After merger Idea-Vodafone entity to have new brand name

Vodafone India and Idea Cellular might come up with a new brand name after the process of the merger would be completed. 

Citing sources a report in the Economic Times stated that the ground work for the same has already been process, a senior officer working closely with the merged entity’s new identity said that both Vodafone and Idea are already working on a new positioning to attract customers while maintaining the recall value that both entities originally had.

Sources said nothing is finalised yet and many options are being discussed. “We are veering towards the maintaining status quo for at least one year. The operational chaos that would ensue as a result of a new brand, however, would be a major issue,” sources told ET.

Meanwhile, last year in December, it was reported that the businesses of both Vodafone-Idea has deteriorated since the merger announcement three quarters back. More than 90% of the expected operational expenditure synergies have been lost and combined Ebitda run-rate has fallen 31%, driven by about 12% drop in revenues, according to an analyst report by Credit Suisse dated December 6.

"Timelines on merger approvals are critical to prevent further marketshare/Ebitda erosion for Idea," Credit Suisse said.

Vodafone MD and CEO Sunil Sood had recently said the merger between Vodafone and Idea Cellular is on track and is expected to be completed in 2018.

The recent numbers show that Idea has not been a participant of the massive growth in the Indian mobile data market. Over the last year, there has been a significant fall in data prices and selling price of smartphones and data subscriber base in the industry has doubled.

Though Idea's customers have bought 30 million smartphones over last year at a growth rate of 43% year on year, the company's data subscriber base has actually fallen, the report said. "This loss of market share and the resultant 30% Ebitda decline yoy (of merged company) nearly offsets all the merger synergies that were targeted when the Vodafone-Idea merger was announced."

The merger was struck after a disruption in the telecom industry created by the entry of Mukesh Ambani-run telecom firm Reliance Jio in September last year. The entry of RJio was marked by free voice calls and dirt cheap data tariffs impacting the margins of existing telecom players and subsequently, forcing them to match the pricing offers to retain their subscribers.