This past week, a letter leaked to the press caused the stock price of Vi (formerly Vodafone Idea) to plummet. All told, the company lost over Rs 3,000 crore (~$404 million) in market capitalisation.
The letter, dated 7 June, was sent from Aditya Birla Group chairperson Kumar Mangalam Birla to Cabinet Secretary Rajiv Gauba. In it, Birla pleaded for “immediate active support” from the government. Without this, he warned, the telco would be driven to “an irretrievable point of collapse.” Birla even offered to hand over his 27% stake in the company to the government or any entity chosen by it in order to ensure the company, India’s third largest telco, remained a going concern. Later media reports indicated that Vi had also conveyed this message to banks.
The letter was allegedly passed on to industry executives by officials at Delhi’s Sanchar Bhawan, the headquarters of India’s Department of Telecommunications (DoT). These executives then passed the letter on to their contacts in the media.
For Vi, which was already caught in a years-long downward spiral, the letter accelerated its descent. Mere days later, on 5 August, Birla stepped down as non-executive director and non-executive chairman of Vi’s board.
The leak came as no surprise to those at DoT. According to one source close to DoT, Birla had been writing distress letters every week for the past few months. “Sooner or later, this [leak] had to happen,” they told The Ken.
While sunlight may be the best disinfectant, public knowledge of Vi’s predicament has only put further strain on the ailing telco. “For many employees, it’s a sinking ship. I have got job applications from several Vi executives,” a former senior staffer at Vi told The Ken. Media reports also claim that recruiters have been flooded with job applications from Vi employees desperate for a lifeboat.
While Birla’s letter highlights the extreme measures necessary to keep Vi in business, The Ken has learned that this was not the first time the telco broached the idea of a government takeover. In 2019, shortly after a court ruling ordered Vi to pay Rs 58,000 crore (~$7.8 billion) to DoT as adjusted gross revenue (AGR), a senior executive at Vi reached out to the government, asking officials to simply convert the company’s debt into equity.
Publicly, the company is attempting to maintain a brave face. A Vi spokesperson clarified that the company has made no noises whatsoever about shutting shop. On the contrary, the company even carried out appraisals in the recent past. The spokesperson did, however, admit that government help would be vital. “The ball is in the government’s court now,” they said. An emailed set of questions sent to the company went unanswered.