Kumar Mangalam Birla’s comeback boosts shareholder confidence in Vodafone Idea

Apr 21, 2023

Credit: BCCL

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. ​

Credit: BCCL

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.

Credit: Canva

​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. ​

Credit: BCCL

​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. ​

Credit: BCCL

‘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.” ​

Credit: BCCL

​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. ​

Credit: BCCL

​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.

Credit: BCCL

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.​

Credit: Business Insider India

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. ​

Credit: BCCL