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Follow UsThe Year 2002 belonged to Sunil Bharti Mittal, chairman and managing director
of the Bharti Group. In this year, India's telecom price warrior
single-handedly managed to bring down the abnormally high phone tariffs in the
country. He started with national long distance, and went on to change the
landscape in international long distance as well-forcing others to cut call
rates to stay in the running. In the cellular telephony space, Mittal's
flagship service-Airtel-led the price wars. By the year-end, lower STD, ISD
and cellular rates had changed the face of telephony in India, fuelling furious
growth in subscriber base.
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But
2002 belonged to Mittal for yet another achievement-one that has gone largely
unsung-and one which really made easy his choice as this year's IT Man of
the Year. At a time when regional security concerns placed a question mark over
India's emergence as the hub for IT services and BPO operations, Mittal put in
place the country's first submarine cable link-a $650-million undersea line
connecting Chennai and Singapore. Once lit, the link will totally de-risk Indian
IT and communications links with the rest of the world, for the cable totally
bypasses strife-ridden geographies.
Mittal also garnered $1.2 billion in foreign equity investment for the Bharti
Group.
Now, with a fiber backbone the stretches over 24,000 km across the country,
Bharti is setting its eyes on greater opportunities in the converging ICT space.
It is for changing the face of the Indian ICT space, that Dataquest presents
the IT Man of the Year Award 2002 to Sunil Bharti Mittal, chairman and managing
director of the Bharti Group.
No time for a game of ten-nis. Can't stop to check out another new feature
on another new mobile phone. Long, involved hours at headquarters 'Sultanate 1'
working on the next big telecom thing... Anyone care to guess what's on Sunil
Bharti Mittal's mind?
Peace, as it happens
At 45, even as he heads a successful enterprise with a market capitalization
of approximately $ 2 billion, employing over 5,000 people, he is a man who's
at peace with himself and the ringing, buzzing, speeding world around him. He
believes in tuning out with Yoga and he's unruffled, self-assured, and quite
completely down-to-earth. Of course, it's a world he's helped create in the
first place, because if there's one person you could pick out as having
spearheaded the telecom revolution connecting this country-that would be Sunil
Mittal.
Mittal has to its credit the breaking up of the 100 year old monopolies of
state run companies to operate telecom services in India. This telecom king
heads the largest mobile phone company on the subcontinent; one that's growing
at a breakneck speed of over 70% as its base widens to address a potential
market of one billion customers. And that's in bad times. In his Sultanate, he
tells his story easily. Comfortably. And rather good naturedly for one who's
probably been asked the same questions dozens of times. Where did it all start?
It began with bicycles. And why not. A lot of good things begin with bicycles.
As a youngster of 18, Sunil knew exactly what he didn't want. He did not
want go get into politics. Not that he didn't admire his father who became a
member of Parliament when Sunil was very young. "My father was one of the
most intelligent and driven men I've ever known", says SBM. Despite the
admiration he felt for his father, Sunil didn't feel drawn to do what he did.
"Politics held no allure for me" he says. To always be in the public
eye, to have people streaming in and out of your life-he didn't quite see
himself fitting that role. Even at that age, he had the heart of a businessman.
The early years saw him dabbling in a variety of businesses including knitwear
and stainless steel utensils. "I think my father saw that too", he
says. Sunil puts it down to the "enterprising spirit of Ludhiana".
"Almost everyone in Ludhiana works for himself and the entrepreneurial
energy flows in the city," he says fondly of his hometown.
The next big thing
And so it was that soon after he passed out of Punjab University, Sunil got
together with a college friend and drummed up the small sum of Rs 20,000 to
start a business manufacturing crank shafts for bicycles.
