Vodafone-Idea merger: emergence of a

telecom giant amidst predatory price wars

Wiboon Kittilaksanawong and Sinduja Kandaswamy

In March 2017, Vodafone India and Idea Cellular Limited (Idea) decided to merge together. The Wiboon Kittilaksanawong is
merged entity would become the largest wireless carrier in India with about 400m subscribers Professor at the Graduate
(Datta and Arakali, 2017). Before, the two companies were, respectively, the second and the School of Humanities and
third largest telecom players in Indian telecom market in terms of the number of subscribers for Social Sciences, Faculty of
a decade (Russell, 2017). This important strategic move was particularly because of the Economics, Saitama
aggressive entry in September 2016 of a new player Reliance Jio Infocomm Limited (Jio), an University, Saitama, Japan.
Indian mobile network operator and a wholly owned subsidiary of Reliance Industries Limited Sinduja Kandaswamy is based
(RIL) (Sengupta, 2017a). The predatory pricing used by Jio had resulted in the immediate at Nagoya University of
reactions from top players to defend their competitive position (Tech Desk, 2017). Was Commerce and Business,
Nagoya, Japan.
the merger the right option for Vodafone India and Idea to fight against the wars? Should they
have instead entered into a joint venture? What synergistic benefits could the merger bring
about? Given an important term of the merger that the combined entity would continue to
maintain their two brands (Sengupta, 2017b), would the two brands compete and cannibalize
each other’s market shares, and thus mitigate the potential synergies? To what extent would
the merger encounter the regulatory hurdles that dealt with liberalizing the airwaves and how
should the merged entity overcome them? If this mega merger eventually went through, what
could be the impacts on the Indian telecom industry? If not, how should the companies move
forward with the competition?

Overview of Indian telecom industry

Indian telecom market was the second largest in the world (Raj, 2017a). International Data
Corporation, a global provider of market intelligence, predicted that the Indian telecom market
would overtake the market of the USA to become the second largest smartphone market in the
world by 2017. It was also estimated that the telecom services market was likely to grow at a
rate of 10.3 percent yearly and would reach $103.9bn by 2020. The size of India’s telephone
subscriber base was 1,059m subscribers as of March 2016. The wireless and wireline
telephone subscribers were 97.6 and only 2.4 percent, respectively. The urban regions
accounted for about 57.29 percent of the total subscription, while the rest were in rural regions
(Telecom Regulatory Authority of India, 2017). The top 5 players in the industry as of February
2017 were Jio, Bharti Airtel Limited (Airtel), Vodafone India, Idea and BSNL Mobile (BSNL)
This work was supported by JSPS
(see Exhibits 1 and 2). KAKENHI, Grant No. 18K01747.

The industry became more consolidated from several key drivers, including hyper competition
that led to high pressure on profitability, relaxed spectrum[1] trading and sharing guidelines, as
well as favorable merger and acquisition (M&A) policy (Singhal, 2016). Traditionally, the industry
was driven by voice services, but with the increase of data consumption per user, adoption of
Disclaimer. This case is written
smartphones and availability of online contents, the industry had seen the shift toward a more solely for educational purposes
data-driven business model. With the aggressive and even disruptive entry of a new operator like and is not intended to represent
successful or unsuccessful
Jio, the industry had witnessed innovative tariff structures. Operators had significantly increased managerial decision making. The
data allowance, resulting in the declining price per gigabyte[2] (GB) of data. Nevertheless, the authors may have disguised
names; financial, and other
most significant impact on the industry was the introduction of unlimited number of voice calls recognizable information to protect
together with the tiered data plans for a fixed rental fee. confidentiality.

