“The search for the new CEO has started and the telco may look at CXOs from industries like consumer and technology (sectors) who have a strong understanding of distribution,” said one of the sector executives on the condition of anonymity.
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Mint‘s emailed queries to Vi remained unanswered at the time of publishing.
A new CEO will join Vodafone Idea (Vi) as Indian wireless carriers have started looking beyond 4G and 5G services. Reliance Jio Infocomm Ltd and Bharti Airtel Ltd recently inked a pact with Elon Musk’s SpaceX to offer Starlink satellite internet services to customers in India. In response to a clarification sought by exchanges about its reported talks with Starlink, Vi said the company is in “exploratory talks with various Satcom providers including Starlink”.
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Vi, which was late in adopting high-speed 5G because of its debt burden, got another reprieve when the government agreed to convert an additional ₹36,950 crore worth of statutory dues into equity last week, increasing its stake to 49% in the company.
The telecom operator, born out of the merger between Vodafone India and Idea Cellular Ltd, has an 18% subscriber market share, compared with Jio and Airtel’s 40.4% and 33.5%, respectively.
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Vi consistently lost customers to rivals over the past two years amid concerns about its survival and stiff competition. At the end of December 2024, the company’s subscriber base was at 199.8 million versus Jio’s 482.1 million and Airtel’s 414 million.
To strengthen its bastion, the company will need to cater to the needs of a younger customer base and even grow its average revenue per user (Arpu), which was ₹173 as of October-December quarter, according to another industry executive aware of the development. Airtel’s Arpu stood at ₹245 and Jio reported ₹203 during the period.
Moondra helped stitch Vodafone-Idea merger
Moondra, chief financial officer (CFO) at erstwhile Idea Cellular from June 2008 to August 2018, played a crucial role in stitching the Vodafone-Idea merger in 2018. The deal took place during one of the most turbulent periods for India’s telecom sector when Mukesh Ambani-led Jio rolled out unlimited 4G plans and slashed data rates, forcing Airtel and other rivals to follow suit.
Moondra was elevated as Vi’s CEO in August 2022 for three years, which ends this August.
During his tenure as CFO and CEO, Moondra undertook a crucial ₹25,000 crore rights issue in 2019 to raise funds to reduce the company’s debt and strengthen its balance sheet amid crippling competition and financial challenges stemming from the merger. During the period, the government first converted ₹16,000 crore of Vodafone Idea’s outstanding dues into equity.
In April 2024, Vi raised ₹18,000 crore through India’s largest follow-on public offer till date. Last week, the company announced the second equity conversion of dues worth ₹36,950 crore into equity, increasing the government’s stake to 49%.
Reacting to the announcement, the operator’s shares shot up 18.9% on Tuesday to close at ₹8.10 apiece.
The conversion of debt to equity will provide some cashflow relief to Vodafone Idea, brokerage Jefferies said in a note on Tuesday. This may support the company’s network investments and slow the pace of market share shifts towards Bharti Airtel and Reliance Jio, it said.
However, analysts at Ambit Capital said the company would require continued tariff hikes to sustain capital expenditure and make good future spectrum and AGR-linked payments.
The operator’s biggest financial strain stems from the adjusted gross revenue (AGR) issue. In 2019, the Supreme Court ruled that Vi and its peers need to pay statutory liabilities on AGR, which includes non-telecom revenue. There was a massive gap between the telecom department’s calculations and the self-assessed dues by telecom operators. For Vodafone Idea, department of telecommunications (DoT) calculated total dues at ₹58,000 crore against the company’s estimate of ₹21,500 crore.
In September 2024, the Supreme Court rejected curative petitions filed by Vi and other operators seeking relief in the apex court’s 2019 ruling.
As of December 2024, Vodafone Idea’s total debt was around ₹2.3 trillion, including ₹77,000 crore AGR liability and ₹1.4 trillion spectrum liability. The conversion of additional liabilities worth ₹37,000 crore will help reduce the company’s debt by 17%, Jefferies said.
