A Vodafone-Idea Merged Entity will be ‘Truly Co-managed’: Colao
Voda chief said to have urged top execs to ‘leave no stone unturned in combating Jio’ in the run up to the merger
Kolkata: Vodafone Group chief executive Vittorio Colao told senior executives at its India unit that the proposed combined entity with Idea Cellular would “truly be a co-managed company”, likely to be modelled along the lines of the British carrier’s joint ventures (JVs) in the Netherlands and Australia, two people aware of the matter told ET. Vodafone has equally owned JVs with Liberty Global and Hutchison in the Netherlands and Australia, respectively.
The CEO, however, refrained from discussing the possible ownership structure of the proposed Vodafone-Idea JV, they said.
A chief executive for the proposed Vodafone-Idea merged entity would be named a few months before the conclusion of the merger, Colao told the Indian executives. The merger could take 12-15 months to complete as it requires clearances from the telecom department, Competition Commission of India and three courts.
On Thursday, Colao held a video conference with the business heads of the company’s India arm to update them on the progress of the merger.
Vodafone said it would not com- ment on ET’s queries on the interaction between the CEO and the Indian executives.
During the interaction, Colao underlined that a decision on the CEO would be taken by the board of the merged entity, in which Vodafone and the Aditya Birla Group that controls Idea would have equal rights, one of the people said.
SERVICE REVENUE HIT
Although Colao was optimistic of “a successful conclusion” to the merger with Idea, he cautioned the local executives also about the risks such mega transactions face.
For instance, in New Zealand, that country’s competition regulator on Thursday reportedly blocked Vodafone’s proposed merger with Sky Network Television, saying the combined company would enjoy a monopoly in pay-TV sports. Last month, Vodafone and the Aditya Birla Group said they were in talks to merge Vodafone In- dia and Idea in an all-share deal that would create the country’s biggest mobile phone company by users and revenue market share. The UK telco had also said the objective was to create a self-funded Indian JV with equal rights to take on Reliance Jio Infocomm.
Colao urged Vodafone India business heads to “leave no stone unturned in combating Jio” in coming months in the run-up to the proposed merger with Idea, the people said.
The top executive emphasised the group’s view of Jio as a formidable adversary in India’s fiercely competitive telecom market. Last November, Vodafone slashed the value of its India unit by
5 billion (.`36,448 crore) due to increased competition sparked by the entry of Jio. Prior to that the company had taken a $3 billion write off in 2010.
In India, Vodafone posted a 1.9% drop in service revenue in the quarter through December to 1,450 million, as competitive pressures unleashed by Jio’s entry and free services had hit prices as well as prepaid top-up volumes. The company’s data browsing revenue growth slowed to 0.6% in the fiscal third quarter from 16% three months earlier. Colao recently predicted intense competitive pressure in India in the fourth quarter as well.
Merger could take 12-15 months to complete as it requires clearances from telecom department, Competition Commission of India and three courts
Although Colao was optimistic of “a successful conclusion” to the merger, he cautioned the local execs also about the risks such mega transactions face VITTORIO COLAO