India's Vodafone Idea has named Ravinder Takkar its latest CEO as it revealed that Balesh Sharma, the previous boss, had quit for personal reasons.
Formed from last year's merger of Vodafone India and Idea Cellular, the operator gave no further explanation for Sharma's abrupt departure but revealed he would take up a new role within Vodafone Group, to be announced "in due course."
Sharma became CEO on completion of the merger in August last year, having previously been employed as Vodafone India's chief operating officer. In its statement, Vodafone Idea said his expertise had cut the estimated timescale for integrating Vodafone and Idea from four to just two years.
But local press reports say recent financial difficulties as well as "cultural clashes and turf wars" were to blame for his departure. Sources who spoke with The Hindu BusinessLine report serious issues with the merger and distrust between executives from the different operator camps.
Vodafone has reportedly denied there are any such problems, but its financial performance since the merger was completed has not been encouraging.
Accounts show that it racked up a net loss of 48.7 billion Indian rupees ($680 million) for the June-ending quarter and lost more than 14 million customers, leaving it with about 320 million in total. The subscriber base has tumbled from about 435 million customers at the combined companies in June 2018. "We are delivering on our stated strategy although the benefits are not yet visible in our top line," said Sharma about the recent performance in one of his last official statements as CEO.
Investors are not impressed. Vodafone Idea's share price closed 2.5% lower today and has plummeted 82% since August, to just INR5.84.
Takkar occupies board roles at Vodafone Group as well as Indus Towers, an Indian towers venture, and will be under immediate pressure to show Vodafone Idea is in healthier shape that its performance suggests.
Analysts may take some convincing. As quoted by The Hindu BusinessLine, Kotak Institutional Equities said in a research note last month: "Without a meaningful revenue/EBITDA uplift, the company could run out of its 'capacity to suffer' in not-too-distant a future." Vodafone Idea's net debt was at INR992.6 billion rupees ($13.9 billion) in June, although the figure had fallen from nearly INR1.2 trillion ($16.8 billion) in March.
India's telecom market has witnessed unprecedented upheaval in the last few years after the late 2016 entry of Reliance Jio, which has built a "greenfield" operation using funds from the deep-pocketed Mukesh Ambani, the owner of parent company Reliance Industries.
Touting a range of low-cost voice and data services, RJio triggered a round of consolidation that included the merger between Vodafone and Idea. Judging by recent developments at Vodafone Idea, operators and executives are still feeling the effects.
— Iain Morris, International Editor, Light Reading