What went wrong with the Vodafone Idea Merger?

What went wrong with the Vodafone Idea Merger?

In what came to be known as the biggest mergers in the history of telecommunication industry, the British telecom major Vodafone and Aditya Birla group-run Idea Cellular had announced their merger on 20th March 2017 in the quest to dominate and keep up with the new competition in the sector. Both companies finally completed their deal on 31st August 2018, making the merger the largest mobile telecommunications network in India as of July 2019 with a subscriber base of 380 million.





The merger has also enabled the company to penetrate deeper into the Indian market, increase its customer base and improve performance. In today’s time, Vodafone Idea has a broadband network of 340,000 sites and a distribution reach of 1.7 million retail outlets. To add to that the merger has also resulted in drastic improvement when it comes to the performance of the network due to the new pool of resources and funds now available with the company. In a post by Ookla, the company behind Speedtest, Vodafone recorded a year-over-year improvement of 23.6 percent in its download speed.


However despite the benefits that came along with this historic merger, what also came along were a lot of problems that did not enable the company to benefit in the way it expected, which leads to the question- What went wrong with the Vodafone Idea Merger? One of the toughest challenges for a company post-merger is to be able to integrate the values and work environment of two different entities into one. Every company follows its own set of rules and have a certain way of doing their work, which employees get accustomed to. This inability of being able to find the needed balance led to Vodafone and Idea merge only on paper, but in the workplace, a boundary between the employees kept getting wider which resulted in an uninviting work environment.


Another factor that led to a decrease in employee morale is the constant fear of being at the edge of losing their job. Vodafone-Idea had to let go of 4,000-5,000 employees in the lead up to the merger in August 2018. Eight months down from that time, the employee count was around 12,500, down from the pre-merger combined headcount of over 17,000. With more and more layoffs each day, the fear and uncertainty in the minds of the employees is a matter of concern that needs to be dealt with by the top management, as for a company to be successful in all spheres, it is necessary for today’s time more than ever that the employees of the company are happy.


Bringing two extremely big companies together calls for some major restructuring and
Vodafone-Idea is yet to excel that in a lot of parameters. This is the major reason why this merger hasn't shown success to its full potential. With more efforts to bring down the wall between the two entities and settling the differences by finding the right middle ground, Vodafone-Idea can reach the potential it destined to, however in this telecommunication industry, where new challenges and hurdles are making their way in every day, the future of this merger can only be secured if the right steps are taken whilst the merger is in its nascent stage.


Cedrus Wealth Partners
Pune, Maharashtra.
www.cedruswealth.com

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