Aditya Birla Group Chairman Kumar Mangalam Birla today sounded alarm bells on the future of India’s third largest telecom services operator Vodafone-Idea, saying that the company will have to shut down if it doesn’t get any more relief from the government.
Veteran industrialist K M Birla’s comments come close on the heels of his telecom venture’s overseas partner Vodafone CEO Nick Read’s remarks on similar lines earlier last month. India’s incumbent telecom firms such as Bharti Airtel, and Vodafone-Idea combine, have been under tremendous financial stress due to competitive pressure from Mukesh Ambani’s new entrant Reliance Jio.
Bharti Airtel, and Vodafone Idea, had to cut tariffs and bleed margins, in order to sustain customers in the wake of dirt cheap services offered by Reliance Jio. The competitive intensity forced Vodafone India to merge with Idea Cellular, in order to prevent going bust. India’s telecom companies’ financial troubles were recently exacerbated by the recent Supreme Court ruling on pending AGR dues, which could put an additional burden of Rs 75,000 crore on the two major players.