives. [191]
Vodafone Foundation

The Vodafone Foundation is a recognised charity which supports and initiates projects which
use mobile technology to benefit the vulnerable, using the slogan "Connecting for
Good".[192] They often work in collaboration with other charitable groups. Below are some
examples of their initiatives:
 DreamLab, a volunteer computing mobile app developed in cooperation with Imperial
College London and used to research on cancer, COVID-19, and other diseases

21
  TECSOS – mobile phones have been adapted to allow victims of domestic violence to
activate immediate contact with the emergency services if they are in danger
 Paediatric Epilepsy Remote Monitoring System – a monitoring system that allows
physicians to remotely make patient observations
 Safe Taxi System – an initiative in Portugal that consists of technology that taxi drivers
can use to alert police if they are in danger of being assaulted
 Learning with Vodafone Solution – technology that allows teachers in India to use
graphical and multi-media content to enhance their teaching
 The World of Difference programme – successful applicants choose charities for which
they work either full-time for two months or part-time for four months (minimum 15
hours a week). The charities are provided with £2,500, with each winner receiving the
balance as a salary after NI and tax have been paid. [193]
Advertising
Since 2017, Vodafone's global advertising has used the slogan "The future is exciting. Ready?".
The previous slogan, since 2009, was "Power to You". [194]
Senior management

Sir Gerald Whent, at that time an Executive with Racal Electronics plc, was responsible for the
bid for a UK Cellular Network licence. The Mobile Telecoms division was de-merged, and was
floated on the London Stock Exchange in October 1988 and Sir Gerald became Chief Executive
of Racal Telecom plc. Over the next few years the company grew to become the UK's market
leader, changing its name to Vodafone Group plc in the process. [195]
Sir Christopher Gent took over as Chief Executive in January 1997, after Sir Gerald's retirement.
Gent was responsible for transforming Vodafone from a small UK operator into the global
operator, through the merger with the American AirTouch and the takeover of Germany's
Mannesmann.[196]
Arun Sarin was the driving force behind the company's move into emerging markets such as
Asia and Africa, through the purchases such as that of Turkish operator Telsim, and a majority
stake in Hutchison Essar in India.[197]
The fourth CEO, Vittorio Colao, stepped up from Deputy Chief Executive in July 2008. [198]

22
Idea
Idea Cellular (commonly referred to as Idea, and stylised as !dea) was an Indian mobile network
operator based at Mumbai, Maharashtra. Idea was a pan-India integrated GSM operator and had
220.00 million subscribers as of June 2018. Idea Cellular merged with Vodafone India and is
now known as Vodafone Idea or Vi.
History
Idea Cellular was incorporated as Birla Communications Limited in 1995 after GSM licenses
were won in Gujarat and Maharashtra circles. The company name was changed to Idea Cellular
and the brand Idea was introduced in 2002 after a series of name changes following mergers and
joint ventures with Grasim Industries, AT&T Corporation and Tata Group. Following the exit of
AT&T Corporation and Tata Group from the joint venture in 2004 and 2006 respectively, Idea
Cellular became a subsidiary of Aditya Birla Group. Malaysia based Axiata had bought around
20% stake in the company in 2008 for US$2 billion.
Idea previously bought a 40.8% stake in Spice Communications Ltd, operating as Spice Telecom,
for over ₹2,700 crore.
VI

Vodafone Idea (or Vi, and/but stylised as V!) is an Indian telecom operator with its headquarters
based in Mumbai and Gandhinagar.[10][11] It is an all-India integrated GSM operator
offering 2G, 3G, 4G, 4G+, VoLTE, and VoWiFi service.[12] As of 31 October 2022, Vi has a
subscriber base of 245.62 million,[13] making it third largest mobile telecommunications network
in India and 11 th largest mobile telecommunications network in the world. [14] The company was
created on 31 August 2018 by the merger of Vodafone India and Idea Cellular, to form a new
entity named Vodafone Idea Limited.

