English हिन्दी
Connect with us

Latest business news

Voda-Idea merger: An idea whose time has come

Published

9 years ago

on

Vodafone-Idea

[vc_row][vc_column][vc_column_text]Cellular telephony in India a loss-making leviathan that cannot last 

By Sindhu Bhattacharya

As it becomes clear that India’s number two and three telecom operators, Vodafone India and Idea Cellular, explore a merger, the question really is why not? For the first time in its history, India—the world’s second largest telecom market—is inching towards a revenue loss.

Analysts say India’s telecom industry could see between 3-5% revenue loss this fiscal as heightened competition and falling ARPUs (Average Revenue Per User) plague the players.

To a large extent, this is a consequence of the arrival of a new entrant in an already crowded market – Reliance Jio Infocomm launched services in September last year with a bouquet of freebies, distorting market pricing and forcing incumbent players to also launch various discounted plans.

With the entry of deep-pocketed RJio making conditions difficult, consolidation can only be a question of time. RJio came with free voice calls for life, free data for a limited period but its freebies continue till date. Remember, India’s telecom market has been fragmented all along. It had almost a dozen operators at peak – while this number has come down, it needs to further whittle down to only a handful of players, who can offer complete data service with high speed data and digital services. Lesser number of players but stronger players could push this market towards profitability at some point, the current fragmented structure surely wont.

Two analysts of brokerage Motilal Oswal, Aliasgar Shakir and Jay Gandhi, said in a note to clients that revenue and financial KPIs (key performance indicators) of India’s telecom market have sharply declined, thanks to the arrival of a new operator and the wireless industry is expected to see a decline of 3-5% in the current fiscal. “This will be for the first time and the market condition will only improve once the new operator starts charging subscribers…..new operator has severely impacted the market,” they said. The current fragmented, multi-operator telecom market should consolidate to only a handful of players.

The arrival of RJio is an indication that the going is getting tough, especially for the big three – Bharti Airtel, Vodafone and Idea. So the talks between Vodafone and Idea signal a good beginning. The merged entity will likely become India’s largest telecom firm, overtaking Bharti, with close to 42% revenue market share and a 36 percent subscriber market share. This means close to half the industry revenues and a third of its subscribers. Besides, the merged entity could report revenues of around Rs 74,500 crore.

Look at the market dynamics pre-RJio. In September last year, Bharti had only a third of the share of revenues while in terms of subscribers, its market share was lower at less than a fourth. And this was the number one operator in the market. Put simply, this means the largest player in the Indian wireless telecom market did not have three in four subscribers and earned only a third of the industry revenues.

Now let us look at the number two and three players. Vodafone had less than a fourth of the revenue pie and just about 19% of a fifth of the total subscribers. Idea fared worse, obviously, with 18.7% revenue share and 16.7% share of subscribers. This clearly goes on to show how fragmented the market already was when RJio made its grand entry.

Lets us now see how the telcos have been performing financially. Vodafone Plc, the British parent, has had to write down close to five-and-a-half billion dollars in India recently. It has been talking of a listing on Indian bourses with little success and has never been profitable here, the world’s second largest telecom market. If a merger were to happen with Idea, it gets to not only perhaps reduce its losses but also a listing on the bourses since Idea is already listed, without having to undergo the IPO process. For Idea too, a merger makes sense. Analysts say it has been weighed down by debt of over Rs 40,000 crore and a merger would enable a re-rating, possible increase in market cap.

In the December quarter of FY17, market leader Bharti suffered due to increased competitive intensity. Third quarter net profit slumped 55 per cent from a year earlier as its voice and data businesses felt the full impact of RJio’s free services. Revenue fell 3 per cent as data and voice rates fell and more subscribers left the operator. Idea also reported a significant dent in its earnings thanks to RJIo’s arrival, reporting its first quarterly loss since getting listed. Its net loss was Rs 384 crore versus net profit of Rs 660 crore in the year-ago period. Revenue declined 3.7% to Rs 8,661 crore.