DOI 10.1108/TCJ-10-2017-0099 VOL. 14 NO. 6 2018, pp. 609-634, © Emerald Publishing Limited, ISSN 1544-9106 j THE CASE JOURNAL j PAGE 609
 Companies might not be able to win the competition in the Indian telecom market by lowering the
tariffs because of high spectrum fees and requirements for ongoing capital expenditure.
Operators were likely to experience continuous pressures on their profitability due to the hyper
competition and therefore financial distress, which tended to drive industry consolidation through
M&A. Among developed and other emerging telecoms markets, India was a market that charged
the lowest tariffs for telecom services. Therefore, a further decline in the tariffs revenue of
domestic voice and data would continue to adversely impact profitability and sustainability of
remaining operators.
Given in 2016, revenues from wireless voice services contributed about 65 percent of the total
circle revenues[3] in India, the revenues of operators were likely to be significantly impacted by
free voice services. Moreover, the revenues from such voice services would also be cannibalized
by the revenues from the increase in the data consumption per user and the adoption of
smartphones. Such increasing competition would increase not only the costs of operators in
acquiring new customers, but also the pressures for them to retain existing customers, as they
needed to offer more freebies and larger voice and data allowances.

The rise of Reliance Jio Infocomm and the wars

Jio was a subsidiary of RIL, the most profitable publicly traded Indian conglomerate holding
company. Jio disrupted the Indian telecom industry when entering the market with free services
and highly attractive tariff plans[4] in September 2016 (see Exhibit 3) (Sengupta, 2017a). The
Founder of Jio, Mukesh Ambani acquired Infotel Broadband Services Limited and the company
became the only successful bidder of the pan-India 4G network[5]. Ambani was very determined
about capturing the wider market share in India as he was working on establishing the base
needed for the high-speed 4G network with optical fiber.

Free services and highly attractive tariff plans

Jio launched the “Reliance Jio Welcome Offer” in September 2016, providing the customers with
4 GB of free data usage per day at 4G speeds and at a lower speed of 128 kbps thereafter[6].
Another big attraction of the offer was providing free 100 text messages per day through short
message service (SMS)[7], Jio Apps, and subscriber trunk dialing (STD) and local calls[8]. The
offer was available until December 31, 2016. A customer who wished to receive this offer had to
become a Reliance Jio’s user by just purchasing the Reliance Jio subscriber identity module (SIM)
card[9] without having to pay for a recharge.
Within just 26 days after the launch, Jio achieved a world record by registering 16m subscribers.
Within the next three months, Jio was able to increase its customer base by 34m, totaling up to
50m ((The) Financial Express, 2016). This phenomenon created fears among the competitors,
which quickly reacted by coming up with marketing schemes to overcome such a fiercely
competitive threat. Airtel came up with an offer of providing 1 GB data at $0.77. Vodafone India
introduced a plan of providing 24 GB data to its post-paid customers, in a monthly installment of
8 GB data per month. The state-owned BSNL reacted to this price war by announcing that it
would provide 1 GB of free data to the smartphone users who had the BSNL connection but had
not subscribed for its data services (ET Telecom, 2017). However, none of these
counterattacking offers gained as much attraction as Jio’s offers.
While the market was curious about Jio’s next move after the expiration of “Reliance Jio Welcome
Offer” on December 31, 2016, Jio came up with another “Jio Happy New Year Offer” (Gadgets
360, 2017). This offer provided the customer with free local and STD calls, SMS and Jio Apps;
however, the free data were reduced from 4 to 1 GB per day. When 1 GB was reached, unlimited
free data were still available but at a lower speed of 128 kbps. However, the customer could
continue browsing at the same 4 GB speed by purchasing the booster pack at a subsidized rate.
This offer was valid until March 31, 2017. Meanwhile, Ambani also promised for lifetime free voice
calling for STD and local calls along with free national roaming[10].
According to Nitin Soni, Director of Fitch Ratings, “We think that Jio is adopting a very sound
strategy of offering free voice and text services and free data till the end of March to bolster its

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subscriber base. They currently have 52–55m subscribers and it could well increase to
100m by end of March, but we will need to remember that these are free services.”
He further added, “So as long as it is free, even a customer who is a customer of Airtel or Idea will
still take a free Jio SIM to enjoy free services for the next three months. But I think there will be
some churn when Jio will start charging from April 1 and that churn may well reduce the
subscriber base by 5–10 percent” (The Indian Express, 2016).
In fact, Jio could gain over 100m subscribers within two months after the launch of “Jio Happy
New Year Offer.” At the end of the fiscal year March 31, 2017, it had 109m subscribers (Pathak,
2017). Later, it introduced the pre-paid services at subsidized rates and came up with the “Prime
Member” subscription, which was a one-time subscription that continued to offer a lot of free
services, including data services at a subsidized rate. Out of the 109m subscribers, 72m of them
had signed up to be prime members (see Exhibit 4) (Pathak, 2017).

