Kumar Mangalam Birla returns to the board of Vodafone Idea

Kumar Mangalam Birla returns to the board of Vodafone Idea

A lot of headlines have been generated in the Indian press by the news that billionaire Kumar Mangalam Birla has returned to the board of Vodafone Idea less than two years after leaving the mobile service provider – but how significant is this appointment?

To begin with, Birla rejoins in a different role. He is an additional director (non-executive and non-independent). Birla was formerly a chairman at the giant operator. He joined the board on 20 April, according to an exchange disclosure.

Secondly, Vodafone Idea's net debt remains astronomical. It stood at 2.23 trillion rupees (about US$27.18 billion) before the Indian government in February converted the nearly US$2 billion of dues that it was owed into equity, becoming the company's biggest shareholder.

However, Vodafone Idea is still trying to manage a vast debt and the company needs to find funding for network upgrades and 5G rollout. That issue is unlikely to change with Birla's appintment, though, interestingly, Birla was in the news recently after he suggested on Indian TV that Vodafone Idea would begin its 5G rollout soon.

Nevertheless, Birla is a big name, not least because he also serves as the chairman of Aditya Birla Group, which reportedly holds an 8.36% stake in Vodafone Idea. A global conglomerate, the Aditya Birla Group businesses operate in a wide range of sectors – metals, pulp and fibre, chemicals, textiles, carbon black, cement, financial services, fashion retail, renewable energy and, of course, telecoms.

Will Birla's appointment make a difference? It looks like we'll have to wait and see. In any event, the market seems to like the news. According to the Economic Times news service, shares of Vodafone Idea rallied nearly 10% in Friday's trade after the appointment was announced.