Telecom Services

Top-level exodus spells trouble for Essar Telecom

August 14, 2011

Essar Telecom is facing exodus of the top management. The series of resignations from the top management could spell trouble for the company which is trying to spread its wings in Africa and in India.

Recently, Ashwin Shah resigned from the post of group CIO of Essar Telecom Business Group and joined Wipro Technologies as an independent management consultant.

The resignation of Atul Chaturvedi, CEO of Essar Kenya, who joined from Idea Cellular in India, also affected the company. Atul was replaced by Madhur Taneja, former CEO of Uganda-based Warid Telecom.

Two months ago, Rajiv Sawhney quit his post as CEO of Essar Telecom Business Group to join Mahindra Holidays & Resorts India as CEO and MD.

Sawhney has moved out of the telecom industry to pursue a career in the hospitality industry, while Chaturvedi wished to return back to India for personal reasons. In a large organization of our size, such movements are natural and we have suitable depth of internal talent to take over these responsibilities,” said the official spokesperson of the Essar Telecom group.

According to industry sources, most of the CXO team at Essar Telecom Group has stepped down. With the exception of Chaturvedi, there have been no replacements for any of the other CXO posts, which have been lying vacant for the past 2-4 months.

When Atul Chaturvedi stepped down, Essar said that it was undergoing a group restructuring to arrest falling market shares in Africa. There have been no internal replacements for the CXO team at Essar, and according to an insider source, all replacements have been kept on hold for the time being.

Since last year, Essar was in talks to sell its stake in the JV with Vodafone Essar. Their discussion ended finally ended earlier this month, with Vodafone buying out its Indian partner, Essar’s stake for $5.46 billion, ending its joint venture by February 2012.

Months of uncertainty regarding the future of India’s number two operator may have inspired the gradual exits of the top-level team. However, there may be yet another reason for most of the ex-senior Essar executives joining non-telecom portfolios.

Essar was recently in the news in India for its role in the the 2G scam, with allegations of scam-tainted Loop Telecom, being a front company for Essar.

Loop Telecom is said to have been among the favoured companies to get 2G spectrum and licenses in 2008, at 2002 prices, during the tenure of ex-telecom minister A Raja. Essar is said to have encouraged this move, with money changing hands via its Mauritius operations. The Ministry of Corporate Affairs is also currently undergoing questioning by the CBI for giving a clean chit to Essar in this affair.

The Essar Telecom Business Group is now trying to prove its innocence and lying low in a wait-and-watch mode to see the outcome of the 2G proceedings. Meanwhile, the industry is waiting and watching for Essar’s reaction to its steadily decreasing high-level workforce.

By Beryl M

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