The Jio effect

Jio’s predatory pricing strategy had triggered the attention of other competitors in the market.
Airtel, Vodafone India, Idea and BSNL all came up with various tariff plans, but none of them could
afford to offer data services and voice calling at prices lower than those being offered by Jio.
Some examples of tariff plans following such predatory pricing were Vodafone’s double 4G data
plans, free voice calling within Airtel’s network, Idea’s 4G SIM upgrade with free 2 GB data and
BSNL’s unlimited 3G plans. Notably as a consequence of Jio’s free offers, Idea reported a net
loss for the first time in December 2017, since its inception in 2007. However, Jio also reported a
net loss of INR225m in March 2017. The actual net loss was believed to be higher than the
reported one because Jio capitalized its expenses, instead of recognizing them as the costs of
operations in the income statement.
The parent company of Jio was willing and able to bear such heavy losses mainly because of the
returns it was expecting in the future. In particular, the important competitive strategy that Jio
used was the blue ocean strategy[11]. This strategy allowed Jio to partly avoid the competition
with existing players by offering the voice calls for free and concentrating on the internet data plan
segment. This move was particularly effective as the sector was crowded with competitors who
were busy competing in the paid voice call segments.
Through its parent company, Reliance Industries, a huge profitable conglomerate in India with
businesses spreading across various industries, Jio had strong financial back up that allowed it to
withstand such losses, while being able to continue to provide the users with such highly
competitive offers.
This financial back up was not the case with other competitors like Vodafone India and Idea.
According to the report of Credit Suisse published on April 21, 2017, “Given the strength of RIL’s
balance sheet, RIL’s ability to fund losses is also higher than that of peers. Jio’s primary target is
likely raising revenue market share as aggressively as possible” (see Footnote 11). Although the
leader like Airtel still had some chances to catch up, it was questionable whether the company
would be able to fight back by introducing an even more competitive offer. These situations called
for a bigger entity to win the competition.

Vodafone India
The partnership between Racal Electronics plc and Millicom Inc. in 1984 to offer mobile telephone
services marked the beginning of revolutionary idea of the Cellular boom in the world and the
beginning of the Vodafone brand. Vodafone Group plc (Vodafone Group) was established as an
independent company in 1991. It was the third largest telecom company in terms of number of
subscribers and total revenues. Beginning operations in Berkshire, UK, the company had
presence in over 30 countries and partnerships in more than 20 countries (Success Story, 2017).
It became the world’s largest telephony company by merging with AirTouch Communications
Inc. in 1999. Vodafone stepped into the Indian telecom market in 2007. By 2011, it acquired the
controlling stake in Vodafone India. In 2014, it acquired 100 percent of stakes in its Indian
operations (Success Story, 2017).

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 Vodafone India was an Indian subsidiary of UK-based Vodafone Group with the operational head
office in Mumbai, Maharashtra (see Exhibit 5). It was the second largest mobile telecom network
in India with approximately 209m subscribers after Airtel. In 2007, it acquired 67 percent of the
controlling stake of Hutch-Essar, which was owned by Li Ka Shing Holdings for $11.1bn[12].
The remaining 33 percent was owned by Reliance Communications Limited (Reliance
Communications), Hinduja Group and Essar Global Fund Limited. The value of the whole
company was around $18.8bn (Parker et al., 2017). In 2014, Prime Metals, an indirect subsidiary
of Vodafone Group bought 11 percent of stakes in India-based Piramal Enterprises Limited
(IANS, 2014).
After the 3G-network auction in India ended in May 2015, Vodafone India paid a large amount of
around $180m for acquiring spectrum in nine circles (Pahwa, 2017). Vodafone India then rolled
out its 4G network in December 2015. Beginning with Kochi in Kerala state of India, Vodafone
India’s 4G network services had expanded all over the country (Gadgets 360, 2015). Following its
main competitors Airtel and Jio, Vodafone India was also planning to launch Voice over
Long-Term Evolution[13] services in 2017. In November 2011, Vodafone India launched the
M-Pesa service in partnership with HDFC Bank Limited[14]. The service was initially limited to
certain regions of India, but was then expanded through partnership with ICICI Bank Limited,
which also launched its M-Pesa service in April 2013 (Pahwa, 2011b). The company was
planning to provide this service throughout the country.
The total revenue of Vodafone India had increased at a compound annual growth rate (CAGR) of
5.84 percent to $75.4bn from 2008 to 2017. The number of customer subscription had
increased at a CAGR of 14.66 percent to 209m subscribers during 2008–2017. The company
also began to invest a huge amount on the fiber optical network in India (see Exhibit 6)
(India Brand Equity Foundation, 2017b).

