Kumar Mangalam Birla returns as Vodafone Idea non-executive chairman as AGR dues ease
Vodafone Idea on Tuesday appointed Kumar Mangalam Birla as non-executive chairman, the company said in an exchange filing. Birla, who returns as non-executive chairman of the company after five years, will replace Ravinder Takkar.
Takkar, who has served as the company’s non-executive chairman since August 2022, has now been appointed non-executive vice chairman.
The change in management of the company comes on the heels of the government reducing the telecom operator’s adjusted gross revenue (AGR) dues as follows: ₹23,600 crore ₹64,046 crore as of December end, with the bulk of the installments falling from FY36 to FY41.
Clarity on the AGR could provide a measure of certainty that, with Birla’s reappointment as chairman, could help the company unlock critical bank financing. AGR is the revenue base used to calculate the license fees that telecom operators must pay to the government.
Of course, Birla resigned as non-executive chairman and director of Vodafone Idea in August 2021. This happened after the Supreme Court in 2019 disallowed recalculation of AGR dues, plunging cash-strapped Vodafone Idea into a severe financial crisis.
“If we don’t get anything, I think it’s the end of the story for Vodafone Idea,” Birla had said at a Hindustan Times event in 2019. About further investment at that time, Birla had said, “It does not make sense to put good money over bad. That would be the end of the story for us. We will close the shop.”
Later, the government provided a four-year moratorium on payment of statutory dues to telecom operators in 2021 and also gave them the option to convert the interest on dues into equity.
To restore investors’ confidence, Birla rejoined the Vodafone Idea board in April 2023 as an independent and additional non-executive director. He currently sits on the company’s board of directors as a non-executive director.
Birla’s subsequent return to the board also helped the company get a raise ₹18,000 crore through initial public offering (FPO) in 2024.
As of the end of December, Aditya Birla Group held 9.5% shares of Vodafone Idea, and UK-based Vodafone Group held 16.07% shares of the company. The government is the single largest shareholder in the company, with a 49% stake, according to the company’s December quarter report.
Last week, the telecom department finalized the revised AGR figure following the Supreme Court’s revaluation order last year. According to the revised payment plan, Vodafone Idea only ₹100 crore annually from FY 2032 to FY 35, ahead of six major installments ₹10,608 crore each will start from FY 36 to FY 41 and the bulk of payments will be delayed by 10 years.
In addition, the telco’s total spend on AGR payments over the next six years from March 2026 to March 2031 will be: ₹744 crore, maximum ₹124 crore per year. These are FY18 and FY19 dues that are not part of the reassessment.
Analysts said the AGR aid could help Vodafone Idea stay afloat in the near term, but it did little to tackle the company’s larger debt burden. ₹1.25 trillion in spectrum dues.
In a May 3 note, analysts at brokerage firm BofA Securities said AGR risk will likely not be an issue for the company in the near term.
“However, spectrum debt continues to be an issue for VIL (Vodafone Idea Limited)… Despite the relief, we maintain an Underperform rating,” BofA said, adding that the company is working to support network build-out, plug gaps in 4G, roll out 5G, etc. He added that a large capital infusion of $6-8 billion would be needed for this purpose. Such a large equity infusion also comes with major dilution risks, he said.