On 7 September 2020, Vodafone Idea unveiled its new brand identity, 'Vi' which involves the
integration of the company's erstwhile separate brands 'Vodafone' and 'Idea' into one unified
brand.

History

Announced in March 2017 that Idea Cellular and Vodafone India would merge. The merger got
approval from the Department of Telecommunications in July 2018. On 30 August
2018, National Company Law Tribunal gave the final nod to the Vodafone-Idea merger[18] The
merger was completed on 31 August 2018, and the newly merged entity was named Vodafone
Idea Limited.[19][20][14] The merger created the largest telecom company in India by subscribers
and by revenue. Under the terms of the deal, the Vodafone Group holds a 45.2% stake in the
23
combined entity, the Aditya Birla Group holds 26% and the remaining shares will be held by the
public.[14] Vi lost a significant number of gross and active subscribers in the month of August
2020 after the merger.

Until 7 September 2020, Vodafone Idea Limited operated two separate

brands: Vodafone and Idea who both operated pre-paid and post-paid GSM service.

Vi also provides services including Mobile payments, IoT, enterprise offerings and
entertainment, accessible via both digital channels as well as on-ground touch points, centres
across the country. Vi has a broadband network of 340,000 sites, distribution reach of 1.7 million
retail outlets.

As of May 2021, data published by the telecom regulator TRAI Vi had the highest upload
speed of 28 Mbps.

24
 RESEARCH METHODOLOGY

Nature of the study

The present research is analytical in nature. The research is analytical because it studies the
articles already available in different forms.

Hypothesis

H01: There is significant change in telecommunication industry due to Vodafone Idea

merger.

Ha1: There is no significant change in telecommunication industry due to Vodafone Idea

merger.

H02: Vodafone has more impact of merging as compared to Idea.

Ha2: Idea has more impact of merging as compared to Vodafone.

H03: VI has more market share in telecommunication industry.

Ha3: VI has less market share in telecommunication industry.

Objective of the Study

1. To get the impact of VI on telecommunication Industry

2. To get the information about the share market of VI in telecommunication

industry.

3. To measure the share market of VI in terms of subscribers.

Scope of the Study

The area for the research is all over India. Large sample is taken to get appropriate results.

Sample size

Researcher found a sample size of 50 units.

Sampling Technique

25
Systematic sampling will be used to collect data from the respondents. This is a type of
probability sampling method in which a sample from a large population is selected
according to a random starting point. This often reduces the representativeness of the sample
by reducing sampling error.

Data collection instruments

Secondary data

Secondary data will be collected through various magazines, journals, newspapers, websites
and annual reports.

Statistical Techniques for Data Analysis

Relevant analytical tools like regression, correlation, ANOVA, time-series analysis would
be used. Model will be developed on the basis of enablers, challenges and their effects.
Model will be validated by the experts and the users. The experts will include bankers,
government officials and experts from the educational institutions.

26
 DATA INTERPRETATION AND ANALYSIS

The merger includes different percentage of shares for Vodafone and Idea while the rest belongs
to the public shareholders. Approximately, Vodafone will have 45.1% of shares of joint venture
after passing the ownership of 4.9% to Aditya Birla Group for 3,900 crore post the completion
of merger. The requisites for the merger was that, it required approval from both the telecom
service providers for the appointment of CEO and COO. The chairman of the merged entity
would be Kumar Mangalam Birla and chief financial officer would be appointed by Vodafone.
From a total of 12 members of the Board, 3 members each would be nominated by the promoters
and rest of the members would be independent. Vodafone India and Idea Cellular Ltd made an
agreement to complete the merger within 24 months. On 31st Aug

