enterprise mittal far.qxp 30/1105 11:39 AM Page 44

Grooving to Heavy Mittal

SYMBOL OF THE SUCCESS OF MOBILE TELEPHONY: enterprise mittal far.qxp 30/1105 11:39 AM Page 45

Enterprise

Telecom czar Sunil Mittal has just got Vodafone to invest $1.5 billion in his company. It was the largest single foreign invest- ment made. N Chandra Mohan profiles the rise and rise of the poster boy of 's economic liberalisation

ince economic reforms took off in ial energy that rubbed off on Sunil Mittal. tion sets. But that came to an end when the 1990s, India Inc is not just He started in 1976 to the government banned imports of portable rocking 'n rolling but also sway- make bicycle components with borrowed generation sets in 1983. Sing to the rhythms of heavy capital of less than $500. Today, he is a He packed his bags and looked else- Mittal. If a non-resident Indian Lakshmi billionaire with a net worth of $2.6 billion. where for opportunity, which came in the Nivas Mittal has become the world's Mittal now joins the select ranks of self- form of a tie-up for push button telephones largest steel baron, a small-town man from made Indian businessmen who became bil- in 1985. As Mittal is fond of claiming, his in Punjab, Sunil Bharti Mittal, has lionaires within their lifetimes — the likes of was the 'First push button. First cordless. become the poster boy of the revolution in the late Dhirubhai Ambani and Infosys’ N First answering machine. First fax mobile telephony. Somewhat expansively, R Narayana Murthy are among the others. machine'. The market for all this was natu- he claims that he's the 'mascot of the With the warm glow of dizzy success rally the Department of Telecom- Indian government's economic reforms. behind them, such people quite often fall munications as telecom was entirely a gov- Our company is the child of liberalisation, prey to the temptation of exaggeration. A ernment monopoly then. globalisation and competition.' possibly apocryphal story of Ambani in his Sunil Mittal is, of course, all that and early years of struggle was that he kept a ut here again, none of this presaged more. None can deny that the shining sym- piece of paper in his pocket that was a Bthe fact that this state-owned sector bol of what reforms can do is the industry schema of the whole petroleum chain! would one day be opened up to private of mobile telephony which made its Mittal is not in that visionary league — sector participation. This, in fact, happened appearance a decade ago. Mittal today is he simply had no idea when he hawked a full ten years after Mittal began his jour- the undisputed czar of mobile telephony. bicycle components that one day it would ney in telecom. The landmark year was His flagship company Bharti Tele-Ventures, lead to fortune in telecom! The next chap- 1992 and he successfully bid for the through its main brand Airtel, has its mobile ter in the Mittal saga was of making money region and began the first mobile service in footprint all over the country with a market out of recurrent power cuts in Delhi by 1995. There was no looking back since. share of 21-22 per cent. It is a $2 billion importing and assembling portable genera- Starting with an initial subscriber base of company that employs over 15,000 peo- ple. It is also a leading telecom conglomer- The growing success of Mittal’s Bharti Tele-Ventures ate that has sunk in $4 billion in infrastruc- ture like fibre-optic cables and a submarine cable linking India with the world. The fact 80 that Singapore's SingTel has a 30.8 per 80 cent stake in Bharti is also an example of what globalisation is all about. But Mittal’s greatest coup has just been delivered: in end-October, soon after the 60 government upped the foreign investment limit for the telecom industry to 74 per 48.3 cent, Mittal got Vodafone, the world's largest telecom operator, to pick up a ten 40 per cent stake in Bharti for about $1.5 bil- lion. It was the largest single foreign invest- Rs billion ment ever made in India. 24.1 Mittal’s entrepreneurial rise is truly fas- 20 cinating. He did not inherit any business 14.9 like many of his counterparts in corporate 5 India. All that he had was a highly connect- 2 ed parentage as his father 0 was a member of the Congress party. 2002-03 2003-04 2004-05 Public affairs may have been a natural Total Revenue Net Profit course but it was Ludhiana's entrepreneur- Source: Annual Reports

45 enterprise mittal far.qxp 30/1105 11:39 AM Page 46

ENTERPRISE

“VISION, DIVINITY AND GOOD BUSINESS SENSE”

