Advertise

MM_logo_black

| 2 minutes read

2 minutes read

How Kumar Birla Lost $3 Billion In Just 2 years

| Published on November 24, 2019

Tata checked out, Aircel checked out, BSNL checked out, Telenor checked out and guess who remained? Three knights in shining armour, Reliance, Vodafone Idea, and Airtel.

Yes, the telecommunications industry in India is left with three operators as we entered the last leg of 2019, where Vodafone Idea was the latest merger between international group Vodafone and Kumar Mangalam Birla’s Idea cellular.

Birla

However, the days aren’t good. With the three knights fighting it out, India’s supreme court has sided with the Government and asked operators to pay a hefty amount of 4 billion dollars as a fee. For a man like Kumar Mangalam Birla, this is no less than a hit on his own castle.

What went wrong for the Birla empire?

Over the past few years, Vodafone shares have gone down by 90%, eroding an approximate market share and bringing it down to just 2.7 billion dollars. On the other hand, Kumar Mangalam Birla has lost his wealth over time, a downfall of 3.1 billion dollars, as per Bloomberg.

What has been the problem?

It isn’t just the tough competition in the telecommunications market and deepening losses of the Vodafone Idea company that is causing such huge cuts in the revenues of the Aditya Birla group.

As a matter of fact, the investments of the Aditya Birla group in huge companies like Hindalco is also taking a hit. Considering the world economic slowdown and global trade wars happening, the renowned aluminum company, Hindalco, itself has seen a 31% fall in the share price from 2017.

Another company, Grasim Industries Ltd, has also faced trouble in its cement business, where the Aditya Birla group has around a 12% stake.

Where to go now?

It is contradictory how the Government does not want any of the companies in the telecom market to fail and only flourish, yet at the same time, making it difficult for them to function or make any profit.

The only plan of action is either to withdraw or to continue to fight the battle. With Reliance Jio increasing its user base and launching new offers, it is becoming difficult for Vodafone Idea and Bharti Airtel to stay competitive.

Related Posts

Mock
Mock

Latest

Mock
Mock