This transaction required various approvals from government authorities including SEBI, dept.
of Telecom and Reserve Bank of India among others. The Department of Telecommunications
(DoT) has given the green signal for the merger of Vodafone India and Idea, the largest Merger
and Acquisition agreement in the sector, which has displaced Bharti Airtel from top position
after over 15 years. The approval conditions, which were given over a year after the agreement,
were announced in March 2017 which included an advance payment of Rs 7,268 crore. The
demand is split between a bank guarantee of Rs 3,342 crore to cover what Idea owes on account
of one-time spectrum charges and cash of Rs 3,926 crore by Vodafone towards the market price
for non-auctioned airwaves. Promoters Aditya Birla Group infused Rs 3,250 crore in Idea
Cellular, which separately raised Rs 3,000 crore ahead of a planned merger with Vodafone India.
Following the equity infusion by Idea’s promoters, their stake in India’s third largest telecom

27
operator rose to 47.2% from 42.4% now. Idea contributed its assets which included standalone
towers with 15,400 tenancies and a stake in Indus towers Ltd of 11.5%. The proposed capital
raising by Idea, the sale of its standalone towers to American Tower Corp. and the potential sale
of its 11.15% stake in Indus Towers Ltd had augmented the firm’s long-term capital resources.

The entry of Reliance Jio Infocomm Ltd in September 2016, with free services for almost seven
months and cheap tariffs, had eroded margins and impacted the revenue of rivals. The
contribution of Vodafone will be Vodafone India along with standalone towers with 15,400
tenancies without including 11.5% stake in Indus Towers. According to the agreement between
Idea and Vodafone, Vodafone India’s funding and contribution of net debt to the merger will
depend upon net debt of Idea Cellular upon completion of merger. Vodafone will contribute
more amount of net debt, about Rs 2,480 crore than Idea at the completion of the merger. Post
termination of both companies, the combined entity will be a joint venture between Vodafone
and Idea, which will account for the under equity method, controlled by both Aditya Birla Group
and Vodafone. Idea promoters hold the rights to acquire 9.5% additional stake from Vodafone
under agreed deal to equalize shareholdings over time as per the following proposition

Vodafone: 45.1% – 9.5% = 35.6%

Idea: 26% + 9.5% = 35.6%

Reasons for the Merger The main reason for the Vodafone-Idea merger was to tackle the rising
dominance of Reliance Jio in the Indian Telecom sector. This will result in a brutal price war

28
between all the major companies in this sector. While merging companies are typically quite
confident about their synergy benefits, most analysts agree that the Vodafone-Idea merger holds
the potential for significant cost savings. With a larger scale and elimination of duplicate costs,
margins can rise substantially. The combined entity became the largest cellular services operator
in prominent circles. In a couple of circles, it will upstage Bharti Airtel as the number one
operator, while in some other circles, it will graduate to a strong No. 2. It remains to be seen that
if the combined entity will retain a half-hearted presence in the relatively smaller circles, or
whether it will up the ante and aim for a strong Pan-India focus. The spectrum of Idea in two
circles while Vodafone India in seven circles, whose permits are valid till 2021-22, is together
valued at around Rs 12,000 cr as per the last auction price. These permits with Vodafone India
and Idea are not in common circles hence there could be potential spectrum capital expenditure
synergies between the companies. Before the merger, a market shares of 18.16% of Vodafone
India with 20,46,80,000 customers and a market share of 16.9% of Idea Cellular Ltd with
19,05,10,000 customers was surveyed. The merger of Vodafone India and Idea Cellular has
boosted the market share to 35% which has made it the country’s largest telecom operation
leaving the Bharti Airtel off its top position. Impact of Marger This merger has caused more
mergers and acquisitions of other telecom companies. The assets of Telenor India and Reliance
Communication were bought by Bharti Airtel. Tata Teleservices customers have started
migrating to the Airtel network under an Intra Circle Roaming (ICR) arrangement. Various
initiatives have been taken by the merger entity like renewal of price due to troublesome entry
of Reliance Jio which caused some serious imbalance. The huge number of subscriber base in
India has made India the fastest growing market and with the merging of huge telecom players
it will endow the telecom sector with health and life. The merger provided support in overcoming
the debt of Idea Cellular and Vodafone India and large sum of credit will be infused in the joint
venture. Impact of merger could be observed in various service providers in terms of quality of
service in telecom sector. This impact could also be observed on the savings, synergies and the
spectrum in rapid growth. Cost and capex synergies is created for both companies which is
estimated to be around 10$ billion after integration cost. The major cost and capex synergies
would be around network infrastructure, savings in energy costs, operational efficiencies, service
centres, lower maintenance expenses. The merger has reduced the operation cost incurred to
about 60% of the total cost which will aid in improving the quality and performance of the service
provided by the company.

