Read full text of Kumar Mangalam Birla’s letter to govt on ‘looming crisis’ before Vodafone India
After reports confirmed that Kumar Mangalam Birla has offered to hand over his stake in Vi to a government entity, the company's shares tumbled over 16 percent.
August 04, 2021 / 04:48 PM IST
File image of Kumar Mangalam Birla
In an unprecedented move, Kumar Manglam Birla, the chairman of Aditya Birla Group, had written to the Government of India last month offering to hand over his stake in Vodafone-Idea (Vi) to any public sector entity considering the "looming crisis" before the telecom operator. After reports confirmed that Birla has issued such an offer to the Centre, the shares of Vi tumbled over 16 percent on August 4.
Here is the full text of Birla's letter to Cabinet Secretary Rajiv Gauba, sent on June 7, 2021.
I write to apprise you about the looming crisis before Vodafone Idea Limited (VIL) and seek your guidance.
Over the last year, VIL has made a very possible effort to improve its operational efficiency through prudent capital spending, man-power restructuring and a whole host of cost reduction measures. Despite all that, the financial condition (particularly the liquidity position) of the company has sharply deteriorated. To sustain VIL operations and pay regulatory/governmental dues, VIL has been trying to raise funding of Rs 25,000 Crs.
To actively participate in this Fund raising, the potential foreign investors (mostly non-Chinese and we are yet to approach any Chinese investors) want to see clear government intent to have a three-player telecom market (consistent with its public stance) through positive actions on long-standing requests such as clarity on AGR liability; adequate moratorium on spectrum payments and most importantly, a floor pricing regime above the cost of service. In the absence of definitive steps in this regard, the potential investors have understandable hesitation to invest.
I want to emphasize that without immediate active support from the Government on these three issues (certainly by July ’21. (VIL’s financial situation will drive its operations to an irretrievable point of collapse. It is with a sense of duty towards the 27 crore Indians connected by VIL, 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.
I and my Team will be more than happy to work with the Government to urgently explore all possible options and solutions to save the company and strengthen it in the national interest without any consideration of our private interest.
I look forward to your urgent guidance on this matter.Kumar Mangalam Birla