Telecom &software in south asia 6- bharti mittal

Sunil Bharti Mittal or SBM as he is called, has at the age of 43 created a Telecom Giant in India . It has risen from humble beginnings in 1970’s as a bicycle parts manufacturer, knitwear and stainless steel utensils in Ludhiana, Punjab state. Together with other foreign companies he has raised $ 1.5 billion of which $ 800 million is still in the bank.

Singapore Telecom SingTel has invested $ 400 million , and Warburg Pincus the New York based investment bank have about a combined share of 40 % in Bharti Telecom ; IFC , AIF have another $ 100 million invested in Bharti. Other partners are British Telecom -BT , Swedish Telecom operator Telia.

SBM’s father was an MP in the Indian parliament and a a friend of Prime Minister Narasimha Rao. However Sunil went his own way .

Bharti Enterprises controls about 20 % of the Total Telecom market in India . As he puts it , it was a mixture of Vision , good luck and hard work by a team of about 10 -12 senior people. The early beginnings in 1985 were in manufacturing telephone handsets. They did not have the expertise to do telephone exchanges , jelly -filled cables had become a commodity and their capital investment was high.

Initially 52 companies were licensed to manufacture telephones; Today only three remain - Bharti , Tata and BPL. Between 1982-86 Bharti manufactured Fax machines, Cordless phones, and telephones. SBM says that they stuck to telecom although every entrepreneur was into paper mills , steel mills, mini-cement plants, cinemas, and hotels.

He says they often went to Sam Pitroda for advice, which was to wait for the telecom sector to open up [ deregulate / privatise ]. As a result SBM says they were always looking ahead and knew what was happening in the world markets.

In 1992 SBM got a market study done for cellular phones. The study said that the market in Delhi was 5000 cell phones. Anyway SBM says they threw away this report and bid and got the Delhi cellular circle at a time when people said that Bharti could not raise the Capital required for this project. Bharti later went on to build and run Delhi cellular profitably. Even the Delhi Cellular License was in Mittal’s own words an encounter with destiny .

In February 1992 , one of the conditions for the Delhi cellular licence was that the bidder have some telecom operators experience . He went and clinched a deal with the French telecom group “Vivendi” after a three hour session with the CEO ; On March 31 the deadline for the Delhi metro licence Vivendi backed out saying that they would go with the Modi Group. After mustering all his strength Mittal persuaded Vivendi that there must have been something that made Vivendi deal with him and that Vivendi should trust their instinct and work with him . He got the deal and Bharti Delhi cellular starting making a profit 2 years ago.

Later on in the Fixed line Telephone Circle and licences , SBM claims it was “divine intervention” that helped them as the other telecom bidders - Himachal Futuristic & Essar -- bid fantastic amounts and later could not pay up.

The Bharti Group

The Group is focused on different areas of business through independent JV companies: Bharti Cellular for cellular operations, Bharti Telenet for basic services, Bharti-BT Internet for Internet services, and Bharti BT for VSAT and WAN consultancy. Others include Bharti Telesoft for telecom software development, Bharti International for JVs in global markets, Bharti Televentures for projects, and Bharti Telecom for telecom equipment development. This completes the entire portfolio of telecom coverage. It has over $ 200 million of turnover. It is the second largest player in terms of total number of subscribers from cellular and basic services.

In the cellular business, it started with Delhi operations and followed up in Himachal. Last year, it invested about Rs 650 crore in acquisitions and bought JT Mobile (JTM) in Andhra Pradesh (AP) and Karnataka, and SkyCell in Chennai. It is contemplating to take over Usha Martin in Calcutta. It entered into alliance with BPL and together they can ensure a seamless connectivity in Delhi, Chennai, Mumbai, Maharashtra, Karnataka, Kerala, Tamil Nadu, and AP. The real issue, according to him, was one of costing and to determine which between GSM and CDMA was more effective. "We are currently betting on GSM" added Mittal. In Mittal's view growth in Cellular phones in India is in Chennai and south India where it is a economic necessity . In the north it is only in the Delhi greater region.

It has bought 100 percent equity in Spice Cell in an all-cash deal from Modicorp, which gives Bharti cellular services in Kolkata to a base of more than 1,00,000 subscribers, saving time and money.

Bharti’s will not bid for VSNL and instead consolidate its existing lines of business that includes fixed and broadband services besides the cellular operations. Mittal, has been supporting the raising of the limit of the Foreign Direct Investments in telecom services to 74 percent.

Bharti - AirTel is rated the India’s best cellular service operator. Bharti has a number of firsts in Indian telecom. Its push button telephones to being the first cellular service in Delhi, first private basic telephone service provider in the country, first Indian company to provide comprehensive telecom services outside India (Seychelles), fastest growing VSAT company in India and first multinational Internet service provider.

Broadband Bharti.

Bharti’s national long distance (NLD) service early next year and plans to acquire the 40 million DoT customers eventually" according to S B Mittal. The company had earlier signed the license agreement to offer the NLD service in the country. Bharti has put in place 10,000 km of fibre optic network across 50 towns in the country.

The Indian Government has divided India into 21 telecom circles for providing the NLD service. These circles have been further divided into 322 long distance charging areas (LDCAs) and these LDCAs have been split into short distance charging areas (SDCAs).

Mittal says that in India only about a quarter million new subscribers are added every year, and that they plan to increase that to a million per month. In China, mobile operators attract four million new subscribers per month with a total of about 40-50 million mobile users , a number that has exceeded that of the USA.

Moreover, it has emerged as India's largest mobile services company covering over 600 cities and with the largest international roaming service in over 47 countries and 106 networks.

Bharti is getting ready to launch long distance services across the country and it is laying optic fibre cable across 200 cities. Bharti is also putting together a $650 million undersea cable project along with its partner Singapore Telecom connecting Chennai with Singapore.

For Sunil Bharti Mittal Sunil and his brother Rakesh who started about 20 years ago selling telephones in the Parliament Buildings that Edward Lutyens designed , this has been a long and winding road selling telephones on their modest scooters to becoming the Telecom giants in India.

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