New Delhi: As it clears the decks to take on former partner and emerging rival Vodafone Group, Bharti Airtel Ltd will formally install President Manoj Kohli as chief executive later this week, replacing Sunil Bharti Mittal. It will also earmark $8 billion (Rs35,360 crore) to beef up its network and operations in three years.
Vodafone, the world’s No. 1 mobile phone services provider, has bought a two-thirds stake in India’s fourth-largest cellular operator, Hutchison Essar, for over $11 billion in cash. Vodafone typically strives to be the first or second in any market it operates in, which means it will want to take aim at Bharti Airtel, currently India’s biggest cellular firm.
Bharti insiders say they welcome Vodafone because, while they do see it as a formidable phone company, they also view Arun Sarin, Vodafone’s CEO, as a disciplined CEO who is unlikely to engage in destructive price wars for marketshare.
Still, “this is the first time Bharti is facing a private competitor with deep pockets. Vodafone is just starting in India and is likely to make long-term investments,” says Vishal Malhotra, a partner with consultant Ernst & Young.
Mint first reported on 2 March that company founder Sunil Mittal was stepping down from his executive role at Bharti Airtel but would continue as chairman to focus on broader issues.
“We are spending nearly $2 billion every year as the future (in terms of creation of infrastructure) continues to be stronger than the past...by 2010, we would have doubled the investment,” Mittal was quoted over the weekend by the Press Trust of India.
The CEO elevation rewards Kohli, who joined the company in 2002 from regional operator Escotel Cellular, and along with managing director Akhil Gupta, is credited for building up Bharti Airtel from a small operation of three million customers to one with nearly 34 million.
Ahead of the CEO shift, Bharti Airtel also announced changes in the senior management. P. Swaminathan, head of its cellular services business in Tamil Nadu, will move as the first head of the group’s telecom infrastructure company, Bharti Infratel. Sanjay Nandrajog, formerly in charge of mobile operations in North India, will lead Bharti Airtel’s new ‘international operations and managed services’ division that will look after new markets such as Sri Lanka.“We have applied for licences in many emerging markets,” said Kohli, declining details. “The whole company is being restructured to help grow each business independently.”
The restructuring will help the operator be nimble, Kohli said. “We are working on a number of initiatives, including direct-to-home and IPTV and international carrier operations. Staffing has to reflect that,” he said.