"Money was hard to come by and it was a tiny unit. But it was the point
of learning," he recalls, describing how he started learning how to handle
commerce. Persuading banks to lend you money, suppliers to give you material on
credit and buyers to pay up in time or before, accepting rejects...this small
business exposed the young Mittal to it all, driven by the burning desire to
make an impact and to excel in what he did. But by 1979, Mittal had realized
that these business would remain small. He moved out of Ludhiana, spent a few
years in Mumbai and in 1981, was running an import and distribution operation
out of New Delhi and Mumbai. (Incidentally, the same bicycle parts manufacturing
business still runs profitably, though Mittal sold his shares to his business
partner when he moved to New Delhi several years ago).
By 1982, Mittal had moved a notch higher, running a full-fledged business
selling portable generators imported from Japan. "Importing anything was
tough in those days given the high duty structures. One had to be creative in
making things work," he smiles. It was this business that gave Mittal the
wherewithal to involve himself in front-end activities like marketing and
advertising. Things were hunky dory until the government banned the import of
generators as two Indian companies had been awarded licenses to manufacture
generators locally.
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| x:str="1995 BTNL awarded license to operate cellular services in Himachal Pradesh. BCL launched GSM cellular services in Delhi " valign="top" bgcolor="#000000">1995 | ||||||
| 1997 Bharti Global was granted the license to operate comprehensive telecom services in Seychelles as second operator |
||||||
| x:str="1998 The first private basic service was launched in Madhya Pradesh by BTNL " valign="top" bgcolor="#000000">1998 | ||||||
| x:str="1999 Bharti BT Internet launched Mantra Online Internet services " valign="top" bgcolor="#000000">1999 | ||||||
| x:str="1999 EM Warburg Pincus, one of the largest International Private Equity Investors, joined BTVL " valign="top" bgcolor="#000000">1999 | ||||||
| x:str="2000 Singapore Telecom decided to invest in Bharti and became a partner in BTL and BTVL " valign="top" bgcolor="#000000">2000 | ||||||
| x:str="2001 Entered into a joint venture with Singapore Telecom International for a submarine cable project between India and Singapore " valign="top" bgcolor="#000000">2001 | ||||||
| x:str="2001 Acquired cellular operation from Spice Cell in Kolkata. " valign="top" bgcolor="#000000">2001 | ||||||
| x:str="Crossed the 1 million subscriber base mark. Bharti launched India's first private sector national long distance service under the brand name IndiaOne " valign="top" bgcolor="#000000">Crossed | ||||||
| x:str="2001 Bharti launched basic services in Haryana under the Touchtel brand " valign="top" bgcolor="#000000">2001 | ||||||
| x:str="2002 Bharti listed on the National Stock Exchange, Bombay Stock Exchange and the Delhi Stock Exchange in February. " valign="top" bgcolor="#000000">2002 | ||||||
| 2002 Bharti received a letter of intent from the Government of India to provide international voice services |
Push-buttons for success
Luckily for him-and the rest of us-Sunil Mittal happened to bump smack
into a push button phone while on a trip to Taiwan. Not only did he think it
looked cool and futuristic, he had a feeling it would do a great job of
replacing the quaint but cumbersome rotary phones that were in use then. In
1982, he was the first to furnish India with push-button phones and sure enough,
you don't see rotary phones around anywhere easily. The company entered into a
partnership for the manufacture of push-button telephones. By the early 1990s,
Mittal was making fax machines, cordless phones and other telecom gear.
The turning point came in 1992 when the Indian government was awarding
licenses for mobile phone services for the first time. Two years later, Sunil
secured rights to serve New Delhi.
In February 1992, one of the conditions for the Delhi cellular license was
that the bidder have some experience as a telecom operator. He 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 license, Vivendi backed out saying
it would go with the Modi Group. After mustering all his strength, Mittal
persuaded Vivendi to work with him. He won the deal.
Telecom: Revolution Part II
Despite his history as a serial entrepreneur, Mittal focus is now on telecom
and telecom alone.
The Bharti 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.
Bharti's world
So what does Bharti, the corporate house stand for?
