Qutab Ambience (at Qutab Minar)
Company Perspectives:
Mission: To be globally admired for telecom services that delight cus tomers.
Bharti Tele-Ventures Limited, part of the Bharti Enterprises group, i s India's leading wireless telecommunications provider, with a 25 per cent share of the national market, and market share of as much as 50 percent or more in the group's target market "circles." Bharti Tele-V entures is also one of the world's fastest-growing mobile telephone c ompanies, in part due to the rapid growth of the Indian cellular mark et as a whole. The Indian mobile telephone market is expected to top 250 million subscribers before 2010, rising from just more than nine million in the early years of the 2000s. Bharti itself has grown from an initial subscriber base of less than 120,000 in the mid-1990s to more than 11.4 million by 2005. The company owes much of its success to its commitment to offering cutting-edge services, while maintainin g low pricing policies, an important component in generally impoveris hed India. The group's GSM-based mobile telecommunications operations span 23 of India's mobile "circles," typically encompassing both maj or urban and outlying areas. In 2005, the company completed the natio nal rollout of its network. Bharti groups its mobile telecommunicatio ns operations under the Mobility Leaders division. Through its Infote l Leaders business division, Bharti also has entered the fixed-line t elephony market, building its own 12,000-kilometer fiber-optic networ k for selected markets; the company also provides national long dista nce and broadband services. Most of Bharti's telecommunications servi ces operate under the Airtel brand. Bharti is listed on the Mumbai St ock Exchange and the National Stock Exchange of India, and is led by founder and Chairman Sunil Mitall. In 2005, Bharti's sales topped INR 78.76 billion ($1.8 billion).
From Bicycle Parts to Cellular Phones in the 1990s
Sunil Mittal was an unlikely candidate to become the leader of India' s mobile telephone sector. Mittal started his business career in 1976 with the opening of a small factory manufacturing bicycle crankshaft s in Ludhiana, in the northwest of Punjab. Mittal, then just 18, star ted the business with only $400; before long, the factory employe d 25 workers. To gain greater scale, and access to bank credit, Mitta l added other manufacturing operations, such as hosiery and household utensils.
As his manufacturing capacity grew, Mittal continued exploring other business opportunities. His attention turned to the import-export sec tor. By the end of the 1970s, Mittal had moved to Delhi and establish ed a new business importing portable generators from Japan, among oth er items. The generator business flourished, adding operations in Mum bai as well, in large part because of Mittal's ability to navigate th e often tortuous windings of Indian regulations governing the sector. Yet in the early 1980s, the government, seeking to develop homegrown industries, placed a ban on the import of a number of items, includi ng portable generators.
The ban, however, encouraged Mittal, joined by his brothers, to explo re new business opportunities, setting the stage for his greatest suc cess. Into the early 1980s, India's telephone system still relied on the rotary dial telephone. The development of new types of telephone services, however, demanded the use of push-button telephones. In 198 3, Mittal reached an agreement with Germany's Siemens to manufacture the company's push-button telephone models for the Indian market.
Mittal became the first in India to offer push-button telephones, est ablishing the basis of Bharti Enterprises. This first-mover advantage allowed Mittal to expand his manufacturing capacity elsewhere in the telecommunications market. By the early 1990s, Mittal also had launc hed the country's first fax machines and its first cordless telephone s.
In the early 1980s, Mittal had continued to explore other areas of op erations; in 1982, for example, he set up Bharti Healthcare in order to produce capsules for medicines. (The word Bharti came from the Hin di word for "Indian.") By the end of the 1980s, however, Bharti's foc us had narrowed to the telecommunications market. As Mittal told R ediff: "From 1986 to 1992, we manufactured telephone instruments, fax machines and cordless telephones. There has been a method to thi s growth. We didn't stray even then. No steel mills, no paper mills, no mini-cement plants, cinema halls or hotels--all these opportunitie s did come to us. Every entrepreneur was getting into these things. B ut we single-mindedly concentrated on telecom."
At the beginning of the 1990s, the Indian government began preparing for the launch of a new generation of wireless telecommunications sta ndards. Bharti quickly recognized the potential for the development o f products such as pagers and cellular telephones. Yet the company's interest now reached beyond manufacturing, and instead focused on bec oming a telecommunications services provider. As part of its own prep arations, Bharti requested the results of a survey from Feedback Vent ures determining the market potential for cellular phone services in the Delhi "circle," as the Indian licensing regions were called.
The results were less than encouraging. As Mittal recalled to Redi ff: "It said that there would be a market for 5,000 cellular phon es in Delhi. That was one more confirmation that these reports were s illy and nonsensical, so we tore it up and threw it away. Even before the project was up, I was sure that on the first day of booking, we would have 5,000 connections, leave alone the market being that size! "
The survey nonetheless succeeded in dissuading a number of larger gro ups from competing for the Delhi license. At the same time, stipulati ons from the government required that any bids be made by groups with prior telecom experience, which effectively eliminated another class of competitors. Bharti's background in telephone and fax machine man ufacturing, however, provided it with the experience sufficient to me et the requirement. Mittal quickly lined up an equipment and support agreement with France's Vivendi and launched its own bid.
The bid from the relatively minor company raised eyebrows, and few ga ve the company any hope of succeeding. Indeed, even Vivendi developed cold feet, and at the last minute decided to switch its backing to t he larger Modi group. Yet Mittal managed to convince Vivendi to stick to their agreement, and Bharti won the Delhi license.
