Kumar Mangalam Birla Resigns From Vodafone-Idea; Eyeing Government Support

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The financial condition of Vodafone-Idea has forced Kumar Mangalam Birla to step down as the non-executive chairman and director of the firm. This development came soon after Birla announced his willingness of selling his stake to the Department of Telecommunication.

 
Kumar Mangalam Birla Resigns From Vi; Eyeing Government Support

"The Board of Directors of Vodafone Idea Limited, at its meeting have accepted the request of Kumar Mangalam Birla to step down as Non-Executive Director and Non-Executive Chairman of the Board with effect from close of business hours on 4th August 2021," the company said in a notice to stock exchanges.

Besides, the notice said that Himanshu Kapania, who is working as a non-executive director will replace Kumar Mangalam Birla. Vodafone Group has declined to comment on the recent changes in the firm, but sources close to the development said that the group will continue to provide its support to Kapania.

Vodafone Group Might Not Invest More Equity

Even though the Vodafone-Idea is eyeing ways to raise funds, Vodafone Group that has more than 44 percent has no plans to invest more in the operations.

"It is a highly stressed situation, a difficult situation that they are trying to navigate. I mean, we as a group try to provide them as much practical support as we can but I want to make it very clear, we are not putting any additional equity into India," Vodafone Group CEO Nick Read said during an analyst call.

Vodafone-Idea Need Government Support

Some industry experts believe that the Government will take charge of Vodafone-Idea as it has a huge user base. The Vodafone-Idea subscriber base cannot switch to other telecom operators easily. In addition, millions of employees are associated with the firm and it will send a bad signal to the other foreign investors who are planning to invest in the country.

 

On the other hand, it seems difficult that the Government will take charge of Vi or merge it with BSNL or MTNL as it is already reducing its stake in public sector utilities. But still, if Vodafone-Idea collapsed, then Reliance Jio will be benefitted as customers that are looking for affordable packs will join its platform and it might end with a 60 percent share in the industry.

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