"Everybody is an owner. Technically, each employee has stock options and
each one decides how much work to put in to decide your destiny, no questions
asked. Each one does what they have to do, travel when they feel the need to do
and enjoy the freedom to take decisions," says Mittal pointing out that the
important thing is that every evening, when each one goes back home, it is with
the feeling of having achieved something special.
While this makes a case for great HR practice and may be true at a more
general level, every company has its share of problems to mop up. Known to be a
"good employer", the Bharti group has traditionally dithered from
firing employees. In the age of building lean organizations and when the concept
of RoI (return on investment) applies to human capital as well, will Bharti
switch to the "right-sizing" mode too?
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Mittal does talk about burning the excess fat that has accumulated in the
next nine months, attributing the magnitude of the mass that has accrued to
"a personal problem of not being able to fire people". This, he says,
is one of the drawbacks of having started off as an entrepreneur with no B
school grounding. As happens with organizations across industries, Bharti has
its share of loyal employees who have been unable to grow and hone their skill
sets at the same pace. The company has plans to "handle" 15 such
employees in the year to come. Ruling out plans of any "large scale
retrenchment", Mittal informs that in the year gone by, three employees
with the same problem were "assisted in going on their own." One was
given startup money for becoming a franchisee, another was awarded a contract to
start digging for laying cables...
"These are people who have given their lives to the company and one has
to be sensitive in dealing with them. I feel sorry when someone tells me his
daughter's wedding plans will be affected if he loses the job," says
Mittal proposing that such employees should be allowed to continue, may be given
a smaller role so that company performance is not affected in the long run.
In fact, "consequence management" was one of the two issues brought
out by a McKinsey study on Bharti concluding that though people love to work
here, some of the HR expenses have been made a year in advance. The other weak
area McKinsey highlighted was the company's formal review processes. Mittal
says there has review processes too have been overhauled recently.
And then, there is the sticky issue of Sunil Mittal as a brand being stronger
than his brothers Rakesh (elder) and younger Rajan. So what do the Mittals do to
ensure that Bharti does not face the strife other family owned businesses often
have.
"There has always been freedom and space among the brothers. We live
separately. In fact we decided years ago that we needed to be away from each
other after work hours in order to give each other that space, and it has
worked," he replies.
Mittal also maintains that he has never looked at Bharti as a family
business. "It has been professionally run, right from the beginning and in
fact, the family interest is being reduced by the day," he says.
Challenge next
Mittal has never liked to stay on to one thing. For him, the excitement lies
in creating a new project. So, does the phenomenal success of Bharti
Televentures mean it is time to move on?
"Will I build a new business after this business, no. Start from scratch
and do all this again, no, " he says indicating that there will be new
projects but only those that make a great impact, among them a larger role in
Bharti Foundation (which has funded 50-odd schools in Madhya Pradesh.
The company also donated Rs 200 million to IIT Delhi for building a Bharti
School of Technology and Management.)
Or else, one could find Mittal involved in building a strong lobby for
developing areas like education, public health or population control. New
ventures could be in the form of building a world class airport or building
infrastructure that will have a high impact on society. "I do see myself in
some form of public life, not necessarily politics in about another five years
when I hit 50," he says.
But as for now, he enjoys his work far too much to allow himself to be called
a workaholic. He's a risk taker, but a very clear thinker to whom a risk must
be well calculated and executed with perfect timing and speed. He believes it's
as important to know when to get out of a business as it is to know when to go
for the kill. He's equanimous and difficult to annoy or ruffle. Mittal
attributes that to not being "emotionally attached" to the business.
While he'd mostly rather be working than doing anything else and is intensely
focused on telecom, he doesn't let it get under his skin.
Today, there are many people who would love to be Sunil Mittal. Who does
Sunil Mittal want to be? He can't think of anyone in the country, but finds
himself deeply impressed with the Singapore leadership. "Whether it's the
Prime Minister in Singapore, younger ministers in the Singapore government or
CEOs of companies, I believe they're driven to the point where they want to
build something for their country and making their country something
different". In that sense, Mittal believes that the businesses he's built
up are incidental, the real mission is to make things better, on a larger scale
and affecting a large number of people.
