New Delhi: Sunil Mittal’s latest attempt to buy what will be a controlling stake in South-Africa’s MTN Group Ltd has investors aflutter over Bharti Airtel Ltd, his listed flagship. Is he expanding equity too much to finance an ambitious deal? Even if he manages to sidestep regulatory landmines and see the transaction through, will he be able to overlay his company’s thrifty business model on MTN’s 21-country operations to squeeze out profits?
There are many imponderables on the Bharti Airtel chairman’s dashboard, but Saurabh Srivastava, a tech businessman who’s known Mittal for two decades, is unfazed.
“I am not selling my shares yet,” says he, referring to the 11.32% drubbing the stock had taken until Wednesday evening. “I think that he will continue to build value and innovate and create solutions that will lead to greater growth,” says Srivastava, currently chairman of the Indian Venture Capital Association.
An ambitious deal: Is Mittal expanding equity too much? Madhu Kapparath / Mint
Srivastava’s cheerleader-like call is rooted in what Mittal has delivered so far—a business built from scratch over some 14 years with a market value of some Rs1.5 trillion.
To be sure, Mittal’s success has coincided with India’s enormous appetite for phone services after decades of supply constraints under a state-owned monopoly and an economy that has trebled since 1991. Still, his success, say some, comes from the ability to manage a regulatory regime that at times is opaque, localize go-to-customer strategies in a country divided into 22 telecom licence areas, meet shareholder expectations and arrange capital to finance growth.
Ludhiana-born Mittal, together with the families of his brothers, today is worth an estimated Rs50,000 crore (ranking him among India’s Top 10 rich people) but he still treasures being respected and recognized for his achievements. That recognition, however, took some time coming. People close to him in the firm point out how India’s hoary business houses took time welcoming into their fold.
That attitude was exemplified by what was then a large automotive business group in the capital in 1994. Mittal was invited to a dinner meeting with the patriach of that group, at the end of which it was suggested he sell out his licence for the New Delhi circle for Rs10-20 crore because he was bound to fail. Mittal, says a company insider, kept his cool.
Even into this decade, sans an occasional appearance, Mittal kept away from two of the country’s most powerful business lobbies, the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry, instead letting brothers, Rakesh Mittal and Rajan Mittal, be the face of the Bharti group of companies there. Then, in fiscal 2006 he was inducted as CII vice-president, taking over at the helm of that body the following year.
Mittal, in the thick of negotiations for the $23 billion (Rs1.1 trillion) MTN deal, was not available for comment for this story but a person in his company talks about a common utterance at meetings the Bharti chairman attends: “I don’t like to lose.”
That attitude and the ability to execute in baby steps make for his management style that has seen him win. Mittal could “dream without having capital. In those days, not even the Tatas or Birlas had that kind of a vision”, says Srivastava.
Others point to a team with a gutsy can-do attitude. “The one reason for his success is that he has built up a very strong management team. He gives them great support and has great support from people like Akhil Gupta and the others,” Kunal Bajaj, managing director of telecom consultancy BDA Connect (India) Pvt. Ltd. “The team is very work oriented, numbers oriented and yet they are able to come up with ideas and focus on what they have to do.”
One example of Mittal’s gratitude came through on 18 February 2002, the day Bharti Airtel (then Bharti Televentures Ltd) listed on Indian stock exchanges. After the ringing of the ceremonial bell that day, say insiders, Mittal took Gupta, a joint managing director at Bharti Airtel, outside and pointed to three Mercedes Benz cars and asked him to take his pick.
Still, there are blemishes in Mittal’s shining record that he wishes never existed. A taped conversation from 1993, for example. In June that year, Harshad Mehta, an investor in Indian stock markets disgraced over market manipulation charges, alleged he had paid Rs67 lakh in bribes to gain access to then prime minister Narasimha Rao.
The meeting, Mehta said, was arranged by Mittal’s father and Congress politician Satpal Mittal. As proof, the investor nicknamed Big Bull replayed a recorded conversation he had with Sunil Mittal before reporters. “You have let me down, lale,” Mehta’s voice in Hindi played out. (Lala or lale is a reference in Hindi for businessman or money lender.)
“Sunil was very non-committal. ‘Lets meet,’ he said,” Mahesh Jethmalani, Mehta’s counsel for that case, recalled on Thursday. “But to be fair, it was more Satpal than Sunil.”
Mittal has consistently denied the Mehta linkage in public. Rao, Mehta and Satpal Mittal are no longer alive.