ET Exclusive | Sunil Mittal’s next big bets: AI, cloud, space telecom and a billion Airtel users

Sunil Mittal wants Bharti Group executives to keep taking risks and make bold bets. As the Bharti Group founder and chairman marks 50 years of his entrepreneurial journey, Mittal, 69, told Kiran Rathee and Vinay Pandey in an interview that his other two key focus areas are drawing up a succession plan and spending more time with the government and political leadership on public policy. Edited excerpts:

How would you describe this 50-year journey?

It's been a remarkable journey with the classic ups and downs. But I think the industry that I chose, eventually, from 1992 onwards, the mobile industry, it was quite a different one and a strange sort of story. It's not happened in many countries like this. The policy shifts, the regulatory curveballs, and the multiplicity of players that came through, its unheard of anywhere else—12-13 operators in a country is never seen. So, from that point of view, I would say it's a journey that mirrors India's growth if you look up from 1976 onwards. From a licence raj, where one struggled for permits and licences, import was almost impossible, foreign exchange was non-existent to where we are today, in some sense, I would say Bharti's journey has been in lock step with India’s journey.


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What comes next? Bharti Airtel is a highly valued company with a solid brand.

Airtel has now come to a point where you can call it a very well-established enterprise or an institution, which is meritocracy-led with high-quality professions driving it. Company’s balance sheet is very strong now after becoming precarious in 2016-18, cash flow is strong, debt is almost non-existent. I think next year we'll have zero public debt and only DoT’s spectrum payments and AGR liabilities will remain.

The company now has to start to think about where to apply cash flow. So we have chosen some new events. Capex of Rs 30,000 crore goes into our regular business like more towers, more fibre, more network, more IT. But in addition to that, financial services, sovereign cloud, and AI data centres--these are three big bets that Airtel is making for India. And some of these will be transported to Africa.

What about international expansion? Will the same verticals follow?

I think you need to have strength in your home country. Doing something new in a new place is something which I would avoid. We don't have the chops to do stuff that we've not done in our country. And even when we are doing our core business, like when we went to Africa, the first few years, we struggled because the industry was not new but the place was. So imagine a situation where you are completely new to everything, it’s tough. When we talked to British Telecom (BT), it was familiar territory. And so therefore, I would say, there will be international growth. We are one of the fortunate Indian companies to truly be an MNC. We are now in 15 countries in Africa, we have a stake in BT, the national champion of telecom in Britain, we have a stake in Eutelsat, which is a satellite company. We are already one of the few Indian-based MNCs. For us, not to do more internationally will not be appropriate, we have

to do more. Where, when, the opportunity comes, we have to see. We have the jobs, we have the talent, we have the tools, we have the balance sheet now. We are just waiting for the right opportunities. But it will not be like Africa, where we had gone and picked something big, which was a stress on our global side. Now will be doing tuck-ins (acquisitions) of a few billion here and there. There are opportunities we should keep on looking at but we have to be value seekers, it must come with a good value. Growth is limited in global markets in telecom, so there must be cost takeout opportunities and it must add a significant amount of revenue and ebitda.

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What about succession plans?

Until a few years back, that was not our priority as we were fighting difficult battles. The question is timely now and I am also working on this. There are two aspects to it. One is Airtel and its ecosystem. That part, I think, succession is already in place with very fine minds and talent who are there. Gopal (Vittal) is lifting himself to a group level, being the executive vice chair with Shashwat (Sharma) taking over in India and Sunil Taldar in Africa. Now the question, therefore, moves to what happens between the shareholder and the professional management. I can answer it at two levels. One is you look at companies like Unilever, where I have been on the board. There is no order. It's run by its people.

British Telecom until we arrived, there was no owner, it was a public company. I had been on the Standard Chartered board, again there was no owner. And then you have Softbank, with Masayoshi Son as a big personality who drives everything. So, I've seen all the models. I think as far as Airtel is concerned, to a large extent, the Unilever model can prevail. So if the family was not to be a shareholder, I think Airtel will be okay with a strong board and running itself. But I'm also conscious that such companies become very risk averse. New bets become very difficult. When things are okay, it works very well. But in a moment of huge crisis, a stewardship or anchor shareholders are required, especially for countries like India and the developing world.

I think my next generation, my sons, my daughter, nephews, they all are coming up into good shape. Both my boys have had years of experience outside, building their own companies, their own ventures, their own fronts. And they are now engaging at the shareholder level. They're getting to see what's going on in Airtel in a much more detailed manner, which was never the case before. So I would say in four or five years, you will start to see step by step those changes happening. Sharvin is already co-chair of Airtel Africa. Gopal is now the chair, I've come off it now. So that’s the first change if you see from the family side, I'm off, he's in.I'm still available for any consultation that Africa or anybody needs. I will still look at the quarterly results, but it's really his job. He's also on the board of Airtel Money. He's been there from day one. And he's looking at many of our international areas of work like satellites and he also has his own fund. And I can see in him a very solid, strong, stable hand who can really deal with very critical aspects of the enterprise.

