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DECEMBER 2001 Contents
Page 6 of 10
Telecom & Software - Trends & Future in South Asia
BHARTI MITTAL [ SBM ]
is a graduate of Punjab University and Harvard Business School.
/Wealth created by 2001 is about $
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.
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
father was an MP in the Indian parliament and a a friend of Prime
Minister Narasimha Rao. However Sunil went his own way .
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
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.
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.
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 .
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.
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.
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.
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.
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.
- 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.
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.
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).
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.
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
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