Building a Mobile Telephone Network in the Late 1990s
Bharti began installing its network, a process completed in 1995. Wit h Vivendi's backing, the group was able to convince Ericsson to suppl y the equipment to build its network on credit. Time International reported that Mittal told Ericsson that Bharti would pay "when t he customers are happy." In that year, the company founded a subsidia ry for its cellular telephone business, called Bharti Cellular, which was placed under the holding company, Bharti Tele-Ventures Limited. Bharti Cellular launched its service, branded Airtel, in Delhi that y ear. The company immediately began bidding for other markets, adding Himachal Pradesh in 1996.
Bharti's growth was rapid and, in an industry requiring high investme nt, the company was among the fastest, and very few, in the country t o enter profitability. A big part of the group's success in this matt er was its willingness to break down traditional subscription-based s ervices. Instead, Bharti emphasized a prepaid card-based model as wel l. The company then began selling its prepaid cards in a large variet y of venues, from grocery stores and other shops, and even to street peddlers. Shopkeepers were given free phone calls and other gifts in exchange for promoting Bharti's service over rivals' networks.
The model worked, and Bharti's growth was rapid. By the end of the 19 90s, the company had succeeded in attracting more than 100,000 subscr ibers, a significant number given the slow pace of the cellular phone industry as a whole in the country.
Bharti began branching out in the 1990s as well. In 1997, the company won a license for providing fixed-line telephone services in Madhya Pradesh. The company also joined with British Telecom, which acquired a 21 percent stake in Bharti Cellular, to launch new services, inclu ding Internet services, in 1998. In that year, also, Bharti became th e first private company in India to launch fixed-line services.
Bharti was one of the rare profitable cellular phone companies in Ind ia in the late 1990s. By then, a number of the country's 30 or so cel lular phone operators had begun to struggle. Bharti once again rose t o the opportunity, and in 1999, the company launched a series of sign ificant acquisitions. The first of these came with the purchase of mo re than 63 percent of SC Cellular Holdings, which in turn controlled nearly two-thirds of JT Mobiles. Renamed as Bharti Mobile, the acquis ition enabled the company to extend its reach into the Karnataka and Andhra Pradesh circles.
In 2000, Bharti moved again, buying up 40.5 percent of Skycell Commun ications, which operated under a license for the Chennai circle. That company was renamed as Bharti Mobinet. That year, the company also a cquired full control of Bharti Mobile.
Into the 2000s, Bharti increasingly moved toward its goal of national coverage. A major step forward came in 2001 with the purchase of Spi ce Cell, which provided services to the highly prized Calcutta circle . That service was then rebranded as Bharti Mobitel. At the same time , Bharti increased its control of Bharti Mobinet to more than 95 perc ent. The company also successfully bid for cellular licenses to enter eight new circles that year. Bharti also was developing its fixed-li ne business, adding licenses for Haryana, Delhi, Tamil Nadu, and Karn ataka in 2001. The company then began rolling out its TouchTel fixed- line service in these markets, starting with Haryana. In addition, Bh arti received the right to offer national long distance services, lau nching IndiaOne.
A large part of Bharti's success had been based on Mittal's ability t o raise private investment capital; by the early 2000s, the company h ad built up a war chest of more than $1.2 billion by bringing in investors such as Singapore Telecommunications and Warburg Pincus. Th is enabled the company to back its growth through a spending spree; b y 2002, the company had spent some $1 billion. That investment ha d enabled the company to quadruple in size, and to capture the leadin g share of the Indian mobile telephone market, just as the market was finally beginning to take off in the early 2000s.
Indeed, from just more than nine billion subscribers at the beginning of the decade, the Indian market was expected to grow to as much as 250 million or even more by 2010. Already in the early 2000s, the cel lular phone market had begun showing growth rates as high as 80 perce nt per year.
Bharti prepared for its transformation into a truly national telecomm unications provider by merging all of its cellular brands under a sin gle unified brand, AirTel, in 2003. AirTel also continued attracting new subscribers by rolling out a wider and wider range of services, s uch as free multimedia messaging services, free incoming calls, and v oice-mail for prepaid subscribers. As a result, the company's new sub scriber rate continued to outpace the industry, topping three million by mid-2003 and more than 12 million by 2005.
Into mid-decade, Bharti continued to expand into new circles. At the end of 2003, the company acquired a stake in Hexacom, which allowed t he company to enter the cellular services market in Rajasthan in 2004 . By 2005, the company had extended its services to Andaman and Nicob ar as well. At the same time, Bharti had been developing its fixed-li ne services, including a rollout of broadband services over its fixed -line network in 2005.
By mid-2005, Bharti had extended its presence to some 23 circles acro ss India. In August of that year, the company announced a vast expans ion effort to be completed by the end of the year, with plans to doub le its number of base stations to 20,000. The expansion was expected to double the number of towns and cities within the company's network , with a corresponding increase in subscribers. In less than a decade , Bharti had claimed the leading position in the Indian market and wa s expected by many to become one of the world's largest telecommunica tions markets before decade's end.
Principal Subsidiaries: Bharti Hexacom Ltd.; Bharti Aquanet Li mited; Satcom Broadband Equipment Ltd.; Bharti Broadband Ltd.; Bharti Comtel Ltd.
Principal Competitors: Bharat Sanchar Nigam Ltd.; Mahanagar Te lephone Nigam Ltd.; Hughes Software Systems Ltd.; BT India Worldwide Ltd.; BTA Cellcom Ltd.; Videsh Sanchar Nigam Ltd.