New Delhi: Vodafone Idea Limited has adopted a cluster-based model and bunched its circles into 10 clusters in the country to ensure "single-minded" focus on operational intensity and outcomes, as per an internal communication reveiwed by ET Telecom.
Analysts said that the new model adopted by Vodafone Idea will help it rationalise its costs and it may lead to employee restructuring or reduction is some of the clusters.
"The cluster-based model adopted by VIL will help it to rationalise its costs and hence improve EBITDA, at a time when customer and revenue market share is falling. This could potentially be the template that can be followed by the other operators in India as well. As such, India’s circle-based classification of service areas is unique and not followed by many other countries globally," said Ashwinder Sethi, Principal at Analysys Mason.
Sethi said that the primary efficiencies from this cluster-based approach is expected to be driven by streamlining of organization structure, which may lead to employee restructuring or reduction in some of the clusters.
As per Vodafone Idea's internal communication, Delhi and Rajasthan are now merged into a single cluster headed by Arvinder Sachdev. Punjab, Haryana, Himachal Pradesh, J&K, Ladakh are now merged into one cluster and is now headed by Mukul Sharma.
Similarly, UP East and UP West are now merged into one cluster, and is headed by Pamesh Gupta. Assam and North East, Kolkata and rest of Bengal, Odisha, Bihar and Jharkhand are part of one cluster, headed Sivam Bhargava as the cluster business head.
Karnataka and Andhra Pradesh are now considered one cluster, and is headed by Arvind Nevatia. Kerala and Tamil Nadu are now merged into one cluster, header by Murali S, whereas Madhya Pradesh and Chattisgarh after converting into one cluster, is being headed by Kavita Nadkarni.
Mumbai is now considered a standalone cluster, and is headed by Rajendra Chourasia, while Maharashtra and Goa as a new cluster is headed by Puneet Krishanan. Gujarat is headed by Monishi Ghosh.
"Over decades we have strengthened circles with wide-ranging functional responsibility - as they are mini-companies. In an era when pricing was often unique, customer choices were more disparate, and competition was fragmented, this made imminent sense. However, in a more ubiquitous market scenario, where the market is far more integrated and payers have consolidated, this approach needs a re-think," as per an internal announcement.
"We have therefore decided that while we do all that needs to be done at a circle level fro a regulatory standpoint, we shall create 10 large clusters for business operations," the telco said in an internal announcement to employees.
Vodafone Idea, in its internal announcement, said that cluster business heads will be based at the cluster head-quarters and will report to respective operations directors. These cluster heads will focus on revenue market share growth (RMS), customer market share maximization (CMS), experience excellence across touch points (NPS), channel productivity and spend optimization.
These new cluster heads will coordinate with other functions to ensure experience delivery and talent optimisation.
The development come at at time when the telco is nearing the completion of its mammoth integration exercise following Vodafone-Idea merger in September 2018. It had previously said that the network integration exercise will be executed by June 2020.
Vodafone Idea has now nearly doubled its 4G coverage reaching one billion Indians across the country. In a recent TownHall with ET Telecom, Vodafone Idea CTO Vishant Vora said that the telco has consolidated 90% of the districts and 90% of its Vodafone and Idea network is consolidated and acting as one.
Vora said that VIL added more than 66,000 cells with more capacity within the first three to four weeks of the lockdown.
The operator, born out of a merger between Idea Cellular and Vodafone India, may even consider giving up spectrum in its weaker circles (by revenue market share) going forward, ET had reported in March this year.
Vodafone Group Plc is likely to inject Rs 285 crore (35 million euros) more into its India telecom JV - Vodafone Idea - by September, as per a pre-agreed mechanism. The second tranche will help the telco meet some of its opex or capex needs.
Vodafone Idea is facing AGR based dues to the government and has paid Rs 6,854 crores so far against the government demand of Rs 58,254 crore. Vodafone Group though has estimated the liabilities at around Rs51,400 crore.
The UK group recently raised concerns regarding Vodafone Idea's ability to generate cash to settle or refinance its liabilities and guarantees, including those related to its adjusted gross revenue (AGR) dues.
VIL spokesperson couldn't be reached immediately for a comment.
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