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Tycoon loses US$3b from India's mobile price war

Mumbai

THE financial distress at Vodafone Group's India venture has dragged down the wealth of Kumar Mangalam Birla, whose group is the second-largest investor in the teetering wireless carrier.

The tycoon, who joined forces with the British operator last year, has lost about a third of his fortune since the end of 2017 as mounting losses and debt decimated the equity of the troubled Vodafone Idea. In addition, shares of his flagship firms that produce chemicals, metals and cement have also tumbled amid a demand slump, eroding his wealth.

The net worth of Mr Birla has shrunk to about US$6 billion from US$9.1 billion two years ago, according to the Bloomberg Billionaires Index.

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A majority of his fortune is derived from his ownership of Aditya Birla Group, a conglomerate that controls his main holdings.

Birla is the latest mogul to burn his fingers in India's cutthroat phone-services market since Mukesh Ambani's Reliance Jio Infocomm entered the fray in 2016 and drove two rivals to bankruptcy.

Formed by the merger of Vodafone's local unit and Birla's cellular operator, Vodafone Idea last week reported the worst loss in the country's corporate history, while the British partner flagged the risk of a collapse.

Vodafone Idea's woes deepened last month after India's top court sided with the government's demand for US$4 billion in fee-arrears from prior years.

Already burdened by US$14 billion of debt, the order came as a blow to its finances weakened by a brutal war with Jio.

Mr Ambani's operator this year became the country's No 1 carrier with 380 million users by offering free calls and cheap data.

Shares of Vodafone Idea, in which Birla's groups owns a little over 27 per cent, have plunged almost 90 per cent since end-2017 in Mumbai, shrinking its market value to US$2.6 billion. The stock fell as much as 9 per cent on Friday.

This week brought some signs of relief to Vodafone Idea shareholders. Its shares have more than doubled in the four days through Nov 20 as the three rivals - including Jio and Bharti Airtel - signalled an end to the price war.

Bharti, a Singtel associate, reported a record quarterly loss last week as well. BLOOMBERG