Just when everyone had written Vodafone Idea off in India, its joint venture telecom business in the country has sent out a strong signal that it’s going to be around, possibly for years to come. At a virtual roundtable called to announce a strategic decision by Vodafone Idea, the telco, saddled with huge losses and high debt, launched a new brand identity for itself Monday morning. It's the final step in the biggest integration of two telecom brands, top executives said.
Addressing the media, Managing Director and Chief Executive Officer of Vodafone Idea Ravinder Takkar elaborated on the significance of the new brand—Vi (pronounced ‘we’). ‘’The unified brand powers our tomorrow together,’’ he said indicating that the partners would stay invested. Later in the Q&A session, Takkar reserved his comment on whether the two partners will participate in the proposed Rs 25,000-crore fundraising exercise announced last week. He however was clear on the tariff front---prices will have to increase, he said. ‘’We are never shy of raising tariff…and others have followed us often.’’
Showcasing the togetherness, Aditya Birla group chairman Kumar Mangalam Birla and Vodafone Plc CEO Nick Read spoke of a shared future while referring to the government’s Digital India initiative as an important element in their business. This is despite Vodafone plc stating last week that it’s not going to pump in fresh equity in India business where its net losses are pegged at Rs 25,460 crore in the June quarter.
After keeping people guessing for many hours on what the strategic announcement would be, the firm set off a teaser campaign on the social media late Sunday evening. Soon, the Twitterati got active talking about the ‘VI’ rebranding exercise. VodafoneIn official Twitter account posted, ‘’Hi @Idea, ready for the big day?’’ Idea was quick to respond: "Yes just can’t wait."
The relaunch, coming two years after the August 2018 merger of Vodafone and Idea Cellular, is to have a combined brand identity and advertising around it. Till now, the organisation has been advertising the two brands separately.
Last week, the board of Vodafone Idea had approved plans of raising Rs 25,000 crore funds through share sale and debt. In the same week, the Supreme Court had allowed telcos 10 years of staggered payments in dues linked to adjusted gross revenue (AGR) while asking them to make 10 per cent of the payment upfront by March 31, 2021. Analysts said the court judgment failed to give any relief to the telco which had sought a much longer payment term of 15 to 20 years.
The October 2019 Supreme Court verdict upholding the Department of Telecommunications definition of AGR (DoT), leading to a Rs 1.47 trillion of liability in dues for the industry came as a double whammy to Vodafone Idea after being battered by Reliance Jio’s deep tariff cuts.
Vodafone Idea’s AGR dues are pegged at Rs 50,399 crore, of which it has paid Rs 7,854 crore. Its dues—a combination of two telcos-- are much higher than Bharti’s. DoT calculations show Bharti Airtel owes the exchequer Rs 43,780 crore, of which the company has paid Rs 18,004 crore.
Vodafone has a 44.39 per cent shareholding in the JV while the Aditya Birla Group holds 27.66 per cent. The two partners have equal control in the board. The merger agreement suggests the Birlas can buy an additional 9.5 per cent from Vodafone to equalise their stakes.