Idea Cellular
Idea Cellular was an Indian mobile network operator based in Mumbai, Maharashtra.
The company offered pan-India, 2G, 3G and 4G mobile services. It was the third largest mobile
operator in India with about 195m subscribers (TRAI, 2015). Idea Cellular was established in
1995 with Aditya Birla Group, Tata Group (Tata) and AT&T Wireless Services, holding,
respectively, equally one-third of its equity shares (see Exhibit 5). In 2004, AT&T Wireless Services
merged with Cingular Wireless, and then sold its 32.9 percent of stakes in Idea. Therefore, the
two giants, Aditya Birla Group and Tata Group, held equal shares in Idea (U.S. Securities and
Exchange Commission, 2015). Tata Group suddenly entered the Cellular market with its direct
subsidiary, a CDMA-based[15] mobile operator Tata Indicom. Following this move, Aditya Birla
Group acquired 48.18 percent of stakes held by Tata Group in April 2006 at INR40.51[16] per
share, totaling up to INR44.06bn, and became the majority shareholder of Idea.
Although Idea began at a slower rate of growth, the company was ahead of its major competitors
like BSNL, Tata and Aircel. As of December 31, 2015, Idea occupied a market share of
18.5 percent. By earning an incremental market share of over 33 percent, Idea had become a
tough competitor against the market leaders like Airtel and Vodafone India. Idea launched its first
3G services on May 19, 2010 by paying $900m for acquiring spectrum in 11 circles (Pahwa,
2010). It also started to launch 4G Long-Term Evolution[17] services in certain parts of the
country, including Kerala, Maharashtra and Tamil Nadu. By introducing Mobile Number Portability
Scheme[18], Idea was able to significantly increase the size of its subscriber base (see Exhibit 7).

The merger between Vodafone India and Idea Cellular

In response to Jio’s strategic actions, Reliance Communications, Aircel, Vodafone India and Idea
had initiated more integration strategies. Reliance Communications announced several deals,
including merger with Aircel in February 2017 (The Economic Times, 2017a). Vodafone India and
Idea had been in talks about the merger since the end of 2016. In the beginning of 2017, both
companies announced the merger to create the biggest telecom company in India in terms of
subscriber base, overtaking the subscriber base of Airtel, which had been in the number one

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position for the past 15 years. The new combined Vodafone India–Idea entity would worth
INR1.55tn, becoming the world’s second largest telecom company after China Mobile
Communications Corporation (The Economic Times, 2017b). As of March 2017, Vodafone India
held 45.1 percent of stakes and Idea owned 26 percent of stakes in the combined entity, with an
intention to balance their shareholdings afterwards (Raj, 2017b).
Vodafone also decided to deconsolidate its Indian arm to reduce its net debt by INR552bn
(Financial Times, 2017). The merger would take approximately 24 months to be completed and
the combined entity would be renamed thereafter. The promoters of Idea and Vodafone India
would be given the rights equally to nominate, respectively, three members on the board (total six
members). The board would have 12 directors, out of which six directors would be independent.
The most important issue about the merger was that Idea and Vodafone India would continue to
operate as separate brands even after the merger. According to Vodafone Group’s Chief
Executive Officer, Vittorio Colao, “We are very complementary. Idea is strong where Vodafone is
weaker. Vodafone is strong where Idea is weaker” (The Economic Times, 2017c).

