Vodafone Idea sent a wave of panic through the telecom industry on Wednesday evening after it announced that Kumar Mangalam Birla had decided to step down as non-executive chairman of the floundering telecom giant.

Birla’s decision to quit came just two days after an anguished letter he wrote to the Narendra Modi government in June seeking a rescue package for the beleaguered telecom giant became public.

The shock announcement left Vodafone Idea’s 277.62 million subscribers staring at an uncertain future unless the government can put together a viable bailout plan for the telecom giant.

In his letter to cabinet secretary Rajiv Gauba, Birla had offered to transfer his 27.6 per cent stake in the debt-laden telecom company ‘‘to any public sector/government/domestic financial entity or any other the government may consider worthy to keep the company going”.

On Wednesday, the company said in a filing with the stock exchanges: ‘‘The board of directors of Vodafone Idea, at its meeting held today, have accepted the request of Mr Kumar Mangalam Birla to step down as non-executive director and non-executive chairman of the board with effect from the close of business hours on August 4.’’

The announcement came after market hours.

Earlier in the day, the Vodafone Idea stock plunged 18.5 per cent to close at Rs 6.03 on the BSE as investors scrambled to sell their shares.

Kampania named new chairman

The company said Himanshu Kampania, currently the non-executive director, would take over as the non-executive chairman of the company. Kampania is a nominee of the Aditya Birla group.

The board also appointed Sushil Agarwal, another nominee of the Aditya Birla group, as an additional director with immediate effect.

It was not immediately clear why Kumar Birla decided to step down and if the appointment of his nominees spells continuity of the business and, more importantly, for how long.

Vodafone Plc, which acquired a 67 per cent stake in the original telecom entity from Hong Kong-based Hutchison Whampoa in April 2007, currently holds about 44 per cent in Vodafone Idea.

Vodafone Idea was created out of a merger between Vodafone India and Birla-owned Idea Cellular in August 2018.

Neither the Birlas nor Vodafone Plc are prepared to pump money into the telecom venture which reported a gross debt of Rs 1.80 lakh crore at the end of March this year.

Vodafone has to pay telecom dues worth over Rs 58,000 crore to the government that are linked to adjusted gross revenues and date back to 2007.

During the quarter ended March 31, 2021, Vodafone Idea had posted a consolidated loss of Rs 7,023 crore, lower than the loss of Rs 11,643.5 crore in the year-ago period.

The Supreme Court recently turned down a petition from Vodafone and Bharti Airtel for a recomputation of the dues.

Speculation has swirled that if the government fails to come up with a viable rescue package, the telecom entity might collapse, creating a duopoly between Reliance Jio and Bharti Airtel. This will not be in the interests of the telecom consumer — a point that Bharti Airtel CEO Gopal Vittal also asserted on Wednesday.

Speaking during an earnings call, Vittal said: “I think from a national perspective, it would be appropriate to see a structure where three players not just survive, but thrive.’’

And, of course, the government player (BSNL) is always there.”

“I feel as a country we do need three players...it is a large enough country with 1.3 billion people, which can easily accommodate three (private) players in this market,” Vittal added.