29
After the merger, Bharti Airtel will be left behind by the Vodafone Idea Ltd and the merged
entity will acquire the top position in Indian telecom industry with a revenue market share of
40% with respect to Bharti Airtel 32%. With the disruptive entry of Reliance Jio, it was the
beginning of price war in the Indian telecom industry. Reliance Jio made an announcement that
for the start of Jio telecom services on 27th December 2015 at minimum rates with a launch offer
of first quarter free for all the consumers. Since the merged entity had enough resources it
resulted in a resource consolidation which ultimately brought a greater benefit to consumer. With
very few companies remaining in the sector, there was a higher chance of stability of prices.
Analysts are predicting a market correction of telecom pricing and the country may see the
companies teaming up to increase the prices of all services. With only 4 major players remaining:
Idea-Vodafone, Airtel, BSNL and Jio (Airtel has merged Aircel, bought Telenor, and may merge
with Tata), rates of these services would be a something which can be arbitrated easily. As big
agencies offer better consumer experience, it cannot come at a cheap price. If we talk about the
telecom market, then it is better for the industry as a whole. The current debt of the merged entity
is at a staggering Rs 1.07 Lakh cr, and Idea has already announced that they would be conserving
close to Rs 14,000 crore per year from savings, due to united execution and shared usage of
infrastructure. Lower arrears mean the companies can now focus more on in improving the
existing infrastructure, which means a better network quality for the consumers.

30
The Expectations

The merger between Idea and Vodafone India has made them a leading player. As per the benefits
that arise from management synergies is Rs 670 billion for cost and capital expenditure & Rs
140 billion operating expenses by the 4th year. It also decreased the debt on the VodafoneIdea
Ltd with sale of Towers Assets. The merger will also lead to cost savings and asset monetization
opportunities aiding financial performance. The big question to be answered is whether the
company will be able to monetize the surplus spectrum and able to stream the money towards
newer technologies and better services. The big advantage to the promoters of Aditya group is
that the consolidated with Vodafone in this pricing war with Reliance Jio and Airtel at the same
time have rights to gradually increase the stake in stages to become equal partners. According to
the current circumstances, there is little to no gain to the public shareholders and they can only
hope that they will be benefited with the merger in the long term.

31
 FINDINGS & SUGGESTIONS

Not very long ago, India had a booming telecom industry, with a dozen operators battling for
market share in this billion user market. But three years ago, Reliance Jio entered the sector
which rock-bottom tariffs. A brutal tariff war started, which kicked several operators out of the
race to provide wireless services and left many with battle scars. Today, just two other private
operators, Bharti Airtel and Vodafone Idea are left to compete with Jio.
Vodafone Idea retains top spot in terms of subscriber base. But if one compares India’s number
one and number two players on metrics like profitability, revenue, 4G data users and the growth
trend of the operators’ average revenue per user, the results that emerge boggle the mind. For
starters, Vodafone Idea, with the largest user base, made a net loss of ₹4,874 crores in the June
quarter, while Jio made a profit of ₹891 crores. Both companies have priced mobile services at
almost similar levels. To be sure, Vodafone Idea is in the midst of a merger integration exercise.
The company believes that it is delivering on its stated strategy although the benefits are not yet
visible in its topline. It also expects better financial performance going forward. But that depends
on when tariffs improve in the market, and that call is clearly in Jio’s hands.
The merger of Vodafone and Idea Cellular will be watched keenly by management gurus the
world over. It is not often that an Indian company and the subsidiary of a multinational
corporation agree to come together. Two brands will lead to extra expenditure and mixed
messaging. If the whole idea behind the merger is to achieve synergies and cut costs, there is no
reason why both the brands should continue.

