IMPACT OF MERGER AND ACQUISITION IN THE TELECOM SECTOR: VODAFONE AND IDEA

Abstract

Businesses might grow in two ways. Either growth could be with passage of the time, or it could be inorganic i.e., a sudden expansion in the workforce, customers, infrastructure etc. might lead to an Overall increase in revenues and profit of the businesses. M&A are basically the execution of some form of transactions amongst the two companies combining in some form. The two terms are often used interchangeable but refer to different legal meanings. M&A are instruments that help to grow an organization and gaining wide acceptance by businesses in India. M&A are becoming the need of hour to deal with competition and macroeconomic factors, for other the purpose may be to get global recognition and become market leaders. Whatever be the purpose of business, which observed M&A has grown drastically in recent years and become popular method for restructuring. This project talks about corporate restructuring through ownership restructuring by M&A. Such decision is strategic which lead to the maximize growth of a firm. This can be achieved by enhancing the operations of business, helping them in creating a larger value along with achieving business purpose and financial strategy. The external grow strategies has recently acquired a lot of attention due to privatization, globalization along with increased deregulation, enhanced competition, breaking of trade barriers. M&A decisions which are capital budgeting and strategic decisions and impact the entire organization. Such decision requires review at every level within the organization. The success of M&A depends on the correct valuation of company which acquiring company targeted. Determining the correct value is one of the most challenging tasks. Analysts face many complications and choices while assessing the target company's value. The proper planning along with the correct methodology help in correct valuation of target company. The project aims is to find financial performance of two giants in the Telecom Sector Vodafone and Idea prior to the merger and after the merger. For carrying out the comparison the financial ratios like Profitability, Liquidity and Leverage will be used. For achieving the objective stated above and gaining a deep insight firstly a comprehensive review of the past papers has been done. The literature review helps in v giving the research direction and understanding the problem in a better way. The study conducted helped in understanding the reason behind the merger of these two telecom giants and impact that it has on performance of the two companies. For carrying out this study secondary data was taken from moneycontrol.com, capitaline.com and screener.com. Hypothesis was proposed and after conducting paired t-test conclusions were drawn.