So will a merger of Vodafone and Idea improve things all round? Ratings agency Fitch had this to say: “A planned merger between Vodafone Group Plc’s Indian subsidiary and Idea Cellular should help them withstand intense price competition in the Indian telco market but is unlikely to lead to increased pricing power for operators in the short term, says Fitch Ratings. We retain our negative outlook on the sector, as fierce competition and rising capex will put pressure on most operators in 2017.”

It went on to prophesise that consolidation is natural in an industry with too many operators and a focus on price competition, and that industry should benefit from such a consolidation in the long term. However, the recent entry of Reliance Jio is likely to ensure that price competition will remain very high for at least one to two years.[/vc_column_text][/vc_column][/vc_row]

Related Topics:
Continue Reading

Latest business news

Xbox announces 3,200 layoffs as Asha Sharma outlines major restructuring plan

Xbox has announced plans to lay off 3,200 employees over the next year while introducing a major restructuring programme that includes management changes, studio restructuring and cost-cutting measures.

Published

3 weeks ago

on

July 7, 2026

By

XBOX layoff

Xbox has announced plans to reduce its workforce by 3,200 employees, representing around 20 per cent of its total staff, over the coming year as part of a broader restructuring programme linked to Microsoft’s increased investment in artificial intelligence.

According to an email shared with employees by Asha Sharma, the company will begin the process immediately, with 1,600 employees leaving on Monday, while the remaining job reductions will take place during FY27. The company also plans to divest four gaming studios and is preparing to separate from another.

Business reset planned amid financial challenges

In her message to employees, Sharma said the company’s current financial position required significant changes, stating that Xbox’s business was operating at substantially lower margins than comparable platform and publishing companies.

She said the layoffs were not a reflection of employees’ commitment or abilities but were part of a wider effort to strengthen the company’s long-term business.

The workforce reduction comes as Microsoft continues implementing AI-focused cost-cutting measures across its operations. Overall, the technology company is reportedly cutting 4,800 jobs, with Xbox accounting for the largest share.

Sharma also described the gaming sector as experiencing one of its most challenging hardware periods and said the company needed to “reset Xbox” to improve its future performance.

Company to streamline operations and reduce management layers

As part of the restructuring strategy, Xbox plans to simplify its organisational structure, revise its content portfolio and improve platform operations.

According to Sharma, the company currently loses 64 cents for every dollar invested annually, making operational efficiency a key priority.

She said Xbox would increasingly support independent game creators by offering open development tools and broader audience access.

The restructuring will also see Mojang and King report directly to Sharma. She said both studios have evolved into major gaming platforms with large monthly active player bases and will play a central role in Xbox’s future strategy.

To improve decision-making, the company plans to significantly reduce its management hierarchy. Sharma said some departments currently have as many as 14 management layers, which slow down operations. Xbox aims to reduce this to no more than five layers, and in some cases, only three.

The company will also reduce vendor spending by 50 per cent as part of its cost-saving measures.

Helen Chiang promoted to Chief Operating Officer

Alongside the restructuring announcement, Sharma confirmed the promotion of Helen Chiang to the newly created position of Chief Operating Officer.

Chiang will oversee profit and loss responsibilities across Xbox’s content, hardware, platform and services divisions while reporting directly to Sharma.

According to Sharma, the new operating structure is intended to improve investment decisions, strengthen accountability and better integrate the company’s various business units.

Despite the ongoing restructuring and job cuts, Sharma said Xbox remains committed to long-term growth and plans to continue investing heavily in the business, while placing greater emphasis on disciplined spending and strategic priorities.

Continue Reading

India News

Bank holiday today: Are banks open or closed on June 29? Here’s what RBI calendar says

Banks in Himachal Pradesh and Mizoram will remain closed on June 29, 2026, due to regional holidays, while banking operations will continue normally in most other states.