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 CONCLUSION
It can be concluded that the merger was needed in order to fight the competitive pricing
policy taken up by Reliance Jio. The consumer is the most beneficial because of this merger
as now all the telecom companies will try to bring in the best technology at the best price
and with better customer service in order to maintain customer loyalty. The merger of
Vodafone and Idea is a perfect example of a market that mostly benefits the customers. This
deal released the telecom industry from the pressure of fierce prices and tariffs. The entry
of Reliance Jio into the telecom industry had a huge impact.
The Vodafone Idea merger resulted in a duplication of resources across the country which
required job cuts too. The combined entity had to lay off their employees on a huge scale,
as Chairman of the new merger, Kumar Mangalam Birla, had already pointed towards it.
When the main objective of both the telecom firms is to reduce their indebtedness via
merger, then the cut downs were pretty much expected. Although the CEO of Vodafone
hadn’t hinted towards layoffs, but analysts predicted that 5-10% of the labor pool from the
merged entity may be asked to resign. The merger lead to pooling of vital resources and
infrastructure, which inevitably lead to a better service quality and customer experience.
This merged entity has also reduced financial challenges, which encouraged it to invest
more on quality of service.
Reliance Jio is the threat to most of the companies in telecommunication industry and to
survive in this cutthroat competition mergers and acquisitions is seen taking place in
industry. In the present case of Vodafone-idea it can be said that Synergy benefits would
gradually be achieved in coming years which will result in higher profits and leverage is
expected to reduce hence resulting in value addition to shareholder. Post-merger, there were
no gain to public shareholders, it used to be a loss-making company amounting a loss of 5.3
billion in the December quarter of 2016.The merger between Idea and Vodafone will make
them a top player in the long run. If we look at the other side of the coin as well, not very
long ago, India had a booming telecom sector, with number of telecom operators fighting
for market share. But in 2016, Reliance Jio entered the sectorwhich rock-bottom tariffs. A
predatory pricing war started and ended up making several companies to exist the market.
Therefore, it will not be wrong to say that market dynamics have changed a lot and
competition level is not the same and telecom sector is being controlled by three major
players. In conclusion it can be said that People who are using Idea and Vodafone are now
getting better network coverage in cities and towns post-merger. Consumers can expect
more diverse services and access to newer and smarter technology like VoLTE, Digital
wallets, and internet of things after the merger. The merger between Idea and Vodafone

33
India has made them a leading player in the Indian telecom sector. As per the benefits that
arise from management synergies is 670 billion for cost and capital expenditure 140 billion
operating expenses by the 4th year. It also decreased the debt on the Vodafone Idea Ltd with
sale of Towers Assets. The merger will also lead to cost savings and asset monetization
opportunities aiding financial performance. The big question to be answered is whether the
company will be able to monetize the surplus spectrum and able to stream the money
towards newer technologies and better services. To be able to gain something out of this
huge telecom merger Vodafone-Idea, need to develop new strategies to increase their
number of subscribers in the market thereby increasing their net revenue while keeping the
debt to minimum. The big advantage to the promoters of Aditya group is that the
consolidated with Vodafone in this pricing war with Reliance Jio and Airtel at the same
time have rights to gradually increase the stake in stages to become equal partners.
According to the current circumstances, there is little to no gain to the public shareholders,
and they can only hope that they will be benefited with the merger in the long term. Keeping
in the view of the Current scenario of Indian telecom sector, it will not be prudent for any
new player to enter the market. Thus, if a company wants to survive in this sector in the
long run, it should have either of these two, huge capital investment or business
combinations.

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