INDIA'S CALL-DROP MOMENT

ONCE THE POSTER CHILD OF INDIA’S GROWING ECONOMIC CLOUT, INDIAN TELECOM IS IN THE DOLDRUMS. A RAPID TECHNOLOGICAL SHIFT, CUT-THROAT COMPETITION, AND LEGAL WRANGLES HAVE ROILED THE SECTOR AND ERODED VALUE. WHAT HAPPENS NOW?

- AVEEK DATTA AND T. SURENDAR

KUMAR MANGAL AM BIRL A is soft-spoken, as also a man of few words. That makes his acceptance of the new business realities surrounding one of his high-profile companies even more stark and noteworthy. Like recently when, at a public forum, Birla opened up about the possibility of Vodafone Idea potentially heading towards closure.

Speaking at the Hindustan Times Leadership Summit in New Delhi in January, Birla, chairman of Vodafone Idea—India’s third-largest telecom service provider by revenue—said: “If you ask me specifically, it is true that we will shut shop if we don’t get relief.” The relief Birla—whose $48-billion Aditya Birla Group is home to success stories such as cement major UltraTech Cement or aluminium maker Hindalco—sought was for the ₹53,000 crore that Vodafone Idea has to pay to the government on account of past dues (including penalty and interest).

He also wasn’t ambiguous on whether the promoters of the firm—a result of a merger between Birla’s Idea Cellular and the Indian arm of multinational telecom giant Vodafone Group Plc—would infuse more capital into it to tide over the crisis. Birla’s direct answer was no. “It’s just not good business,” he said. “It doesn’t make sense to put good money after bad.”

Bharti Airtel and Tata Teleservices (which sold its wireless business to Airtel in 2017) face similar issues to Birla, battling frail financial health as a consequence of a bruising price war exacerbated by the entry of the Mukesh Ambani-led Reliance Jio Infocomm.