The post-merger scenario

The combined entity would have approximately 400m subscribers as of March 2017, whereas
Airtel and Jio had 320 and 108.9m subscribers, respectively (see Exhibit 8). The stock price of
Idea saw a rise in January 2017 after the merger talks. The value surged by 15 percent but closed
approximately 10 percent lower on the Bombay Stock Exchange. The merged entity would have
35 percent of the total number of subscribers and 41 percent of the total market share. The
combined entity through its size of subscriber base and potential synergies was believed to
become a strong rival against Jio. The implied enterprise value for Vodafone India and Idea would
be INR828 and 722bn, respectively. All the businesses of Vodafone Idea excluding its 42 percent
of stakes in Indus Towers Limited would become a part of the new entity (The Economic Times,
2017d). It was estimated that the combined entity’s EBITDA would be around 40.6 percent,
taking into account the net present value of potential synergies of approximately INR670bn (see
Exhibit 9)[19].
In particular, the biggest synergies would be derived from network operating expenses as both
companies indicated that approximately 20 percent of telecom sites were duplicated and could
be eliminated within two to three years after the closing of the merger (Vodafone, 2017a).
The general and administrative expenses and fixed costs could be reduced from centralization
and removal of duplication in functions such as finance, legal, sales, marketing and customer
acquisition, and their related employees. While savings in sales and marketing would depend on
the management of brand integration, the combined entity could at least reduce costs associated
with the distribution of SIM cards. Both companies also mentioned that spectrum harmonization,
widening of spectrum bands and removing guard bands in certain cases would help the
combined entity expand data network capacity many folds without significant incremental capital
expenditures (see Exhibit 10).
Merging one brand into the other brand that customers were more familiar to strengthen scale
economies in brand promotion and supports was not an option according to the merger term.
The coexistence of both brands might lead to a situation, where one brand cannibalized the
market share of the other’s brand. However, as the customer segments of both companies were
not completely the same, full cannibalization was unlikely to occur. In particular, Vodafone India
was mostly preferred and established in the urban areas, whereas Idea was strongly established
in the second-tier cities and rural areas (see Exhibits 11 and 12). Therefore, the two brands would
concentrate on their respective strong segments. Creating a new brand would require a lot of
resources and time before the brand becomes known and established in the market, which might
not be appropriate in the fiercely competitive Indian telecomm industry. In the long run, however,
the combined entity might roll out a new brand or keep either one of the two brands.
According to Kumar Mangalam Birla, chairman of Aditya Birla Group, “This landmark
combination will enable the Aditya Birla Group to create a high-quality digital infrastructure that
will transition the Indian population towards a digital lifestyle and make the government's
Digital India vision a reality” (Doval, 2017). Vodafone Group’s CEO Colao also commented,

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 “The combined company will have the scale required to ensure sustainable consumer choice in a
competitive market and to expand new technologies – such as mobile money services – that
have the potential to transform daily life for every Indian […]. The combination of Vodafone India
and Idea will create a new champion of Digital India founded with a long-term commitment and
vision to bring world-class 4G networks to villages, towns and cities across India” (Guha, 2017).

