Recently, Vodafone-Idea rebranded themselves as V!. Both companies are hoping that rebranding could be a fresh start in a cut-throat competitive market and that it may allow the company to raise money to fill the hole in its balance sheet due to AGR dues. Let’s have look at how Vodafone-Idea became V!.
Crux of the Matter
About Vodafone Group
Vodafone Group PLC is a UK-based multinational telecom founded by Ernest Harrison and Gerry Whent in 1991. It provides services like fixed-line telephone, wireless network, broadband, digital television, internet television, IPTV, Internet of Things (IoT), etc. As of today, Vodafone owns and operates telecom networks in 24 countries and operates with partner networks in 41 countries.
- Vodafone entered India in 2007 when it bought a majority stake – 67% for $11.5 bn – in Hutchison Essar. Later the company was renamed Vodafone Essar.
- In 2008, it acquired a license to operate in 7 circles.
- In May 2010, it paid ₹11,618 crores for the 3G spectrum in 9 circles.
- Reached 100 million customers in India in 2010.
- In 2011, it booked €15 million profit in India.
- Founded in 1995 by GD Birla and Aditya Birla.
- 1997 – Started services in Gujarat and Maharashtra.
- 2000 – Merged with Tata cellular in Andhra Pradesh.
- 2006 – Became a PAN India 2G service provider.
- 2010 – In the 3G spectrum auction, Idea paid ₹5,768 crores for spectrum in 11 circles.
2016 – A Turning Point
2016 proved to be a turning point for the telecom industry in India. Reliance launched Jio, bringing down calling and data tariffs. In 2016, Vodafone had 200 million subscribers and the Idea had 188 million. To maintain the subscriber base, telecoms reduced their prices in response to Jio’s low prices. Slashing prices was a blow to existing telecoms like Airtel, Idea, and Vodafone.
Consequently, in 2017, Vodafone-Idea merged its operations by signing a deal worth ₹1.55 lakh crores. Despite all efforts, Vodafone-Idea lost 30 million subscribers in 2018. Things got worse when Vodafone-Idea lost 36 million subscribers in only one month in 2019. Moreover, in 2020, SC ordered it to pay AGR dues of more than ₹50,000 crores.
Rebranding To V!
In September 2020, Vodafone-Idea officially renamed their brand V! that, they hope, will give them a fresh start. It is also likely to introduce new plans. The company is also planning to raise ₹25,000 crores to pay off dues and set V! up for the foreseeable future. It will initially raise hybrid debt through convertible bonds. Experts also say that rebranding will cost the company a lot.
- In Corporate finance, mergers and acquisitions (M&A) are transactions in which the ownership of companies, other business organizations, or their operating units are transferred or consolidated with other entities. From a legal point of view, a merger is a legal consolidation of two entities into one, whereas an acquisition occurs when one entity takes ownership of another entity.
- Earlier this year, Zomato acquired Uber’s food delivery business in India, Uber eats. The whole transaction was an all-stock deal worth $350 million.
- The Great Merger Movement was a predominantly U.S. business phenomenon that happened from 1895 to 1905. During this time, small firms with little market share consolidated with similar firms to form large, powerful institutions. One of them was Standard Oil Company, which at its height controlled nearly 90% of the global oil refinery industry.