Published

4 weeks ago

on

June 29, 2026

By

Bank Holidays

As June comes to an end, many customers are wondering whether banks across the country are open on June 29, 2026. According to the Reserve Bank of India’s (RBI) holiday calendar, bank operations will not be affected nationwide, but branches in some states will remain closed due to local holidays.

Banks closed in these states on June 29

Banks will remain shut in Himachal Pradesh on Monday, June 29, on account of Sant Guru Kabir Jayanti. In addition, bank branches in Mizoram will remain closed to observe Remna Ni, a regional public holiday.

However, bank branches in most other states and Union Territories are expected to function normally as June 29 is not a nationwide banking holiday.

Will online banking services remain available?

Even when physical branches remain closed, customers can continue using digital banking facilities. Services such as internet banking, mobile banking, UPI transactions, ATM withdrawals and cash deposits at ATMs will remain operational.

Customers planning to visit a bank branch are advised to check with their local branch beforehand, as holiday schedules may vary depending on the state and local observances.

Continue Reading

India News

Union Budget 2026 highlights: Nirmala Sitharaman Raises Capex to Rs 12.2 Lakh Cr, West Bengal Gets Major Allocation

Finance Minister Nirmala Sitharaman is presenting the Union Budget 2026 in Parliament today. Follow this space for live updates, key announcements, and policy insights.

Published

6 months ago

on

February 1, 2026

By

Finance Minister Nirmala Sitharaman arrives to present Union Budget 2026

Finance Minister Nirmala Sitharaman will shortly present the Union Budget 2026 in the Lok Sabha, marking her ninth consecutive Budget. The annual financial statement is expected to outline the government’s policy priorities, reform agenda and spending plans for the coming year. Stay tuned for live updates, key announcements and immediate reactions as the Budget speech unfolds.

Finance Minister Nirmala Sitharaman tabled her ninth Union Budget today, beginning her speech at 11 am.

Nirmala Sitharaman is set to present her ninth Union Budget today, with the finance minister scheduled to begin her speech at 11 am.

Budget 2026 live updates: Presenting the Union Budget for 2026–27, Finance Minister Nirmala Sitharaman said the occasion coincided with Magh Purnima and the birth anniversary of Guru Ravidas. She noted that over the past 12 years, India’s economic journey has been defined by stability, fiscal discipline, sustained growth and moderate inflation.

The budgeted fiscal deficit for fiscal 2026 is estimated at 4.4 per cent of gross domestic product (GDP)

Planned capital expenditure this fiscal year Rs 11.2 lakh crore

Rare earth corrdiors in Odisha and Kerala

Hi-tech tool rooms to be set up by PSUs

Construction equipment scheme to be launched

Container manufacturing scheme for Rs 10,000 crore over 5 years

Rs 10,000 crore SME Growth Fund

Semi-conductor mission to get Rs 40,000 crore

Rs 12.2 lakh crores for infrastructure development

Dedicated RITES to repurpose land of Central PSUs

20 new waterways over next 5 years to be connected

7 high-speed corridors on rail

High-level committee on banking for next phase of Viksit Bharat

Capital expenditure hike of to ₹12.2 lakh crore in Budget 2026, with West Bengal receiving a significant share of allocations.

Mahatma Gandhi Gram Swaraj Initiative aimed at boosting the khadi, handloom, and handicrafts sectors.

High-speed rail corridors: Mumbai-Pune, Pune-Bengaluru, Hyderabad-Bengaluru, Chennai-Bengaluru, Delhi-Varanasi, Varanasi-Siliguri, Pune-Hyderabad

Five university campuses to be established near industrial corridors

Lakpati Didi program expanded in Budget 2026 to reach more beneficiaries across India.

Fiscal deficit for FY26 revised to 4.4%; Budget Estimate for FY27 set at 4.3%.

TCS on overseas tour packages cut to 2% to ease travel costs

Tax holiday to foreign companies that provide cloud services by setting up data centres in India till 2047

17 cancer drugs exempted from import duties

Continue Reading

Trending

© Copyright 2022 APNLIVE.com