Search the Internet          Tips  Sites: Finance, Investment

Sunil Mittal answers his telecoms calling

Santosh Menon

From a small-time maker of bicycle parts in northern India to a telecoms chief, Sunil Bharti Mittal has pedalled a long way.

Mittal, the street-smart founder and chairman of Bharti Enterprises, presides over a vast, complicated empire whose operations span the country's telecoms scene.

With mobile and fixed-line telephony, manufacturing of push-button telephones, telecom software development, Internet access, a V-SAT network and a fibre-optic cable network under construction, analysts say Bharti has all it needs to become a telecoms giant.

The company's operations are profitable and in the past nine months, when telcos the world over struggled to raise money, Bharti raised over $1 billion in private equity -- giving it a war chest to fulfil its ambitions.

"There will be three top telecoms companies in India. And I think Bharti has already taken a ticket in that club," Mittal, 43, told Reuters in an interview.

Bharti has an impressive array of stakeholders -- from Singapore Telecom, British Telecom and Sweden's Telia to private equity firm Warburg Pincus and the International Finance Corp.

The group aims to have five to seven million customers, over $1 billion in sales and over $250 million in profits within the next five years. Sales totalled Rs 13 billion ($277 million) in 2000/01 (April-March) and generated cash worth Rs 1 billion after providing for past losses.

The New Delhi-based unlisted group has managed to hold its own in the cut-throat business despite competition from global telcos such as Hutchison Whampoa, AT& T and Indian conglomerates such as the Tata, Birla and Reliance groups.

HUMBLE BEGINNINGS, BIG GOALS

Mittal, a father of three, started off in 1976 as an 18-year-old straight out of college, launching businesses as varied as making bicycle parts to steel sheets and yarn.

Mittal, who is an economics and political science graduate, grew tired of manufacturing after just three years and decided to try his hand at something big. He soon became India's largest importer of generators.

But this was not to be his calling either.

"It was profitable, but it could never be institutionalised. And I was very keen to set up an organisation, an institution, a corporate," Mittal says.

His dreams were realised in Bharti Enterprises and in the telecoms business, but not before his earlier corporate venture, Bharti Healthcare, to make hard gelatine capsule shells flopped.

Bharti Enterprises, which became involved in the telecom sector by making push-button telephone handsets in 1985, is now one of India's largest private telecom service companies with more than 800,000 customers and 4,000 employees.

It produced about 3.6 million phones last year making its manufacturing operation among the largest of its type in Asia.

But Bharti entered the big league when mobile telephony was introduced in India in the mid-1990s.

"The cellular licence for New Delhi was the turning point for us," said Mittal, who assembled a consortium comprising France's Vivendi and Mauritius-based Emtel to win the licence in 1994 despite stiff competition.

Bharti, which began small with networks in New Delhi and northern Himachal Pradesh state, expanded its operations by acquiring money-losing cellular networks in the states of Karnataka, Tamil Nadu, Andhra Pradesh and turned them around.

HANDS ON

It also started India's first private fixed-line business in the state of Madhya Pradesh and it was also the first Indian telecoms group to branch out overseas with a foray in the Seychelles.

Unlike many other private groups, which continue to lose money in the cellular sector, all of Bharti operations except one have broken even.

Mittal also makes a point of learning the nuts and bolts of the businesses he is in.

"In the old days, I could easily take apart a generator to repair it. In my early days in the telecom business, I climbed towers to look at switches. Today I can sit with a team of engineers and design a network," says Mittal, who has no technical background.

Now after nearly six hectic years of bringing the business up to shape, Mittal has stepped back. He focuses on future strategy, even managing an occasional game of tennis, while managers handle daily operations.

"To his credit, Mittal has built up a professional company. Bharti is among the most financially sound telecom companies and has acquired a name for its knack to attract funding," said an official with a European investment bank.

STAYING CONNECTED

SingTel has so far invested $650 million in the group while Warburg has put in $300 million. Despite these investments, Mittal and his family retain a 54 per cent stake in the group's main holding company Bharti Televentures.

Bharti Televentures, due to be listed later this year, is valued at $2 billion.

Mittal says Bharti has attracted investors because of its hard-won reputation of a group that keeps a tight control on costs, executes projects on time and has a focused management.

Recent funding from investors will come in handy as Bharti bids for up to 12 new mobile licences and gears up to start fixed-line networks in four out of eight states for which it has government approvals.

Bharti is also entering long-distance telephony, laying a 35,000 km (22,000 mile) nationwide fibre-optic backbone. Together with SingTel, it is also laying India's first private submarine cable link connecting the cities of Bombay and Madras with Singapore.

Tell us what you think of this report