'Wireless Wonder' Sunil Mittal Asia's Best

By agencies   |   Monday, 15 January 2007, 06:00 Hrs
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WASHINGTON, Agencies: Naming India's Sunil Mittal as Asia's Businessman of the Year, Fortune Magazine calls him a 'Wireless Wonder' who has built a mobile-phone empire by turning outsourcing on its head. Now the founder and CEO of India's leading mobile company, Bharti Airtel, is plotting a retail revolution with a new partner - Wal-Mart, said the magazine in the cover story of its international edition.

India's No. 1 mobile provider with subscriptions shooting past the 30 million mark is expected to report revenue of more than $4 billion in the fiscal year ending March, up from $509 million in 2003.

Bharti, which lost money every year until 2003, has posted rising profits every year. Its stock is on a tear, rising to more than $14 a share on the Mumbai exchange in late December, a fivefold gain since 2003. With a market capitalization of $26 billion, Bharti has emerged as India's fourth-most-valuable firm, and Mittal one of India's richest men.

How did Mittal rise to the challenge of managing breakneck growth? By taking a quintessentially Indian solution - outsourcing - and standing it on its head. Egged on by his CFO and a core of in-house technology specialists, Mittal resolved to give away his network, Fortune said.

In 2004 he signed contracts worth $400 million to hand over operation of Bharti's entire phone network to Sweden's Ericsson, Germany's Siemens (Charts) and Finland's Nokia (Charts).

The deal means Bharti no longer has to worry about buying and maintaining equipment. Instead it pays the European vendors a fee determined by customer traffic and the quality of service the firms provide. That same year, Mittal signed a ten-year, $750 million contract with IBM (Charts), farming out the bulk of Bharti's information-technology services, including billing, management of customer accounts and even operation of the Bharti intranet.

The IBM contract is a revenue-sharing arrangement, but the objective is the same as the deal with the European equipment vendors: freeing Bharti to do what it does best - marketing, devising new services for its customers, and searching for new business opportunities.

Now Mittal is forging his most audacious foreign partnership yet, Fortune said. In November he announced that Bharti Enterprises will team with Wal-Mart (Charts) to transform India's underdeveloped retail market.

Terms of the alliance, structured to end-run Indian restrictions barring foreign investment in any retail operation offering customers more than one brand, grant Bharti full ownership of stores selling directly to Indian consumers under the Wal-Mart name.

Bharti and Wal-Mart will form a separate joint venture to take on back-end activities in which overseas investment is permitted, including wholesale, logistics, supply-chain management and distribution.

The companies haven't disclosed who will own how much of the joint venture. But Fortune citing Mittal says he will open hundreds of stores over the next five years in formats ranging from super center to neighborhood market, and he predicts investment in the venture will exceed $1 billion.

Wal-Mart spokeswoman Elizabeth Keck hails the partnership as a 'perfect match,' the magazine said. Bharti, she says, 'excels at meeting customer needs in India, while Wal-Mart excels in logistics, sourcing and supply-chain management.'

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