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Can't compare Jio and Vodafone Idea; we are not getting into content: Kumar Mangalam Birla

9 1 3
12.02.2019
I don’t think Binani would have been resolved if it wasn't for IBC. It’s a very brave reform by the Modi govt. You must give them credit Kumar Mangalam Birla, chairman of the Aditya Birla Group, spoke to ET on issues ranging from how Vodafone Idea is tackling competition to the Insolvency and Bankruptcy Code (IBC) and his views on the next government. Edited excerpts:

How do you see Vodafone Idea in a tough market after Jio unleashed a tariff war?
The industry is in a tough situation, but what is Vodafone Idea doing to combat the situation is more important. We know that the number of telecom operators have shrunk from 8-10 to three … therefore it has changed the dynamics in a way. But, having said that, we have created scale and size. There are 387 million subscribers (and) 40% of India's mobile voice traffic. Having said that, the promoters have invested Rs 2,57,000 crore and so it’s not an entity to be scoffed at. Will it withstand Reliance Jio is a different question, but the fact that it is underinvested is not true, because together the investment has been substantial.

How is the merged entity shaping up?
In one quarter of its market, the two networks have been hooked up — which means the consumer gets more penetration more coverage and you're bringing both networks together so that the consumer experience goes up. And that's done in Bangalore, Karnataka (and) all of Madhya Pradesh, which is fairly quick considering the consolidation has just happened. At this scale, nothing like this has been executed anywhere in the world. In the next 12-18 months, both networks will be hooked up completely and that's addressing the basic question of consumer experience, which has taken a huge beating for all operators in the last few months and is likely to get only worse.

Are synergies of the merger showing?
We had talked about synergy targets of $10 billion in NPV (net present value) terms and this quarter results already indicate Rs 3,500-crore annualised savings, which to my mind, given that it has just been three months, is huge. They are also saying there will be Rs 8,500 crore of savings rate in the third year of the merger, which is substantial. Bringing down the cost is obviously a very important part of the equation and that’s what is going to essentially........

© The Economic Times