Vodafone Idea's Vi Decoded - Business News At A Glance, Ep.1

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Remember all those talks about the Indian telecom sector heading to a duopoly with Reliance Jio at starboard and Airtel right behind? And other major telecom players struggling to find their feet? Vodafone & Idea Cellular had merged into one entity to fight this tough competition. Add to all this, the AGR or adjusted gross revenue dues that telecom companies were expected to cough up and the Supreme Court case to buy time. 2 years down the line, we finally see a consolidated offering from these brands. A unified brand called VI.

The decision of rebranding comes at a time when the company is planning on raising funds of around Rs. 25,000 crores. With the Supreme Court granting 10 years to telecom operators for payment of AGR dues, these funds would be used by Vodafone Idea to create fresh equity and also the payment of annual installments of AGR due. The new brand will be focussing on initiatives around digital and IoT.

How is this relevant for you, the MBA student?

Whether you’re studying for consulting, finance, or marketing, this topic is something you should ideally be able to extrapolate on, as it has strategic ties to all those domains. So, let’s talk about strategy. Vodafone as a brand had premium urban appeal, while Idea had strong roots as a mass rural brand. When they faced tough competition through Jio, they decided to merge to cut the losses and repay debts.

A restructuring took place, in a way, and the companies merged. But their offerings remained separate. Both Vodafone and Idea saw the dilution of their brands in their focus area of premium urban and rural segments respectively since the merger. This led to a sharp decline in the average revenue per user (ARPU) for the company. The company needs to double its ARPU in order to fulfill its AGR dues. For this, they need to consolidate their consumer base and get their top lines and bottom lines sorted. The unified offering will help them reach this goal. It will also probably help them to fund The new brand entity of VI which will compete with telecom giants like Airtel and Reliance Jio to fulfill the digital needs of the customers, while also providing succour to Vodafone Idea Ltd.

Explore this topic further by reading about it here:

Vodafone Idea launches unified brand ‘Vi’; shares zoom over 4%

As Vodafone Idea becomes Vi, a look at the challenges with rebranding

In Other News:

Big Booster: Govt panel clears $100 billion mobile export proposals from global manufacturers

India is set to export around $100 billion worth of mobile phones. All the applications from iPhone’s contract manufacturers Foxconn, Pegatron, and Wistron along with Samsung, Karbonn, Lava, and other manufacturers are cleared by the empowered committee. The applications have been approved under the production linked incentive scheme (PLI). This scheme was launched with the aim of making India a smartphone manufacturing hub. It has already shown an extraordinary response from the global community with many companies moving out of China amid the Sino-US trade tensions and setting up and expanding their manufacturing base in India.

This is an important step for Indian players who can now learn from their global counterparts and start making world-class smartphones.

India’s turning point: A n economic agenda to spur growth and jobs - McKinsey Report

With the current ongoing economic crisis in the country, India is at a crucial juncture from where a spur of new reforms can take India once again to a high growth trajectory whereas failing to do so could risk a decade of economic stagnation. A report from the Mckinsey Global Institute states the way on how India can still rank in the world’s outperforming emerging economies by implementing some new reforms in the next 12-18 months.

The report is an excellent read for students wanting to understand the economic implications of a pandemic and how a country like India can emerge out of it.

Some of the key points/highlights discussed in the report are?