Hurdles of the merger and the future

The combined entity would face regulatory hurdles related to the liberalization of the airwaves in
India. The transaction also involved a break-fee of INR33bn ($500m) that would become payable
under certain circumstances (Vodafone, 2017a). The revenue market share of the combined
entity would exceed limits of 50 percent in spectrum caps[20] in the administratively allocated six
circles, including Gujarat, Haryana, Kerala, Maharashtra, Madhya Pradesh and Uttar Pradesh
(West). The circle in Kerala would be alarming because it would have 65 percent share. Based on
the M&A rules, Vodafone India would have to return the excess spectrum caps in these six circles
(The Economic Times, 2017e). The company needed to comply with these limits within a year
after the completion of the merger. However, the revenue market share of Jio at the time of the
completion of the merger would also have some effects on such spectrum caps as well.
To liberalize some spectrums that the two companies would be holding and that were
administratively allocated (not auctioned), the combined entity would have to pay around
INR30bn as market price (The Economic Times, 2017f ).
The telecommunication sector in India had become highly commoditized. It would be quite
difficult for the companies to differentiate their products and offerings. As in the case of Jio, the
company had to employ the clear low-cost strategy, and in particular, strong predatory pricing as
the only way to compete and catch up with the incumbents, while providing better service
offerings. The mergers like Vodafone India and Idea, pooling of infrastructure and vital resources,
were believed to be an effective strategy to react to such disruptive strategy initiated by Jio, while
providing the customers with better service quality.
The other strategy was to provide the customers with new offerings such as the Wynk Movies
mobile app by Airtel (Bajaj, 2015) and “Choose Your Number” scheme by Vodafone India
(TeleAnalysis, 2015), wherein the customers are allowed to choose their own numbers. However,
such differentiation strategy evidently did not attract as much consumers in the Indian market as
the low-cost strategy. As India was concentrating on Digital and Cashless economy (Garret,
2017), there would be a rise in the mobile wallet and banking systems, which would provide the
merged entity a promising breakthrough expansion opportunity.
In fact, Jio was reported to have connectivity issues and bugs in its applications ((The) Financial
Express, 2017a, b). Reports also showed that about 82 percent of customers were still using Jio
as a secondary SIM[21] card while using other operators like Airtel, Vodafone India, Idea and
BSNL as their primary SIM card (The Indian Express, 2017). The merged entity of Vodafone India
and Idea would have much better infrastructure, resources and capabilities, which would give the
company a competitive edge to compete against Jio in terms of product quality at a competitive
price. Customers might be willing to pay a reasonably more expensive tariff plans for better
service quality.
Therefore, the Indian telecom industry might further see several of such mergers and there would
be even fiercer price wars. The financial challenges of the combined entity would be reduced, while,
in turn, they would be more ready to spend a little extra to provide the best for customers. While
facing many hurdles, the ultimate merged entity of Vodafone India and Idea would be in a much
better competitive position with greater efficiency than the two operating as individual companies.

Notes
1. Spectrum is the range of electromagnetic radio frequencies used to transmit sound, data and video
across the country. All wireless communications signals travel over the air via radio frequency, also
known as spectrum.
2. Byte is a unit of digital information. One gigabyte is 1,000,000,000 bytes.

PAGE 614 j THE CASE JOURNAL j VOL. 14 NO. 6 2018

 3. For a variety of purposes, India’s telephony regulators have divided the country up into a number of
regions, called “Telecom Circles” or “Telecom Service Areas.” Circle revenue is, therefore, generated
from such service areas.
4. In telecommunications, tariff plan is an open contract between a telecommunications service provider
and the public, filed with a regulating body. It outlines the terms and conditions of providing
telecommunications service to the public including rates, fees and charges.

5. 4G is the fourth generation of broadband Cellular network technology, succeeding the third generation, 3G.

6. Gadgets 360 (2017); kbps ¼ kilobits per second (amount of data that are processed over a second).

7. SMS is a text messaging service component of most telephone, World Wide Web and mobile
device systems.
8. Local calls were those done within a circle or a state decided by the network operator, while subscriber
trunk dialing calls were those made outside a circle or the state, but within India.

9. A subscriber identity module card is a smart card that stores data for Cellular telephone subscribers.

10. Roaming refers to the ability for a Cellular customer to automatically make and receive voice calls, send
and receive data or access other services, when traveling outside the geographical coverage area of the
home network.
11. Blue ocean strategy refers to the creation by a company of a new, uncontested market space that
makes competitors irrelevant and that creates new consumer value while decreasing costs.

12. All currency amounts are in US$ unless otherwise specified.

13. VoLTE is a standard for high-speed wireless communication for mobile phones and data terminals.

14. Pahwa (2011a), M-Pesa is a mobile phone-based money transfer, financing, and microfinancing service
by Vodafone.
15. Code-division multiple access was a channel access method for radio communication technologies,
where several transmitters could send information concurrently over a single communication channel.

16. INR ¼ Indian rupee; US$1 ¼ INR44.5963 on April 1, 2006.

17. Long-Term Evolution is a standard for high-speed wireless communication for mobile devices and
data terminals.
18. Mobile number portability allowed mobile telephone users to keep their numbers when changing from
one mobile network carrier to another.
19. Idea (2017c) and Philipose (2017); EBITDA ¼ Earnings Before Interest, Taxes, Depreciation and
Amortization.

