Challenges That Lay Ahead of Vodafone Idea, BSNL Merger

If we take a look back at the happenings of 2018 and 2019, some of the biggest decisions in the telecom industry of that time were mergers and acquisitions. While most telecom operators were shutting shops, the Vodafone Idea merger was the biggest deal on the table.

Highlights

  • If they merger then the dues would be book entry for Vodafone Idea
  • Aditya Birla Group is offering up its share to the takers
  • Vodafone Idea might get help from Vodafone Plc

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Vodafone Idea
Vodafone Idea Ltd has grabbed the headlines all across the country, and unfortunately, the reason for this situation is not at all good. The telecom company is in deep trouble and in the trenches because of its financial ailments, and things do not seem to be recouping anytime soon. Even the big names like Kumar Mangalam Birla have given up their seat on the table just a few days back. Amidst all of this, there are two things that might have fallen in favour of Vodafone Idea Ltd. First is, of course, the retrospective taxation law, which was passed on Friday, and the other one is the talk about BSNL and Vodafone Idea merger. However, if the BSNL and Vodafone Idea merger is to happen, there are certain hurdles that will need to be crossed for both companies.

The Network Integration Exercise

If we take a look back at the happenings of 2018 and 2019, some of the biggest decisions in the telecom industry of that time were mergers and acquisitions. While most telecom operators were shutting shops, the Vodafone Idea merger was the biggest deal on the table. However, following months after the merger, Vodafone Idea actually found itself in deeper trouble because it started losing subscribers rapidly owing to the network integration exercise of the company. If the BSNL and Vodafone Idea merger goes through, then the company should keep in mind not to repeat its past mistakes to ensure no further churn.

The Marketing Overhaul

Given that BSNL and Vodafone Idea are two companies that are both losing subscribers on the prepaid front, they will have to do a massive reboot of their respective marketing strategies even if they decide to keep different shop fronts on the outside. If the brands do decide to merge together, then it’s quite possible that the companies might help each other by giving a boost to their marketing strategies, which is BSNL is in dire need of.

The High Churn Rate

Lastly, as we pointed above, both BSNL and Vodafone Idea are companies that have reported a loss in subscribers. While Reliance Jio and Bharti Airtel are in a much better position, both the companies have lost millions of subscribers. After the merger, the churn rate of subscribers should be the topmost priority of the management to target. After all, the subscribers that will stay on the network will be the ones who will come to pay back for the services.

The 4G Network Dilemma

The consumers of Vodafone Idea have been complaining about network issues, and the management of Vodafone Idea is probably stretched thin on the operational expenses of the telecom company. In such a situation, when the merger goes through, then the subscribers of BSNL added with Vodafone Idea will have a single 4G network, and it is quite possible that the company will require a solid impetus right from the beginning to tackle the problem of insufficient network infrastructure. If both the companies together can manage these issues, then surely we can expect that the much-dreaded duopoly in the telecom market can be avoided.

Reported By

Junior Editor

Arpit spends his day closely following the telecom and tech industry. A music connoisseur and a night owl, he also takes a deep interest in the Indian technology start-up scene and spends rest of his time spilling poetry and stories on paper.

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