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Made mistakes in telecom business

“Telecom has been a tough one for us. I think there have been several factors where we could have done better. It’s one of a few sectors in which we have not done well. But, it is the story that is going to play out,” Kumar Mangalam Birla said, replying to a question on his “key learning” from telecom industry investment at the ICC annual session and AGM.
Aditya Birla Group chairman Kumar Mangalam Birla on Friday said the telecom business has been a “tough one” for the diversified conglomerate and it could have done better on “several factors”.

Birla also said one of the biggest regrets in his life was to lose out on Hindustan Zinc, the country’s largest zinc-lead miner. Currently, the company is a subsidiary of Anil Agarwal-led Vedanta Group, which acquired it when the government divested its majority stake way back in 2002-03.

“Telecom has been a tough one for us. I think there have been several factors where we could have done better. It’s one of a few sectors in which we have not done well. But, it is the story that is going to play out,” Birla said, replying to a question on his “key learning” from telecom industry investment at the ICC annual session and AGM.

He, however, said Vodafone Idea (the Aditya Birla Group holds 27% stake in the company) was in a much better situation now compared with a month ago. “Some factors that we did not do right were within our control. I think every situation, every business comes with its own set of learning,” he pointed out.

Vodafone Idea, along with Bharti Airtel, has recently opted for the four-year moratorium offered by the government on payment of adjusted gross revenue (AGR) and spectrum dues.

During the July-September quarter, the company was able to narrow its net loss to Rs 7,132 crore from Rs 7,319 crore in the preceding quarter.

The company has incurred a loss of Rs 14,451 crore for the half year ended September 30, and its net worth stands at a negative Rs 52,685 crore. The total debt of the group stands at Rs 1.9 lakh crore as on September 30, while an amount of Rs 10,022 crore has been classified from non-current borrowings to current maturities of long-term debt for not meeting certain covenant clauses under the financial agreements.

On losing out HZL, Birla said, “Hindustan Zinc we actually lost out very relatively, and I think we just missed some details in the due diligence that we did. So, the learning from it that I have taken away is that the devil is in the details. We missed by a whisker. It could have been a great investment to add…I think there is no end to the detailing that you can do, which is the smart thing to do,” Birla said.

Hindustan Zinc was a central public sector unit till 2002. The Central government put up the state-owned company for strategic sale in 2002-03 and it was acquired by Vedanta, while Birla lost out. Business Journal

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