The entry of Reliance Jio has triggered a wave of consolidation in the industry with Vodafone India and Idea Cellular announcing a merger.
Idea MD’s letter advising staff to refrain from sharing telco’s key info with Vodafone indicates the two companies will remain rivals till merger is sealed.
India’s No 2 carrier Vodafone India gained 0.79 million net subscribers in January, while No 3 telco Idea Cellular added 1.2 million new users.
As per the shareholders' pact, Airtel, Vodafone and Idea need to agree to any of their partners moves to sell down or exit the venture.
Experts said that it will cost much less to maintain two different identities than creating a new one, which includes establishing a new connect with consumers.
During the video conference, attended by some 17,000-odd employees of Idea, Birla gave a presentation on the merger and took questions from them as well.
"The logic of the deal has been shaping over the years and has been based on the financial success of both the companies," Colao said.
Layoffs on account of consolidation and poor business performance are already underway. Those who remain are looking hard for a lifeline.
R Gopalkrishnan, a former Tata Sons director, says the Japanese spend a lot of time on relationship-building. "Time is not of essence, a relationship is."
While Airtel, Voda & Idea have already increased ad spending by 10-15% each since Jio launched services early Sept, they are expected to further rev up expenses.
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