Sunil Mittal, Telecom News, ET Telecom

MUMBAI: Bharti Enterprises chairman Sunil Mittal said cultural differences between disparate merging organisations have led to struggles that Vodafone Idea – the telecom JV between UK’s Vodafone Plc and India’s Aditya Birla Group – faces today.

“When Vodafone (India) and Idea Cellular merged, I had said this will not work as you have two very different cultures being put together, and that’s precisely what has happened to the company,” Mittal said at a CII event Thursday.

He said the Vi merger did not work as “UK’s Vodafone is an MNC with a very open culture, whereas the Birlas “are a large business enterprise rooted in India with a financial-results orientation”.

Mittal said “Vi should have been a fabulous company,” given that, at the time of the merger (in August 2018), it had the country’s largest network, had the largest fibre network and also the largest market-share at 42%,” but instead it became “a classic case of the 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, though, dismissed the comments.

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

This person added that while there were genuine apprehensions around Vi’s merger, “it had nothing to do with the culture…the concerns were around people being laid off”.

Mittal, on this part, added that governance credibility also plays a big role in fundraising, noting that while Vi is struggling to raise funds for the past two years, it had taken him merely six phone calls for Bhart Airtel to raise billions of dollars during a period of crisis.

The executive familiar with Vi’s strategy, though, countered Mittal once more, saying Vi’s fundraise has faced challenges not due to governance credibility, but since the telco failed to create value in its 4G services. This, he said, was the outcome of a long merger process that the two erstwhile companies – Vodafone India and Ide Cellular — went through.

It took a total of almost three years from the announcement to the complete integration of two companies.

“In the interim, they (Vi) failed to build and grow their 4G base, which meant the investors did not see value in the company,” he told ET.

Dwelling on the emerging geopolitical landscape amid the pandemic and the continuing Russia-Ukraine war, Mittal said the world is rapidly moving to an era of trusted supply chains, in a departure from global supply chains. Many companies, he said, were in fact, shifting their supply chains out of China, even at the risk of higher costs, opting for trusted supply chains.

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

Mittal, though, expects India to benefit from these shifts and garner tremendous tailwinds if it plays its cards well. India’s key advantage, he said, is that it’s “a continent of consumers endowed with its own markets, own resources. More importantly, India also is a trusted source, and supply chains are likely to come to democracies and open societies.

He said the era of “globalisation is over,” but India could leverage these changes to its advantage by growing its semiconductor manufacturing business, given the constraints arising from geopolitical tensions with China, in addition to bolstering its defence gear manufacturing capabilities, amid the Russia-Ukraine war.