Vodafone India Ltd: Managing in a Turbulent Emerging Market

V. S. Pai

Vision, 2021, vol. 25, issue 1, 103-117

Abstract: Along with the global telecom sector, the Indian telecom market has evolved over the past three decades. From the first generation technology in the 1990s, the telecom industry in India offered 4G services in 2012. From microwave technology it has moved into underground fibre optic cables, enhancing the quality and variety of telecom services. Ahead of several emerging markets, subscriber demand in India shifted to data from voice telephony. Subscriber base grew substantially, but average revenue per user (ARPU) has fallen significantly. Intense competition has led to consolidation in the industry. The mobile services faced market disruption from Reliance Jio (R-Jio). The latter launched a strategy of predatory pricing resulting in data wars. R-Jio’s network was based on 4G technology, while other competitors were still offering 2G- and 3G-based services. In comparison to competitors, R-Jio laid more fibre optic cables. Therefore, it could effortlessly upgrade the services offerings to 5G and other future technologies, which competitors could not match so they experienced fall in profits or outright losses. R-Jio also moved into providing fibre-to-the-home technology accompanied with ultra-high-speed internet that could provide a host of entertainment features. As a virtual knee-jerk reaction to the severity of the competitive challenge facing it, Vodafone initiated merger talks with Idea Cellular and soon achieved its culmination. This merger resulted in the largest telecom service company in India. However, Vodafone Idea Ltd.’s balance sheet was over leveraged, rendering it incapable of playing the price cutting game. Besides, it was unclear if it would be able to build the formidable infrastructure required to invest in 5G spectrum, offer superior content as well as smart devices. It soon became obvious that the merger could catapult Vodafone to the pole position in the industry but staying and flourishing there would require it to be more resourceful, imaginative and aggressive. Balesh Sharma, the CEO of Vodafone-Idea Ltd., and his top management team had to respond to the challenges the company was facing and emerge successful.

Keywords: Market Disruption; Indian Telecom Market; Competition; Emerging Market; Merger and Acquisition (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:sae:vision:v:25:y:2021:i:1:p:103-117

DOI: 10.1177/0972262920984862

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