Indian billionaire Kumar Mangalam Birla has returned to the board of Vodafone Idea Ltd as an additional director less than two years after leaving the mobile service provider.
Birla, formerly a chairman at the debt-ridden telecom giant, will join the board effective April 20, Vodafone’s Indian JV said in an exchange disclosure.
He also serves as the chairman of conglomerate Aditya Birla Group, which held an 18.07 per cent stake in Vodafone Idea as of February 7, according to Refinitiv data.
Earlier in the day, the telecom company said Krishna Kishore Maheshwari, a former top executive at Aditya Birla Group-owned Ultratech Cement Ltd, had quit as a non-executive director, citing personal reasons.
Vodafone Idea’s net debt stood at Rs 2.23 trillion ($27.18 billion) before the Indian government in February converted the nearly $2 billion of dues that it was owed into equity, becoming the company’s biggest shareholder.
In 2021, the government approved a rescue package for debt-strapped telecom companies, allowing them to convert interest on deferred adjusted gross revenue owed to the government into equity.
A domestic brokerage recently said Vodafone Idea or Vi stares at a bleak future, including the possibility of “shutting shop” due to factors triggered by heightened competition.
It also expects telecom companies to start hiking tariffs only after the general elections in June 2024 amid inflation staying above the RBI’s upper tolerance level.
In the absence of the price hikes, Vi will not be able to keep up with the investments required and launch 5G services, which will lead to an erosion of subscribers and make the planned capital raising exercise difficult, the report by Kotak Institutional Equities said.
The long-feared prospect of a “duopoly”, with only Reliance Jio and Bharti Airtel remaining in the fray, is likely to play out, the report said.
The brokerage said that factors contributing to the prospect include headline inflation staying above the RBI’s comfort band and state elections.
Reuters and PTI