SUNIL BHARTI MITTAL, 48, is far ON WHETHER BEING A from retiring in a couple of years' CONGRESSMAN'S SON HELPED: time as has been made out in pop- At my level, one would certainly ular commentary on his remark- like to influence policy in a manner able success story. He very much that suits us. That is a legitimate intends to continue as chairman of point. Certainly being a the Bharti Group, although not as Congressman's son had its bene- hands-on as in its earlier years. fits like getting out of turn connec- There is a sparkle in his eyes as he tions for telephones or travel. One discusses his diversification plans was also privileged to stay in quar- beyond telecom in apparently ters for Members of Parliament. unrelated areas like airports and One also developed the confi- agriculture. “I am an entrepreneur. dence in meeting important peo- We are like junkies looking for the ple. But beyond all of that, there next big fix,” he confessed in a was no help. There was nothing relaxed chat with India Now. done for us by the government. ON HIS SUCCESS: I think it is a No largesse. If anything, we got combination of vision, divinity and the wrong end of the stick as peo- good business sense. In whatever ple hesitated to help me just business I got into — bicycle because I was a Congressman's parts, trading in copper, making son! The only time I spoke of my telephones, mobile telephony — I business to my father was in 1992 always dreamed of making it big, when mobile telephony was of setting up a large enterprise thrown open to private participa- that can influence markets. The tion. But he died that year itself. telecom business, however, is dif- WE WERE FIGHTING FOR SURVIVAL: Sunil Mittal ON HIS FUTURE PLANS: Airtel ferent from knowledge-intensive remains the pinnacle of my businesses. Here you can dream big but you are constrained by achievement. But one cannot build or scale two peaks in one's limitations of size, scale and resources. People say that we have lifetime. So where does one get the next fix? The telecom busi- made Rs 20 billion in profits but this went with a Rs 180 billion ness has stabilised and the ship is on a steady course. As I tell investment in telecom infrastructure. This business calls for seri- my colleagues, we are now in peacetime. I am as determined to ous capital. So to make it in this business is the rarest of succeed as a peacetime leader as a wartime general. There is achievements for an individual, a first generation entrepreneur the need to step back and plan ahead. There is no question of like me. selling out or retiring as I will be heading my business as chair- There is also definitely the hand of a superior power. When one man. flips through the company's 10-year brochure one cannot People ask me whether I will go into politics. Maybe five years believe that all of this could have happened without such inter- ago, I was open to that idea but no more. Similarly, three years vention. In 1996, for instance, when the second round of ago there was talk of me entering public life. But unlike telecom, licences were awarded, we got only Himachal Pradesh. Many there is no prospect in this area of having a big impact on soci- wondered how a family-run single circle company would survive. ety, economy or national policy. I consider airports as modern But we managed. We did our sums and tried to figure out how day cathedrals and I am deeply embarrassed about the existing we were outbid. At that time, I told a television interviewer that state of affairs regarding airports in India. Unfortunately, Changi there would be blood on the streets. We just hung on and pre- pulled out of our efforts to bid for maintenance services at Delhi pared for the chance to swoop and pick up other licences from airport. cash-strapped operators later on. The other area that I am excited about is horticulture. I love Three years back was also one of the hardest periods in my life this project. This can create a revolution in rural areas. As when people thought that it was the end of Bharti with the entry against employment of an average of one person per acre in rice of the conglomerate Reliance in this business. We knew that we and wheat cultivation, it goes up to16 persons in horticulture. were fighting for our survival. The question was not if but when. But there is a need to build infrastructure in this area just like in My strategy was to lie low and let the storm pass. Morale was telecom. The potential in this business is bigger than telecom. so low in the company that I had to go around giving hope to The scalability is also higher than telecom. Prime Minister employees. I told them we were not expected to win. But if we Manmohan Singh is personally interested in bringing about a big did so, we would create history. The rest, as they say, is change in this area. Agriculture is also good politics and it can history. transform the country.

46 enterprise mittal far.qxp 30/1105 11:39 AM Page 47

ENTERPRISE

A NEW CORE COMPETENCY WHICH CAN CREATE A RURAL REVOLUTION: Horticulture is Sunil Mittal’s new interest

10,000, growth entered an explosive tra- persuade global equipment manufacturers This has been done in a far-sighted jectory to reach 13 million ten years later! like Nokia to locate manufacturing facilities manner by outsourcing everything from After it was opened up, the telecom in India. Thanks to the ongoing boom, the network management to IT to customer industry saw the entry of private and for- highly fragmented mobile industry is also support to partners like Ericsson, Nokia, eign players. Mittal had his share of part- consolidating rapidly with five major play- Siemens and IBM. He has also teamed nerships with the likes of Alcatel, Siemens ers currently vying for domination in this up with IBM to jointly connect all the and British Telecom. However, none of market. There is talk of moving on to 3G offices of the income-tax department by them lasted. But the biggest beneficiary services and value-added services. Mittal is December 2005. was the customer who enjoyed one of the one of these five big players who have a Such strategic outsourcing, no doubt, lowest mobile phone tariffs in the world, presence in all segments of the business. helps Mittal to focus on service delivery besides a choice of operators and technol- and market his telecom wares in 5,200 ogy; GSM or CDMA. India now has over hile being lucky is an important ele- towns and cities all over India. His success 105 million phones, which includes 60 mil- Wment of Mittal's story, none of his naturally has brought him recognition and lion mobile phones. The number of success could have happened without awards like Ernst & Young Entrepreneur of mobiles, in fact, overtook landline phones networking skills. Mittal most certainly the Year in 2004 and most recently the last year. exhibited savviness to do what suited his Economic Times Businessman of the Year The zero date for reform in mobile interests without antagonising powerful in 2005. Mittal has also made it to the telephony was 1998 when the first order business rivals in the telecom business. prestigious Prime Minister’s Council of of the regulator, the Telecom Regulatory Considering the litigation, corporate rival- Trade and Industry. Authority of India, was issued. A cellphone ries and policy flip-flops that charac- As the poster child of reform, questions was then still considered a luxury good: terised this industry over the last 10 naturally are being posed whether Mittal handset prices were prohibitively expen- years, Mittal has emerged unscathed and will one day take the leap to public affairs. sive and tariffs were as high as 35 cents prospered. He prefers to be more guarded in saying, per minute. But with crashing handset As the industry consolidates and “Whether my public life will meander into prices and tariffs as low as 3 cents per matures, the hallmark of Sunil Mittal's politics, I don’t know.” But this much can minute, mobile telephony zoomed into the success stems from ensuring operating be said for certain. At the relatively young stratosphere from 2003 onwards. Today, efficiencies and high quality of services. age of 48, he has achieved what many there are over two million new customers take generations to do. And, he will contin- being added every month! On the Web ue to be a role model for the new genera- Bharti Tele-Ventures: As the spearhead of reform, mobile tion of entrepreneurs who are being www.bhartiteleventures.com telephony is fast acquiring critical mass to thrown up by a liberalising India.

47