Kavin is a technologist, but he is also very fine in how companies run. He has run his own company with 250 people, and became a unicorn. He has his own skills, but his focus is deep tech and solving critical and complex issues. He's also got very broad shoulders to deal with a lot of issues. How they combine between themselves has to be worked out as we go forward. My daughter runs a hospitality business with her husband, they are already very successful. They have over 200 hotels globally, managing multiple brands in hospitality. And then, nephews are now coming in--Zubin, Rajan's son, is already in Airtel Finance. He is helping me with Haier, our new investment in consumer appliances. They will develop their own businesses, get their own training in a different way. Rakesh’s son is running his food business. So, we are not the classic family business type of people, we are different. My own view is, treat us as a family in business, not a family business. We are not doctors, lawyers, we are a family in business but we are not a family business. And I think it's a model to be cherished.

Has the thought crossed your mind that succession can be disruptive as stakeholders increase?

To my mind, it is a function of any founder that you must leave behind as much clarity as possible. So to your point, yes, it's been on my mind. We have created or laid early foundations of what I call House of Bharti. It's a charter that I have created for the next generation but they are co-creating it with me--how they will deal with issues when things come up, how will they decide if they have disagreements. Those things are now being worked upon but one thing I'm ensuring is in all situations, you bulletproof your enterprises. If there's a contest between the family and enterprise, enterprise wins every time, that's how I see it.

What about you personally? What is it that you want to do now?

I think I'd like to see Airtel get to be the first company worldwide with a billion customers. We are 600 million, so we have to get another 400 million. I think India will give us another 200 million, Africa will give us another 100-150 million. So we are still short of 100-150 or 200 million customers. My desire will be to look into markets which have higher ARPUs, higher margins and therefore, we keep spotting opportunities. Those have to be inorganically strapped on. And we'll hopefully get there. Earlier, we were in Bangladesh, which could have given us 20-25 million customers but we have reduced the stake there. We would like to probably exit at some point. Sri Lanka is the same, it’s much smaller. So we have to look at some opportunities. I think the new bets are where I want to spend some time--AI data centre, sovereign cloud, space telecom, how the space will shape up. These are the areas which are taking most of my time.

So if you put this into three parts--one is for the enterprise, how to grow it into new bets, ensure that our professionals keep taking risks, new bold bets. Second is the transition succession plan and the third is how I can personally spend more time with the government and political leadership in public policy.

Can the tariffs stay low going forward or there should be hikes?

I would say if you need the nation to have a robust digital spine, you need it to be very healthy. You don't want a situation where you're struggling. And I can tell you today, some of the European markets are struggling. They are behind in the digital journey despite being very rich economies. The US is not, China is not, India is not. And paradoxically, the US is $50-60 ARPU, we have only $3 or less here and we were still able to build it. It's very important that the companies remain very healthy.

While people look at the ebitda margins, it's a wrong metric for telecom companies because a large part of our ebitda that comes through, we spend every year on new capex. There are spectrum auctions that take tens of thousands of crores. It's a very capital-intensive industry. I would say we should build 4x or 5x of what we are today. We should build a million base stations, we are merely 350,000. It’s a long journey, we must have space connectivity, we must have submarine cable, so that in tomorrow's new world, where technology is most important, our fundamental connectivity bedrock is very strong. To that extent, do you need another dollar, dollar and a half--yes. If India gets to Rs 350 ARPU, my stated objective, we will still be lowest in the world. People who can pay a few hundred rupees as tip for opening the car door in a hotel, why can’t they spend Rs 600-700 a month on their phone. It is not a problem for them, but we have artificially kept it so low.

So there is room for differential pricing?

Absolutely there is. The unlimited offering at Rs 399 makes no sense at all. Those people will pay a thousand rupees, they'll be comfortable paying a thousand rupees. And then you can actually keep subsidies down for the lower end. By bringing the whole table down, you put some load on the lower end.

What is stopping companies from offering such tariffs?

It’s the competition. We have tried to move it, but when the competition doesn't move, you're in the market, you have to be competitive.

We already have a 15-20% premium in tariffs. But that’s the limit.

There is a lot of noise around the current business environment in India, the rupee, capital outflows. How do you see the situation and what kind of reforms would you expect going ahead?

