Sunil Mittal bullish on Airtel’s digital biz
Speaking at a CII event on getting future ready, Mittal said that Airtel was steadily generating value from digital assets of its own such as Wynk Music and Airtel Thanks besides building new business streams of advertising, cybersecurity, cloud for SMEs and communication platforms as a service (CPaaS) on the back of partnerships with companies that specialise in the segments.
“Our digital revenues should start to become meaningful in their own right in several billion dollars over the next few years, and thankfully, the valuations of the multiples that one generates in the digital business - because the capex is low - is significantly better than telecom, which is a very solid business but a capital guzzling and spectrum guzzling business every year. (This) will be a good combination to have the group," Mittal said at the virtual event on Thursday.
“Our companies have woken up very late. Trillions of dollars of valuations have transferred to the OTT players whether it is Facebook, Google and now ecommerce, and they all ride on us. We spend billions and they enjoy trillions of valuation, that’s the equation. So, we have decided that we just can’t let everything go out. We need to be serving and doing value-add," Mittal added.
The industry stalwart further highlighted how Airtel was transforming amid changing times with its payments bank business becoming a huge success. “We are now adding surveillance to it (cybersecurity)," he said, adding that about 3,000 people were presently employed in the digital group, up from a few dozen some years ago.
The current times present an inflection point for India to step up to the opportunities emanating out of geo-political challenges, Mittal noted adding that the world was moving to trusted supply chains from global supply chains despite additional costs and India was set to get tailwinds from being one of the trusted supply chains owing to the Atmanirbhar Bharat initiative.
“The good news is India the continent of consumers, so we will be fine and the second most important part is India also is a trusted source. So we must get tremendous tailwinds because of this shift," he said. He added that India’s scorecard was ‘absolutely fantastic’ and it would stay the course even amid high inflation and hardening high interest rates. “If there’s any country that is well poised and positioned to deal with these tectonic shifts, it is indeed India," he said.
He mentioned that entrepreneurs are well accustomed to change, however the last two-three years have yielded unrelenting shocks. In the face of these external pressures, the resilience of all organisations has been tested, he said.
Mittal also said that adoption of technology and dealing with innovation and disruption are relatively difficult in larger organisations, since the success of Facebook, Whatsapp other e-commerce companies have significantly changed the whole ecosystem. To keep up with the changing times, existing businesses must adopt a futuristic outlook, taking into consideration changes in consumer behaviour, market dynamics and other factors, he said.
Mittal stressed that every crisis offers an opportunity and expressed that India, with its strong leadership, will see a dramatic upliftment in sectors such as electronics and defense in the next 10-15 years.
Speaking about building successful enterprises, Mr Mittal mentioned that it is important to realise that one size does not fit all. Identifying what works for a particular organization and matching it with partners and thereafter nourishing those principles have proven to work out well. He said Airtel and Bharti as a group has been through many ups and downs, including regulatory challenges, market competition and have survived.
Talking about organisational cultures, Mittal said that the merger of Vodafone Group and Idea Cellular was bound to run aground since there was clear mismatch of cultures.
“When you put together a very MNC open culture with very different Indian honed into very strong financial result orientation coming together, it just did not work and the fact is, Idea on its own used to perform significantly better in terms of profitability, allocation of capital and the return on capital, which sometimes even amazed us that they were doing better than us so," Mittal said.
He added that the Vodafone Idea has been unable to raise funds for the past two years, amid weak balance sheets, tough competitive environment and series of regulatory challenges, which highlighted the challenges in the telecom sector and put the spotlight on governance credibility of an organisation or its promoters.