Telecommunications giant Idea Cellular and Vodafone India are in the plans to kick off operational integration of their networks. Idea management said the company could “now plan the integration aspects” with approvals in place from the Competition Commission of India (CCI) for its merger with Vodafone India. Brokerage house HSBC said “prompt CCI approval is a positive” but integration of Idea and Vodafone India's operations will have to be “seamlessly executed” to ensure the merged entity is able to contest market disruption by Reliance Jio Infocomm.
HSBC director and telecom analyst Rajiv Sharma said the Idea-Vodafone operations integration “may not be easy as the two organisations differ significantly in terms of billing systems, network vendors and culture”. However, Bharti Airtel CEO Sanjay Kapoor warmed up to the idea, saying the merger could induce the need to make several tough choices around technology vendors, IT partners, CRM partners and should naturally lead to realignment of existing agreements and contracts with their respective partners. “Since the objective would be to build synergy and avoid duplication of network, systems, people resources and partners on a circle-by-circle basis, the consolidation at the ecosystem partners level is inevitable.”
Both the telecommunications giant will have to choose between vendors running parallel service and supply contracts, so as to keep one network. Goldman Sachs said both Vodafone and Idea would have a significant “tower overlap”. Director at ratings agency, Fitch, Nitin Soni said he expected integration to be complex and costly. “Country-wide network integration could prove costly as both telcos might have to terminate some long-term contracts with partner tower companies prematurely, for which they could end up shelling our hefty penalties,” he said.
He stated that another challenge they would face is integrating Vodafone and Idea's marketing teams, which would hinge on whether the combined entity decides to carry two corporate brands or just one. “Carrying two brands can prove very expensive for the Idea-Vodafone combined entity as it would require dedicated marketing teams to support each brand, which might not be a great idea.”