People around Mittal sometimes think he's serene to a fault. But if there's
one thing he certainly deserves, it's the sense of detachment and peace he
gets with yoga and that untroubled walk in the park with his dog.
Nothing but Telecom: Sunil Bharti Mittal, Chairman & MD
l Which would
you say are the milestones that altered the course of the communications
industry in India?
When the Government of India allowed the private sector into telecom
equipment manufacturing in the mid 80s, it changed the course of the industry.
The second most important event was the granting of mobile telephone
licenses in 1994. Everything had been closed till then and finally, the
government felt that services is no longer a security issue. And as for Bharti,
the turning point was the launch of Delhi in 1995. It was a Rs 300 crore
project on the back of a Rs 25 crore balance sheet. Launching and managing that
project was a big thing as was taking a leadership position against a big
competitor.
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l From push
button and cordless phones to answering machines and fax machines, you have a
string of firsts to your credit. Did being the first involve more risk?
We are not risk averse, but have managed risks as we have grown. When one
is riding on billions of dollars, one cannot afford to be reckless. But we have
taken calculated positions.
For instance, some time back, we decided to exit all areas of business in
which we do not have complete control. Casio was one such venture and it was
frustrating. So we decided to exit. For the same reasons, we bought out the
Siemens venture. We had put in just Rs 2 crore in the Duraline venture and got
back Rs 40 crore in two years. But we thought it made eminent sense to exit
that business as we had nothing more to contribute to it.
In the Internet area, we had made significant investments in POPS. But
Mantraonline scaled back from 150, 000 to 100,000 customers. Being an ISP does
not make sense for us today, except in the case of Mantraonline selling
corporate intranets using fiber.
We had plans of a software venture and had built a facility in Gurgaon.
Seeing that it was not making headway, we moved our entire operations to Okhla
in Delhi. The Gurgaon building is now being used by Agilient Technologies on a
10 year lease. This deal makes good economic sense. Similarly, when our plans
of a call center did not take off, we gave out the building with a 1200 seating
capacity to American Express. In fact, these two successful deals have led to
the creation of a specialized service within the Bharti group- of setting up
large, high quality buildings for call centers and software companies with
bandwidth infrastructure provided by Bharti.
What does not work out, offers us lessons to pick up, spurs us to move
quickly and gives us the wherewithal to experiment.
l What has
been your role in contributing to the formation of government policy?
I have been fairly active on the policy making front. However, I have never
felt the need to influence policy beyond a point. There have been times when
policy drafts have actually been shown to us and our suggestions sought and
implemented. That is the level of credibility and trust that we have built for
ourselves-that we will always give suggestions that will work to the benefit
of the country.
l What are
the bottlenecks Indian telecom faces today?
The over-regulatory style of the administration is an issue. The regulator
needs to wake up. It is not doing enough currently. The body needs to iron out
creases and certain niggling issues need to be resolved expeditiously. India is
also being held back big time because of interconnect problems. The onus is on
BSNL and MTNL to sort out the interconnect issue.
l Bharti's
recent CEO Conclave at Agra was dominated by your views on dealing with the
Reliance threat. How long will Bharti be Sunil Mittal?
The annual CEO Conclave at Agra is my event, where I present my vision to
our CEOS. I listen to others the year through and at this event, they listen to
me! What we discuss at this conclave, are areas we need to work on. This time,
one issue was dealing with competition involving what are the strategic
pressure points and how we need to strengthen ourselves.
There have always been advantages and disadvantages of creating an icon in a
company. Nearly seven to eight years ago, we took a decision to create a strong
icon for branding. We have found that having a strong icon for the group helps
in internal cohesion as well. Two years ago I'd say that if I'm not there,
the only area that will suffer is new projects. Today if I'm not there,
nothing will suffer.
