Neither Vodafone nor Idea: merged entity may have new brand ID

Vodafone India and Idea Cellular, India's second and third ranked telecom companies that are in the process of a merger, are working on a new name and brand identity for the combined entity.

The new identity may come into effect a year after the transaction closes, The Economic Times reports citing people familiar with the matter.

"There will be a new brand identity - work has started on it," a senior consultant working on the merged company's new identity told the paper on condition of anonymity due to non-disclosure agreements.

UK-based Vodafone and Kumar Mangalam Birla-owned Idea are chalking out a new positioning that will attract customers and retain the recall value associated with both the parent companies, according to the people. The two companies didn't respond to ET's emailed queries.

The merger will create India's largest mobile phone operator by subscribers and market share, and strong enough to take on new entrant Reliance Jio Infocomm and current market leader Bharti Airtel in a market where intense competition and high spectrum costs have eroded revenue, profit and cash flows.

The companies expect the deal to close in the next few months, as they are in the final leg of getting regulatory approvals for the merger.

In March 2017, both the companies said that the brand strategy of the combined company will be developed in due course and will leverage customers' affinity for the existing brands, built up over the past decade. While Vodafone is strong in urban areas, Idea's strength is in the rural market.

Senior executives in the telcos aware of the developments said it will be a while before any new brand is rolled out. "Nothing is locked as of now and all options are open. We are veering towards maintaining the status quo for at least one year," ET quoted a senior executive at one of the telcos as saying.

"It's very likely that one unified brand will emerge," said a senior executive at an advertising firm that has worked with one of the telcos. "The operational chaos that would ensue as a result of a new brand, however, would be a major issue."

Idea and Vodafone India have hired Aon to chalk out salary structures, Bain Consultants to advise on overall strategies, and leadership management company Spencer Stuart to shortlist candidates for major roles in the combined entity.