| BUSINESSWEEK ONLINE : DECEMBER 27, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- ASIAN BUSINESS
Why Phones Are Ringing for Sunil Mittal (int'l edition) Suddenly, he's one of India's biggest private telecom operators Powerful industrialists scoffed when Bharti Enterprises first jumped into the bidding to offer cellular phone service in New Delhi in 1992. After all, Bharti was a mere manufacturer of phones and answering machines. What did its chairman, Sunil B. Mittal, know about breaking into India's deregulating telecom market? Lots, apparently. Since then, Mittal has turned his company into one of India's most successful private telecom operators, with $186 million in sales, up 54% over last year. His Delhi cell service, called Air Tel, was the first private Indian telecom company to turn a profit, thanks to aggressive marketing and tight cost controls. Bharti also has won a license to operate in the Seychelles, making it the first Indian company to run telecom services abroad. Now the stakes are getting higher for Mittal. With Indian regulators paving the way for a consolidation of the country's fragmented telecom industry, he wants to position Bharti as one of the long-term survivors. So Mittal is making acquisitions in key Indian cities and states. Just last month, Mittal sealed a $93 million deal for JT Mobiles, which provides cellular phone service in two hubs of India's infotech industry, Hyderabad and Bangalore. He also has been working to acquire a 51% stake in Skycell Communications, which operates in booming Madras. He hopes to announce the deal in late December. ''It's part of the dream of building a national telecom network,'' says Mittal. Foreign investors are impressed enough to buy in. British Telecommunications has 39.5%, worth about $250 million, of Bharti's cellular venture in New Delhi. BT has also joined with Bharti to offer a satellite network for internal corporate communications. In a separate venture, Bharti and BT, along with Intel Corp., are offering Internet access to the public through the brand name Mantra Online. The service, available in Bombay, Delhi, and other big cities, is winning subscribers fast. It's not all smooth sailing for Mittal. Competition will intensify in the coming months when state-owned service providers, including Mahanagar Telephone Nigam, launch their own cellular services, which were delayed by regulatory disputes. With its powers eroded, the Telecom Regulatory Authority of India may not be able to adequately protect private operators if cash-rich government rivals resort to price slashing, subsidizing calls, or other anticompetitive practices. It will take a lot, though, to weaken Bharti. In an industry where many telecom startups are backed by large, established industrial houses, analysts see Bharti's exclusive focus on telecoms as an advantage in the coming phone wars. ''They're a force to be reckoned with,'' says Mahesh Uppal, a telecom consultant in New Delhi. While most telecom companies owe so much in license fees to the government they are considered unviable, Bharti's telecom services are close to breaking even. Air Tel is earning modest profits of around $12 million a year. Last year, Bharti became the first private company to set up a fixed-line phone service in India. Now Bharti's network in Madhya Pradesh is signing up more new subscribers than the government's. Because he is in relatively good financial shape, Bharti has funds on hand to make more acquisitions. India has about 30 telecom companies that sprang up after deregulation, and not all of them will survive. Ravi Suri, head of structured finance for ABN-Amro in India, expects consolidation as the stronger players extend their reach and weaker ones make their exit. ''A lot of guys are keen to sell out, and a lot of guys are keen to buy in,'' says Suri. Mittal sees this as the moment he's been waiting for to expand his company. He has plans to go public on Nasdaq next year, bypassing the Bombay exchange. He also believes the government, which has promised to strengthen regulators, will act quickly to stop anticompetitive practices from proliferating. Even the prospect of competing with state telecom giants doesn't seem to scare him. ''We move very fast. I don't think bigger firms can match our speed,'' he says. And in the Indian telecoms race, the pace is getting faster and faster. By Amy Louise Kazmin in New Delhi _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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