Balesh Sharma steps down as CEO of Vodafone Idea; Ravinder Takkar to take over with immediate effect
Ravinder Takkar, currently Vodafone Group's representative in India, will be appointed as the new MD and CEO
The telecom sector is burdened with staggering debt levels and cut-throat competition
Competition has only intensified since 2016, when Reliance Jio, owned by Mukesh Ambani, stormed into the market
Vodafone Idea shed 41.45 lakh subscribers, and Bharti Airtel 29,883 customers during June
New Delhi: Vodafone Idea on Monday said its CEO Balesh Sharma has stepped down due to "personal reasons", a development that comes amidst intense competition in the telecom sector eroding market share and subscriber base of the company.
The company has accepted Sharma's resignation and replaced him with the representative of Vodafone Group, Ravinder Takkar.
Sharma was the representative of Vodafone in the JV between British telecom giant Vodafone and Aditya Birla Group's Idea that was formed to fight the onslaught of free calls and dirt cheap data plans unleashed by Mukesh Ambani's Reliance Jio.
"The Board of Vodafone Idea Limited today announced that it has accepted Balesh Sharma's request for personal reasons to step down as CEO of Vodafone Idea. Balesh will be taking up a new role with Vodafone Group, which will be announced in due course," a company statement said.
Takkar will be appointed as his successor with immediate effect, the statement added.
Kumar Mangalam Birla, the Chairman of Aditya Birla Group and Vodafone Idea, said, "Under Balesh's stewardship, Vodafone Idea has realised a significant proportion of the synergies in a much shorter timescale than originally estimated".
Birla said Takkar is well versed with the Vodafone Idea business context, and exuded confidence that he will successfully steer the company through the next phase of development and help unlock its full potential.
The move comes just months after Sharma was named the chairman of the Cellular Operators' Association of India (COAI) at industry association's Annual General Body meeting in early June.
Vodafone Idea, as well as Bharti Airtel, has been engaged in a bruising tariff war in India's mobile market following the entry of Reliance Jio, backed by India's richest man Mukesh Ambani.
Jio shook the mobile telephony market with free voice calls and cheap data in 2016, and within three years has emerged as the largest telecom player in the sector by revenue.
Jio's mobile entry has dented the financial metrics of older and established operators, deepening the impact of regulatory decisions; Jio now hopes to repeat the feat in fixed line broadband space.
Industry observers noted that Vodafone Idea has lost substantial ground in the last one year. The merger of the India unit of Vodafone Group and Idea Cellular was completed on August 31, 2018 and shares of Vodafone Idea that hovered at almost Rs 31 a piece on September 3, 2018 have tumbled to Rs 5.99 apiece now.
Vodafone Idea's consolidated losses for the June 2019 quarter stood at Rs 4,873.9 crore.
As per data released by the telecom regulator on Monday, Vodafone Idea shed 41.45 lakh subscribers in June, even as Jio continued to add customers at a breakneck speed. In fact, its earnings statements show that Vodafone Idea has lost over 100 million subscribers in the last one year - its overall subscriber base stood at 422 million as on September 2018 has tanked to 320 million as on June 2019.
Adding to its woes, the telecom department's apex decision-making body, Digital Communications Commission (DCC), last month approved imposing a cumulative penalty of Rs 3,050 crore on Bharti Airtel and Vodafone Idea for not providing points of interconnection to Reliance Jio at the time of launch of services in 2016.
The penalty on Airtel and Vodafone works out to be about Rs 1,050 crore each. In case of Idea, it comes to about Rs 950 crore. Since Vodafone and Idea have now merged their businesses, the new entity Vodafone Idea will have to bear their penalty burden; the company has vowed to explore options including legal recourse to protect its interests.
The Vodafone Idea statement announcing the organisational change on Monday noted that Sharma had overseen the successful integration of Vodafone Idea "resulting in the estimated timescale to complete the integration falling from four to just two years".
"Balesh has driven the strategy of the combined business since its formation and he has also spearheaded the largest-ever equity raise in India," the statement added.
Sharma's successor, Takkar, is currently a Board member of Vodafone Idea and Indus Towers, where he is responsible for all Vodafone Group interests in India, a role which he took on in 2017.
"Prior to his current role, Ravinder was the CEO of Vodafone Romania for three years and CEO of Vodafone Partner Markets in London. He has been with Vodafone Group since 1994 and brings a wealth of experience in telecom industry having worked in several leadership positions across Vodafone's operating companies over the last 25 years," the statement added.
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Balesh Sharma said there is no clarity on when the pricing situation will improve either in the domestic market.
"Six months ended 30 September, 2018, includes 3.5 billion euro of impairment charges in respect of the Group's investments in Spain, Romania and Vodafone Idea and a 3.4 billion euro loss on the disposal of Vodafone India," Vodafone said in a statement.
Vodafone Idea tumbles 11% after company reports consolidated loss of Rs 4,973 cr for September quarter
Vodafone Idea, in a regulatory filing to the stock exchanges on Wednesday, reported a consolidated loss of Rs 4,973 crore for the September quarter in its maiden financial results post merger.