Kumar Mangalam Birla has stepped down as non-executive chairman of Vodafone Idea (Vi) after offering to give up his stake in the debt-ridden telecommunications (telecom) company.
Himanshu Kapania, a telecom industry veteran and a nominee of Aditya Birla Group on the board, will take over the chairman’s post. Kapania served on the global GSMA board for two years and was also chairman of the Cellular Operators Association of India, the company said in a stock exchange notification.
Birla Group Chief Financial Officer Sushil Agarwal has been named additional director on the Vi board. The Vi board approved the leadership changes on Wednesday. Birla, who was earlier chairman of Idea Cellular, took over as chairman of the combined entity, following its merger with Vodafone India in August 2018.
The company’s stock was priced at Rs 34 at the time of its merger. It closed at Rs 6.03 on Wednesday, shedding 27 per cent in two days after Birla’s submission to the government became public.
In his letter written on June 7 (before the Supreme Court dismissed its application on adjusted gross revenue, or AGR, issue), Birla said he was willing to offer his stake to any government or domestic financial entity to keep Vi afloat.
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While the Birlas own around 27 per cent stake in the company, Vodafone Group Plc has over 44 per cent stake. Birla’s letter highlighted the need for urgent measures from the government, while offering to give up control of the company.
“It is with a sense of duty towards 270 million Indians connected by Vi, I am more than willing to hand over my stake in the company to any entity – public sector/government/domestic financial entity – or any other that the government may consider worthy of keeping the company as a going concern,” Birla said in his letter.
Vodafone Idea – rebranded Vi last year – has been under stress, losing market share, while its huge Rs 1.8-trillion debt liability has raised concerns about its survival. The company’s efforts to raise Rs 25,000 crore from investors have not yielded result, in the absence of any relief measures from the government. The Supreme Court, too, has ruled against its application for recomputation of AGR dues, dealing a blow to its revival.
“To actively participate in the fund-raising, potential foreign investors want to see clear government intent to have a three-player telecom market (consistent with its public stance) through positive actions on long-standing requests, such as clarity on AGR liability, adequate moratorium on spectrum payments, and most importantly, a floor pricing regime above the cost of service. In the absence of definitive steps in this regard, potential investors have understandable hesitation to invest,” wrote Birla.