20. The spectrum cap is the restriction on the amount of broadband spectrum an entity could hold or have
attributed to itself in a particular geographic area.

21. SIM ¼ subscriber identification module.

22. Global System for Mobile Communications (GSM) site is a Cellular telephone/communication site where
antennae and electronic communications equipment are placed.

23. IBS is a telecommunications solution which is used to extend and distribute the Cellular signal of a given
mobile network operator within a building.

24. Small cells are available for a wide range of air interfaces including GSM.

25. EBITDA ¼ earnings before interest, taxes, depreciation and amortization.

26. SIM ¼ subscriber identification module.

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Exhibit 1

Table E1 Total subscribers in Indian telecom industry

Year Total subscribers (million)

2007 206
2008 300
2009 430
2010 621
2011 846
2012 951
2013 898
2014 846
2015 996
2016 1,059
2017 1,189

Source: Created by the case authors based on India Brand Equity Foundation (2016a)

Exhibit 2

Table E2 India’s mobile network operators as on July 31, 2017

Rank Operator’s name Subscribers (in millions) Market share (%)

1 Vodafone India–Idea 210.54 (Vodafone India) 17.74 (Vodafone India)

193.96 (Idea Cellular) 16.34 (Idea Cellular)
2 Airtel India 281.25 23.70
3 Reliance Jio Infocomm 138.60 13.09
4 BSNL Mobile 104.55 8.81
5 Aircel 89.93 7.58
6 Reliance Communications 81.27 6.85
7 Telenor India 47.06 3.97
8 Tata Teleservices 42.09 3.55
9 Mobile TeleSystems India 3.92 0.33
10 Mahanagar Telephone Nigam 3.62 0.30

Source: Created by the case authors based on TRAI (2017)

VOL. 14 NO. 6 2018 j THE CASE JOURNAL j PAGE 619

 Exhibit 3

Table E3 The dynamics of industry characteristics before and after the entry of Jio

Industry characteristics Before the entry of Jio (August 2016) After the entry of Jio (August 2017)

Mobile data consumption (million) 200 per month 1,500 per month
No. of wireless broadband subscription (million) 154 282
Average revenue per user ($) 2.20 2.03
Average monthly bill ($) 5.42 3.73
No. of 4G devices (million) 47 131
Data tariff ($) 3.9 per GB 0.8 per GB
SIM activation time 1–3 days 15 min

Source: Created by the case authors

Exhibit 4

Table E4 India’s broadband subscribers

Number of subscribers (million)
2015 2016 2017
Service provider Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

Jioa – – – – – – – 72 108
Bharti Airtel 22 25 28 31 38 41 46 44 49
Vodafone 19 22 24 26 28 32 36 35 38
Idea 19 18 20 21 23 27 31 27 25
BSNL Mobile 15 17 19 20 20 21 22 20 22
Others 24 27 30 38 40 42 58 38 35
Total 99 109 121 136 149 163 193 236 277

Note: aJio was released to the general public in September 2016

Source: Created by the case authors based on Deep (2017)

Exhibit 5

Table E5 Shareholding pattern of Vodafone India and Idea Cellular

Shareholders of Vodafone India Percentage of Shareholding as of October 2013
Vodafone Plc 64
Ajay Piramal 11
Independent Investors 25
Total 100
Shareholders of Idea Cellular Percentage of shareholding as of December 2016
Aditya Birla Group 42
Axiata Investments 20
Institutions 31
Others 7
Total 100

Source: Created by the case authors based on Business Standard (2013) and Chatterjee (2017)

PAGE 620 j THE CASE JOURNAL j VOL. 14 NO. 6 2018

Exhibit 6

Table E6 Vodafone India’s revenues and total subscribers

Year Revenues (US$ billion)a Total subscribers (million)b

2008 3.9 61
2009 4.4 91
2010 4.9 124
2011 5.9 148
2012 6.7 147
2013 7.4 153
2014 6.2 167
2015 6.7 183
2016 5.9 205
2017 6.5 209

Notes: aCompound Annual Growth Rate (CAGR) for revenues from 2008 to 2017 ¼ 5.84 percent;
b
compound Annual Growth Rate (CAGR) for total subscribers from 2008 to 2017 ¼ 14.66 percent
Source: Created by the case authors based on India Brand Equity Foundation (2016b)

