Kumar Mangalam Birla’s comeback boosts shareholder confidence in Vodafone Idea
Apr 21, 2023
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Kumar Mangalam Birla back on the board of Vodafone Idea
Aditya Birla group chairman Kumar Mangalam Birla is back on the board of troubled telecom company Vodafone Idea, after resigning as its chairman in August 2021.
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Stock moves up
A stock exchange notification sent late Thursday said that Birla has been inducted back as a non-independent and non-executive additional director. The stock moved up 10 percent in trade on Friday, cheering the move.
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A dramatic exit
Birla’s resignation in 2021 was dramatic as he had sent a letter to the cabinet secretary, offering stake in Vodafone Idea to the government, after its dues to the government piled up to over ₹50,000 crore.
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Off to a collapse
Birla said in a letter to the government that Vodafone Idea was at an “irretrievable point of collapse” after a Supreme Court verdict in 2019 favoured the government in calculating adjusted gross revenue in a battle that’s been a bone of contention since 2005.
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‘A sense of duty’
In the letter, with a ‘sense of duty towards Indians’, Birla said, “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.”
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What are the AGR dues?
The SC verdict asked all the telcos to pay the government AGR dues worth ₹1.9 lakh crore, that they owned since 2005 for all telcos. Vodafone, which was one of the oldest entities, had the highest chunk of liabilities.
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What are the AGR dues?
Eventually, the government converted the interest owed to it, into equity and now owns 33 percent stake in the company.
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Vodafone and Idea
Vodafone was once India’s second largest telecom company, and Idea (owned by Aditya Birla Group) was the third largest. They merged in 2017 — to stave off competition from Reliance Jio which was offering data at dirt cheap prices. Birla had then taken over as the chairman of the merged entity.
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Once India’s largest telecom company
Briefly, Vi was India’s largest telecom company with over 400 million subscribers but competition, AGR dues and other problems had set it back. It now has around 240 million subscribers.
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