Measurement of Operating Performance of Vodafone-Hutch Deal Against Threshold Line of Economic Value Added

November 25, 2017 Posted by admin

Manish Sharma
Research Scholar, Department of Commerce, University of Lucknow 226007, Uttar Pradesh, India

(Received 26 January 2017; received in revised form 12 May 2017; accepted 19 June 2017)

Abstract
This paper examines the outcome of selection of inorganic mode of expansion by Vodafone Group Plc. in its brown field investment of $18.2 billion in India. This work investigate the achievement of operating performance by Vodafone India in Hutch-Essar deal, upto five year post acquisition, against a benchmark established using the concept of Economic Value Added. This work is an attempt by author to have deeper investigation in M&A deal by firstly establishing the threshold limit of performance and then evaluating the actual performance of the deal against the benchmark established.The deal resulted in the overall negative operating performance for Vodafone India. Operating performance of Vodafone India, after acquisition of Hutch-Essar, improved in following years of deal (Refer Analysis table in the last section- refer Improvement in EVA values for the years 2008, 2009, 2010) but increased cost of operations and immense competition in the telecom sector made it difficult for Vodafone to sustain such improvement in operating performance.

Keywords: economic value added, mergers and acquisitions, operating performance.

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