Look at the operations' aspect. Every CEO is like a chief minister, with
powers to take decisions on all aspects of the business. There is a list of
just 13 things a CEO here cannot do. And these are all big ticket items like
not changing the brand, no collaboration with external agencies, no plans to
surrender licenses...things which in any case, CEOs do not want to do.
l You have
been active proponents of allowing 74% foreign direct investment. Will Bharti
eventually be sold out while you move on to more challenging things?
In this business, one can never say never, but right now, there are
absolutely no plans to sell out. We have been in the telecom business since
1982. After BSNL, we have the most experience. If you talk of financial muscle,
there is enough. As against our Rs 9000 crore investment, Reliance has invested
Rs 5000 crore and the Tatas nearly Rs 4000 crore.
By March 2003, we will have 24,000 km of fiber laid out covering 87% of
India's traffic. We have been working smart and are growing at a quarter
million customers per month.
Despite a 700 m $ investment from Singtel, not a single person from there is
on our board. More divestment is likely to take place. If you want to sell your
company there are many ways of doing it.
Look at the Nandas in Escorts or the Mahindras, their stakes in their
companies are even lower than ours, but they never get asked if they have plans
to move on! That is because they are married to their businesses and my
emotional attachment to this business is nil. But that in no way means, we are
selling out.
l Who do you
think are the others who have revolutionized telecom in India?
Sam Pitroda inspired me in my early years. Watching him, talking to him,
moved me and fired me up. Then there was Rajeev Chandrashekhar, Nahata, Rajeev
Mehrotra-not too many people. The Tatas do everything and Reliance is
dabbling in telecom only now. In the telecom space today, it is essentially
Bharti, for we do nothing but telecom.
What everybody wants to know about the telecom King
There are three questions that Sunil Bharti Mittal gets asked most often.
Good-naturedly, he answers them every time he's asked...
l Your father
was a member of Parliament. Did you ever think of getting into politics?
My mother was not keen on any of her children entering politics. I saw how
she suffered the downside of being married to a politician. Being in public
life, my father was away often. We always had people walking in and out of the
house-never any privacy. My father was very worldly wise and I was greatly
inspired by him. Whenever he was home, I'd spend my evenings sitting with him,
most kids at my age then, won't do that. His high energy level and presence of
mind has impressed me a lot.
There was just one thing, he ought to have been more diplomatic. Despite the
fact that I admired my father, the entrepreneurial spirit of Ludhiana drove me
to business. I was always a businessman at heart and my father saw that. In
fact, I think he would have made a great businessman.
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l Would
you expect your children to follow in your footsteps?
I have always maintained that ours is not a family business. We have less
than 40% stake today and it will drop to 26% in the next year. Building this
company has been a mission. Each employee is charged because he knows that a
child will not drop from a parachute and enter the boardroom. We will not allow
it to happen. This company will be well beyond my control by the time my
children are old enough to start working.
My daughter who is 19, is studying politics and modern languages. She is good
at public speaking. She will probably go her own way seeking a career in the
media or in public life.
My twin sons are 15 and they have many years to go before they start working.
They are not even allowed to visit me at work. I have been strict with these
rules right from beginning. If my kids were allowed to visit, so could every
director's kids and we'd have a kindergarten in the office! In fact, I don't
even get calls from home unless there is an emergency.
l Are you a
Type A personality?
Type A has a lot of things associated with it. I thrive behind my desk. My
involvement in work has ensured that my personal interests and hobbies have
gradually disappeared. I want to bring them back and I've decided to work
towards that soon. My work gives me great pleasure no doubt, but my attachment
to the business and authority is low.
I stopped signing checks 15-16 yrs ago. I travel alone without the entourage
that I see others with. I am happy carrying my own bags and am essentially very
comfortable with myself. I don't need people around me all the time. I can
spend hours by myself with my dreams. My attachment to business is low but to
its cause, it is very high. It does not keep me awake. My family is supportive
and loving, so there is no stress on that front. As a matter of fact, when I see
others around me working so hard, I'd say some of our directors at Bharti are
more type A!