Merging company

mittal: Cultural differences hurt merged Voda Idea: Sunil Mittal

Bharti Enterprises chairman Sunil Mittal said cultural differences between disparate merging organizations led to struggles that Vodafone Idea – the telecommunications joint venture between Britain’s Vodafone Plc and India’s Aditya Birla Group – faces today .

“When Vodafone (India) and Idea Cellular merged, I said it wouldn’t work because you have two very different cultures being created, and that’s precisely what happened to the company,” said Mittal at a CII event on Thursday.

He said the Vi merger didn’t work because “Vodafone in the UK is a multinational with a very open culture, while the Birlas “are a large Indian-based business enterprise with a focus on financial results.”

Mittal said that “Vi should have been a fabulous company”, considering that at the time of the merger (in August 2018) it had the largest network in the country, the largest fiber optic network and also the most big market share at 42%,” but instead became “a classic case of mix-and-match culture not working.”

Vi did not respond to Mittal’s comments at the CII event.

But a person familiar with Vi’s thinking dismissed the comments.

“A lot of people who are part of the Airtel culture have left my company… these negative comments were made long before the Vi merger came into effect, and at some point the company decided to make a cocoon and ignore all of it,” he told ET.

This person added that while there were genuine misgivings around the Vi merger, “it had nothing to do with the culture…the concerns were about the people being let go.”

Mittal, for his part, added that governance credibility also plays an important role in fundraising, noting that while Vi has struggled to raise funds in the past two years, it has only taken him six years. phone calls for Bhart Airtel to raise billions during a time of crisis.

The exec familiar with Vi’s strategy, however, countered Mittal once again, saying Vi’s fundraising has faced challenges not because of governance credibility, but since the Vi operator telecommunications has failed to create value in its 4G services. This, he said, was the result of a long merger process that the two former companies – Vodafone India and Ide Cellular – went through.

It took a total of nearly three years from the announcement to the full integration of the two companies.

“In the meantime, they (Vi) have failed to build and grow their 4G base, which means investors haven’t seen the value in the business,” he told ET.

Dwelling on the emerging geopolitical landscape amid the pandemic and the continuing Russian-Ukrainian war, Mittal said the world is rapidly moving towards an era of reliable supply chains, breaking with the chains of global supplies. Many companies, he said, were actually moving their supply chains away from China, even at the risk of higher costs, opting for reliable supply chains.

“I think we’re going to have reliable supply chains as opposed to the global supply chain and that’s a big, massive change that you’re going to see. And if that means more pain, more suffering, so be it,” he said.

Mittal, however, expects India to benefit from these changes and gather huge tailwinds if they play their cards right. India’s main advantage, he said, is that it is “a continent of consumers with its own markets, its own resources. More importantly, India is also a source of trust, and supply chains are likely to arrive in democracies and open societies.

He said that the era of “globalization is over”, but that India could take advantage of these changes by expanding its semiconductor manufacturing business, given the constraints resulting from geopolitical tensions with China, in more to strengthen its defense equipment manufacturing capabilities, in the middle of Russia. – Ukrainian War.