Launch of Jio was the birth of one of the most powerful competitors in Indian telecom space, says Airtel’s Sunil Mittal
Peerzada Abrar |
Last Updated at April 15, 2021 21:37 IST
The launch of services by Mukesh Ambani-led RIL’s telecom subsidiary Reliance Jio in 2016 became one of the most powerful competitors in the Indian telecom space, according to Sunil Bharti Mittal, founder and chairman, Bharti Enterprises. Mittal was sharing experiences about building Airtel into a leading telecom company and how it emerged from several rounds of crisis.
“The launch of Jio (2016 edition) was one of the most powerful competitors in Indian space. Free service for a year, subsidised service for another year. Predatory pricing, subsidized phones, all sorts of things,” says Mittal during Amazon Smbhav Summit 2021, the flagship event of the e-commerce firm. “And it’s no surprise that nine out of the 12 operators packed up, went bankrupt, merged with us or with each other. And today we are down to three private sector operators, in which very clearly one operator is becoming increasingly a question mark.”
For a country of the size of 1.3 billion people, Mittal said the country is now down to nearly two and a half operators, but Airtel has passed that test very well.
“We have increased our market share, brand loyalty and index, and we’re getting more customers than the competition in the last 8-9 months,” says Mittal.
The company has added new lines of businesses and accelerated fibre to home service and hundreds of thousands of new homes have been connected every month. Data centre business has come through. The firm’s enterprise business is leading and the DTH (direct to home) business now has taken a lead over DishTV which used to be the largest DTH operator. Also, Airtel Payments bank is making strides in the rural areas and in tier-2 and tier-3, with nearly 15 million active monthly customers using the service.
“So all in all, I would say, we have now arrived today, after three or four big crises into a very healthy shape,” says Mittal.
Telecom is a very high capital intensive industry. Spending Rs 50,000 crore over the spectrum, which will be used over 20 years, but paid up front, is pretty normal. Spending Rs 20,000 crore of capital expenditure on the network, year after year is very normal.
“Have we gone through challenges? The answer is yes. We have gone through, I would say several near-death experiences,” says Mittal.
In 2003, the question was when would Airtel collapse. Airtel was growing at a breakneck speed, rolling out networks in every part of the country including mobile and fixed-line. It was putting satellite nodes and India’s first submarine cable from India to Singapore. The firm was hiring a massive number of people.
“All this was creating a massive crisis. We needed to get capital and get support from our vendors and have more customers signed on with us to make us successful,” says Mittal. “We demonstrated that Airtel is a company which will thrive even in a crisis.”
That playbook has helped the company several times since 2004. In 2008, 12 new licenses were given out in the industry which created a huge disruption in the marketplace and Airtel emerged from that challenge as well.
Talking about the opportunities now, Mittal said India is a continent of consumers where more than 1.3 billion people are consuming more products, services and data. And based on that data and the smartphones in their hands, they are using the services of companies such as Amazon, Google, Facebook, Ola and Uber and seeking deliveries from the restaurants. Everything is now fast-moving on to the digital platform.
“And these young people who are coming in hordes into the mainstream are adding momentum to our GDP and to our consumption story,” says Mittal.
He said India is attracting today tens of billions of dollars of FDI (foreign direct investment), year after year and the country is getting some tailwinds as China is not the flavour of the decade. Most people are shifting their businesses from China to India, which would mean more manufacturing development and innovation would come to the country. Mittal is of the belief that in the next 5-10, India could become a major economy, which would have industrial and digital upliftment.
“And importantly, more of self-reliant and stronger India in the hands of Indians,” says Mittal. “ Some of you will break through and make bigger businesses than Airtel, and many other established companies. I always say, those who are there yesterday are not here today, and those people like me who are here today may not be there tomorrow.”
Mittal started his business as a small entrepreneur in 1976. He started as a manufacturer of bicycle parts to supply to the bicycle companies in his hometown in Ludhiana, in Punjab. Access to capital and attracting talent with the right kind of skill sets was hard. One of the fundamental thesis of building a venture from a small firm to a bigger company is being committed.
“You need to do a test check when you get into a business. You need to be in a place which you enjoy every morning,” says Mittal, who has always been doing this test on himself on Monday mornings. “ If I am not excited about going behind my small little office desk in Ludhiana, I knew that I was not in the right business.”
This test kept him moving from one business to another in the first 10 years of his entrepreneurial journey. By doing things out of compulsion it’s very unlikely that one will make a huge success of it.
“When your work becomes your joy, that’s the time when the magic really starts,” says Mittal. “From 1976, when I started till today, (nearly 45 years) for me, the Monday morning test is very important and I can tell you, I still pass it every Monday morning. For me, weekends are difficult to pass by. I am excited about getting back into my office on a Monday morning because I really love what I do. I say this to my children and young entrepreneurs.”
For building a business, there is no substitute for hard work. According to Mittal, there are stories of people who worked less hard than him and did create businesses that were equal or bigger than his venture, but those examples are far and few.
For building a business, it is also important to assemble a team early on, which is aligned to the thoughts of the entrepreneurs and fill the areas where he or she is not strong. Mittal emphasised hiring better people and creating an atmosphere where everybody can flourish and thrive. He recalled how he hired an IIT- IIM graduate as his deputy during 1984-85.
“He was braver than I was. He saw probably something in my eyes, that there could be a possibility of scaling up a big business,” says Mittal. “He could have got a bigger job, but I could talk to him and convince him that he had an opportunity of a lifetime. And we could build something together. So, he joined me and stayed with me for over 20 years.”
Mittal said entrepreneurs need to make sure that their fiscal discipline is strong and their finances are under control. However, ambition always needs to be greater than resources. But equally, one shouldn’t extend to a point where the day of salary becomes stress.
“I would scramble around and beg my bank manager to give me an overdraft or borrow some money from some friendly place or a place which will charge me very high interest,” says Mittal. “But I ensured that the payday was never missed out.”
It is important to pay people on time to build credibility. During the worst times of Airtel, the company was able to raise $12 billion.
Back in 1977, Mittal’s early venture was a supplier to Hero Cycles founded by Brijmohan Lall. Mittal went to seek money ahead of time to Lall and appealed to him that he was in a desperate situation and needed the money.
“He was not happy I could see the frown on his face. He finally wrote me that cheque. But he told me not to make this a habit,” says Mittal. “I have never forgotten those words of that wise man and that was the last time that I ever let my monetary position take the better of me.”
Now, the journey of scaling up for companies has really shrunk from decades to years and even less than a year as technology is providing an advantage to the firms. Amazon is an example of how disruptive technology can start to create businesses that could have never been thought of before. Technology will accelerate the growth of the businesses and make them more efficient, cost-effective and improve their margins.
“Please use technology early on,” says Mittal. “If you have younger members of the family who are eager to do business, bring them in early, they are digitally native and understand technology very well.”
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