Topic Of The Day”Now To Compete: On Vodafone, Idea Merger”
A week is a long time in politics. In business, especially one as rapidly evolving as mobile telecommunications, a year can be an eternity. So for the Vodafone Group’s Indian unit and Idea Cellular Ltd., which had in March 2017 announced an agreement to merge, last week’s approval of the proposed union by the Department of Telecommunications came not a day too soon. The changes in the industry landscape over the intervening 16 months have been dramatic. The market has contracted marginally in terms of overall subscriber numbers — from 1.17 billion on March 31, 2017, to 1.13 billion at the end of May this year. But the number of competing service providers is set to shrink from double digits to just three privately run large rivals plus state-owned BSNL and MTNL. This consolidation, from the wave of mergers and acquisitions over the last couple of years, was the gain the companies left standing were hoping for. From more wholesome slices of the customer pie to more bang for the buck in a highly capital-intensive business, the merged entities including Vodafone Idea Ltd. — as the new business will be called — ought to be happy with the way things have panned out. But the situation on the ground is far from ideal. The intensity of competition has steadily increased since the entry of Reliance Jio, founded by the deep-pocketed billionaire Mukesh Ambani. This has left the incumbents battling furiously to protect their turf with tariff reductions to match the newcomer’s ‘no prisoners’ approach to pricing of its voice and data services. The telecom regulator’s September decision to more than halve the fee that operators pay on cross-network calls has only added to their woes, resulting in a steep and continuing erosion in average revenues per user and margins. The managements of Vodafone and Idea have repeatedly underscored the competitive challenges facing them, with both operators losing customers and the latter awash in red ink. With about 430 million subscribers, Vodafone Idea would vault past Bharti Airtel’s current India customer base of about 345 million to the top of the heap. But this scale that they gain would ultimately count for little if the combine fails to staunch customer losses, and do that without compromising on the business’s viability. The cost of bidding for fresh wireless spectrum is escalatingsteadily and mobile number portability has made it easier for customers to switch networks in case of dissatisfaction with service quality levels or pricing. The combine will therefore need more than just a few smart ‘ideas’, as Idea Cellular’s erstwhile marketing campaign used to stress, to make a fist of their merger
WORD AND MEANING
1) Evolving
Meaning: Develop gradually.
Example: “the company has evolved into a major chemical manufacturer”
Synonyms: Develop, Progress
2) Eternity
Meaning: Infinite or unending time.
Example: “their love was sealed for eternity”
Synonyms: Ever, Perpetuity
3) Intervening
Meaning: Happening between two times or between other events or activities.
Example: It was a long time since my last visit to Berlin, and it had changed dramatically in the intervening period/years.
4) Shrink
Meaning: Become or make smaller in size or amount.
Example: “the workforce shrank to a thousand”
Synonyms: Diminish, Dwindle
Antonyms: Expand, Increase
5) Consolidation
Meaning: The action or process of combining a number of financial accounts or funds into a single overall account or set of accounts.
Example: “a business selling debt consolidation services”
6) Wholesome
Meaning: Conducive to or characterized by moral well-being.
Example: “good wholesome fun”
Synonyms: Moral, Ethical
7) Panned out
Meaning: To develop in a particular way or in a successful way.
Example: We’ll have to see how things pan out.
8) Deep-pocketed
Meaning: A deep-pocketed person or organization has a lot of money to spend.
Example: Facebook has begun to attract deep-pocketed advertisers.
9) Halve
Meaning: Reduce or be reduced by half.
Example: “pre-tax profits nearly halved to £5 m”
Synonyms: Reduced, Decreased
10) Woes
Meaning: Things that cause sorrow or distress; troubles.
Example: “to add to his woes, customers have been spending less”
Synonyms: Trouble, Problem
11) Underscored
Meaning: Emphasize.
Example: “the company underscored the progress made with fuel cells”
12) Awash
Meaning: Containing large numbers or amounts of someone or something.
Example: “the city was awash with journalists”
13) Red ink
Meaning: A situation in which a company is losing a lot of money.
Example: The line between profitability and red ink in a bookstore is so thin that even the little decisions are important.
14) Heap
Meaning: A large amount or number of.
Example: “we have heaps of room”
Synonyms: Much, Plenty
15) Staunch
Meaning: To staunch is also to keep something from continuing.
Example: The company abandoned the plan to staunch the departure of more managers.
Synonyms: Stop, Halt
16) Viability
Meaning: Ability to work successfully.
Example: “an interest in the long-term viability of British companies”
17) Escalating
Meaning: Increase rapidly.
Example: “the price of tickets escalated”
Synonyms: Develop, Grow
Antonyms: Shrink
18) Erstwhile
Meaning: Former.
Example: “the erstwhile president of the company”
Synonyms: Former, Old
Antonyms: Present, Future
20) Fist
Meaning: A hand with the fingers and thumb held tightly in.
Example: Protestors were shaking their fists at the soldiers.
