Sunil Bharti Mittal, founding chairman of Bharti Airtel, India’s largest mobile phone operator, needs a new personal challenge. And he has found it with the $19 billion informal bid that he is reported to have made, or at least is considering, for MTN, the South African-based telecoms group.
Last week Mittal finished a year as president of the Confederation of Indian Industry (CII), a leading business federation. That was a time-consuming post that tied him up in tedious committee work, which he disliked. His group is also partnering with Wal-Mart (WMT) in a slow-developing retail and cash-and-carry business, but that is primarily being looked after by one of his brothers.
So Mittal, one of India’s richest men, needs a new challenge. He also needs to catch up with Tata, Birla and other Indian companies that have been tying up big foreign takeovers while he has been presiding over the CII.
Having started in 1976 as a 19-year old engineering graduate making bicycle parts in his north-Indian home town of Ludhiana (with $1,500 borrowed from his father), Mittal is now India’s most successful first-generation businessman to emerge outside the field of information technology since the country’s economic opening up began in 1991. (His internationally-known Indian-born namesake, Lakshmi Mittal, who is not a relation, built his LNH Holdings steel empire outside of India.)
India’s media is convinced that one day he will enter politics – reporters were pushing him on that last week when, a couple of days after finishing his CII post, he announced a Bharti telecom link-up with IFFCCO, an agricultural co-operative, to target India’s 750 -million rural population and bring Internet links to farmers.
He says that “transformational activities” motivate him. “Public life still excites me,” he told me early last year. “But will I cross the line and become a full time politician? I think it is unlikely, having seen the transformation that I can achieve here,” he added, referring to the Bharti Foundation, a $50 million charity that sets up village schools and other initiatives.
He tried transforming Indian fruit and vegetable production a couple of years ago by growing produce for export; but could not sustain sufficiently high standards for western markets, so he turned that business into a food processing joint venture with Del Monte (DLM).
His link-up with Wal-Mart – aimed at playing a leading role in the current transformation of India’s retail industry – is moving far slower than he hoped when the joint venture was agreed at the end of 2006. And he bid unsuccessfully three years ago to privatize and rebuild Delhi’s international and domestic airport.
So he has returned to the industry he knows best for his next challenge: telecom. Bharti and MTN are roughly the same size – they both have 60 to 70 million customers and market capitalizations of around $30-$40 billion – and they are both experienced at providing telecom services across vast countries. Bharti is growing the faster – adding 2 million new customers a month – and is cash-rich. But it has only two small telecom operations outside India – in the Seychelles and the Channel Islands (Jersey and Guernsey) – plus one about to start in Sri Lanka. Now Mittal is attempting to become a significant international player, but looks like he’s facing strong opposition from nationalist fervour in South Africa and competition from other telecoms.
He has succeeded in India by beating competition with strong marketing and consumer service and by outsourcing Airtel’s information technology activities and network management four years ago to IBM (IBM), Ericsson (ERIC) and Nokia (NOK). Critics said he was giving away his technology “lifeline” to suppliers, but, he says: “Our lifeline is how to get and retain the customers – technology for a telecom company is just an enabler which we buy to sell to our customers.”