Exhibit 7

Table E7 Idea Cellular’s revenues and total subscribers

Year Revenues (INR billion) Total subscribers (million)

2013 225 122

2014 265 136
2015 316 158
2016 360 175
2017 356 190

Source: Created by the case authors based on Idea (2017a)

Exhibit 8

Table E8 Holding structure of the merged entity

Characteristics Vodafone Idea Merged entity

Customers (million) 205 191 395

Gross revenue 2016 (in INR million) 446 364 811
Gross revenue Q3 2017 (in INR billion) 110 87 197
EBITDA (in INR billion) 131 120 251
Total spectrum holding (in MHz) 958 891 1,850
Number of broadband carriers 73 74 163
Broadband spectrum holding (in MHz) 630 639 1,429
800/900 MHz spectrum (in MHz) 165 118 283

Source: Created by the case authors based on Idea (2017b)

VOL. 14 NO. 6 2018 j THE CASE JOURNAL j PAGE 621

 Exhibit 9

Table E9 Gross revenue and EBITDA of Vodafone India and Idea before and after the
merger in FY2016 (billion US$)
Companies Gross revenue Gross revenue market share (%) EBITDA

Vodafone India–Idea 12.1 40 3.7

Airtel 9.8 32 3.3
Vodafone India 6.7 22 2.0
Idea 5.4 18 1.8
Aircel 3.4 11 na
BSNL 2.7 9 na
Tata 1.9 6 0.5

Source: Created by the case authors based on Vodafone (2017b)

Exhibit 10

Table E10 Vodafone Idea merger – synergy details (in billion INR)

Synergy details FY2020E FY2021E FY2022E Comments

Network and information 9.57 28.72 47.86 Elimination of redundant telecom sites of the combined entity
technology
General and 1.56 4.67 7.78 Elimination of redundancies in functions such as finance, legal, and marketing
administrative expenses
Personnel expenses 1.1 3.3 5.5 Elimination of redundancies in headcounts in functions such as finance, legal, and
marketing
Other expenses 3.06 9.19 15.31 Access and roaming cost saving as on-net traffic proportion increases and intra circle
roaming (ICR) arrangements reduce
Capital expenditures 5.86 17.59 29.32 Optimum utilization of spectrum achieved through a combined rather than a standalone
entity

Source: Created by the case authors based on Telecomlead (2017)

Exhibit 11

Table E11 Market share of Indian telecomm companies in 2018

Company Market share (%)

Reliance Jio Infocomm Limited 43

Bharti Airtel Limited 20
Vodafone Group plc 14
Idea Cellular 9
Bharat Sanchar Nigam Limited 6
Others 8

Source: Created by the case authors based on India Brand Equity Foundation (2017a)

PAGE 622 j THE CASE JOURNAL j VOL. 14 NO. 6 2018

Exhibit 12

Table E12 Geographical distribution of Vodafone India and Idea Cellular

Geographical area Vodafone India (%) Idea Cellular (%) Combined coverage (%) Combined market position

Metro
Mumbai 33 9 42 1
Kolkata 34 8 42 1
Delhi 27 12 39 1
A Circles
Gujarat 37 22 59 1
Maharashtra and Goa 24 32 56 1
Andra Pradesh 10 23 33 2
Tamil Nadu 24 6 30 2
Karnataka 15 11 26 2
B Circles
Kerala 23 39 62 1
Haryana 28 27 55 1
UP West 22 30 52 1
Madhya Pradesh 9 42 51 1
West Bengal 37 9 46 1
UP East 28 14 42 1
Punjab 16 24 40 1
Rajasthan 22 13 35 2
C Circles
Bihar 14 14 28 2
Assam 23 5 28 2
North East 18 4 22 2
Odisha 17 6 23 2
Himachal Pradesh 10 12 22 2
Jammu Kashmir 10 6 16 3

Source: Created by the case authors based on Vodafone (2017c)

Corresponding author
Wiboon Kittilaksanawong can be contacted at: wiboon@mail.saitama-u.ac.jp

VOL. 14 NO. 6 2018 j THE CASE JOURNAL j PAGE 623