I take you back to 1992, when the first wave of reforms happened and that to my mind, should give us a lot of comfort that reforms finally work, and they don't work for just business people, they work for their entire country. I witnessed that from very close quarters. I was a struggling young entrepreneur at that time and that released so much energy in me personally, our enterprise and our people. As a small example, I can tell you, the time you used to spend in the corridors of government, it was gone. The import restrictions were gone, the simplification happened in the custom tariffs and FDI started to open up. That model needs to keep on repeating itself every now and then. I would say we have seen this government very focussed on reforms, and they have done many reforms. And in my own industry, the digital pillar of Prime Minister Modi, from day one, became a very important gain for my industry. He was focussed on ensuring that this digital pillar becomes one of the important pillars of the economy going forward. And that's why you've seen so much growth in our space. Startups, IT industries, the telecom industry, and infrastructure around it. So if I have to give one message back to the government, keep on working on your mantra of ease of doing business--more needs to be done. Sometimes I feel that our political leadership has a bigger ambition, which gets diluted as it starts to get implemented, because every reform that comes has one or two things around it, which lowers the impact of reform. But I think the government is aware. Right now if you see, the government saw the difficulty of price increase, the geopolitical conflicts, the difficulty in supply chain with America becoming insular, trade deals getting into difficulty, China issue and all that. They have moved very quickly to get more dollars into the country. The rupee is below 94 today, a miracle I would say. There were predictions of the rupee going to 100 against the dollar but going back from 97-98 is a miracle. The government is very focussed and conscious and when they see the stock market suffering, capital flows going out, you suddenly see a debate starting--should we look at long-term capital gains in the stock market, should we look at other reforms coming through? My own view is that the next budget that is going to come through may surprise the country, the industry, and many verticals with a lot more ease of doing business coming through. So I would say only one message--keep working more, hear the voice of industry, get more focus groups, invite the industry chambers and firms to talk to you and listen to the needs of the industry. And whichever industry you feel is making supreme profits, then there are ways to tackle that but worry about making the job easier for the industry to do more. And I can tell you, the factories, industries, corporations start to make more money, it goes back into more investment because they're so excited about the opportunities. They invest more money. What's my job every day when our cash flows are going up? I'm not focussed on how much dividends to go out. All the time the conversation is more investments, more investments.

India now has two $100 billion telcos and financial stress in the sector. Does it open doors for a new entrant like Starlink, which may have ambitions to become a full-fledged telecom player?

Satcom connectivity is definitely coming, but I strongly believe it's a complementary service and not a supplementary service. It cannot supplement terrestrial networks by its very nature of design. I must compliment Elon Musk that he is pushing the boundaries. The amount of capacity being created was earlier thought to be impossible. So you have to give him the credit but at the same time, the cost for a bit, cost for a GB, is never going to be at a point where he can contest fibre or terrestrial radio connectivity. The US, some markets in Europe, Japan, maybe there is a market to be picked up by satellite because when you have $50-60 ARPU, then there's a game to be played there. You can connect a home and get $50, you can be fine. You can get a mobile customer at $50, you can play the part. But if you see Elon Musk with all his fanciful technology, is picking up local spectrum, is building local networks on the ground and then will combine both. So in the end, even he's saying the same thing that we are saying, you can only be complementary. India has two benefits. One is we are down to $3 ARPU, why would you want to fight a $3 ARPU market, it needs a very high ARPU. Secondly, in India, unlike even the US, we don't have dark spots. We have coverage available everywhere the population is there. It’s unique that in $3 you have covered the entire country. Anywhere in the country, you will get a radio signal, you may not get fibre, which is getting better but you get a 5G radio signal, which is better than a satellite connection. I would say there will be some places, a farmhouse, or oil rig, or something, or a flight connectivity where you will use Starlink or satellite connectivity but on the ground in India, parts of Africa, where we operate, I think the ARPUs are so low, and connectivity is very good, so I don't see a problem. My own view is you will see them combining with local terrestrial operators in India and try their luck in the US.

Amid the discussions over currency, there's been talk that we need to look at outbound investment. What are your thoughts on that?

I think this is an interesting question. We have almost always been encouraged to go and spread India to the world. That took us to Africa, Bangladesh, Sri Lanka, the UK and Europe. So we have always been encouraged at every level in the government. It's a matter of pride for a few Indian companies to go out into the world, taking Indian talent, taking technology, and Indian ways of working. In the end, this wealth that is sitting outside, where does it sit? It belongs to India. So you have these dollars, pound revenues coming through--they all belong to India. Unlike some of my peers who switched overseas and invested from outside of India, we invest from India outside, so entire Africa, Africa Money, British Telecom, Eutelsat are owned from India. They are governed by Indian regulations, RBI, my investments are all from India. So they're all Indian assets. I would never compromise what is needed to invest in India at the cost of going out. But when you have exhausted your opportunities here, India is actually beckoning a handful of companies to go out. It builds our soft power, it builds our diplomatic relationships. It builds our presence in those countries, even politically.

Jio has listed and India already has a kind of duopoly. How do you see the domestic market?

It is good that the listing has happened, which is an important event for a large company like Jio. We have four companies, out of which two are fully and partly owned by the government. There is some cooperation between Vodafone Idea and BSNL. So I would say in that sense, there are three companies--it's a perfect size, perfect market dynamics. We need to be freshly healthy. When there were 12 operators, everybody was suboptimal, spectrum was fragmented, we were struggling

to provide quality. Nobody was investing money, they were just doing cities and trying to compete in the key economic markets, ignoring the rural areas. So I would say this is a perfect combination. China has three, the UK has moved on to three, the US has had three for long, and in Africa, most of them are two operators. So I would say in India, it is ideal to have three operators. They must be encouraged, they must be tasked to build more and more in the coming years.