Vodafone Idea, one of India’s big three operators, is reportedly planning a new operational model to improve efficiency, sparking speculation that it still has long-term plans for the Indian market despite enormous financial pressures.
The Department of Telecommunications has divided India into over 20 telecom circles or service areas. Vodafone Idea has proposed compressing its circles, at least for operational purposes, into what it calls 10 clusters. It seems that, while honouring regulatory requirements for the existing circle system, the 10 large clusters will inform a new approach to business operations.
Vodafone Idea has been quoted as saying that the cluster business heads will be based at cluster headquarters and will report to respective operations directors. The company says that these cluster heads will focus on revenue market share growth, customer market share maximization, experience excellence across touch points, channel productivity and spend optimization.
While precise detail is limited, it seems likely that this cluster-based approach will allow some streamlining of organizational structures and some employee restructuring or reduction.
As a number of reports in the Indian press point out, this is happening just as the integration exercise following the merger of Vodafone India and Idea Cellular Limited in September 2018 comes to a close. The expected completion date is June 2020.
Vodafone Idea has been quoted as calling this a “new operating model, which is leaner, agile and more cost-efficient to address customer needs”, and has argued that it will lead to stronger competitive positioning for the company in the marketplace. This in turn has sparked speculation that, despite its financial challenges, the operator still sees itself as a long-term player in the Indian market.
Certainly, it would appear that this new system could offer Vodafone Idea the chance to reduce costs. Nevertheless, hanging over the company there is still the issue of the AGR-based dues it is required to pay the government, which, if government estimates hold, come to a startling $7.7 billion at current exchange rates, of which Vodafone Idea has paid less than $1 billion.