There are many countries whose citizens must be quite used to their country's businesses being present around the world. Indeed, an American or a Japanese would be positively surprised to find a country where McDonald's burgers or Toyota cars are not present. However, we Indians are not in that category yet. Whatever presence Indian businesses have abroad is either as business-to-business suppliers (garment exporters, for example); or as behind-the-scenes service providers (TCS or Infosys); or more recently, as bought out brands (Jaguar and Land Rover). This is but natural - it takes a long time to build brands. The Chinese are far ahead of us in exporting to everyone in the world, but Huawei or Haier are not household names and even Lenovo, their best-known brand, is a buyout that hasn't made good the opportunity it got.
I'm not sure whether Airtel will be another Nokia or whether it's destined to be a Lenovo. But one thing is certain, Sunil Mittal's African safari will be a make or break gambit for Bharti. Our cover story of the month takes a very positive view of Mittal's venture, unlike what the consensus view of the markets has been. The article is written by my friend Sanjeev Pandiya, whom you know as a regular columnist in Value Research's magazines and website. Sanjeev is not a professional journalist. He's a finance professional and has held senior positions in a number of large companies. He is also a remarkable investor and a most original thinker about business, markets and investing. Sanjeev, as you will read in the story, is entirely positive about Bharti's takeover of Zain.
Unlike the routine analyst who is focussed on backward-looking data points like what Bharti is paying for each current subscriber, Sanjeev's view is a forward-looking one. The point of the story is not how many Africans are carrying Zain phones today, but how many are not carrying any kind of phone and therefore, could be carrying an Airtel phone tomorrow. However, in a certain sense, the stock market is right. Africa is a gamble, the biggest that Sunil Mittal has ever taken.
Telecom is a tough business and in places like Africa, the biggest risk doesn't come from the poverty or the diversity of the market. Unlike commentators who worry about being polite, I'll say it up front - Mittal's biggest risk comes from the endemic and extreme corruption in African governments. Now there are those who would say that that's a competitive advantage for Bharti. A businessman who has flourished in India surely knows his way around corrupt politicians. After all, long before Mittal was known for telecom, he was known as the man who escorted Harshad Mehta and his Rs 1 crore suitcase to the then Prime Minister of India!
But these kind of people-handling skills are a double-edged sword, as the other globe-conquering Mittal found out at one stage of his career. At the end of the day, the business is only facilitated by pliant governments. The core has to be in what it delivers to customers. Africa is an extraordinary opportunity for Bharti. In Africa, the mobile phone is far more than just a phone - it's also a banking system, an identity system and much more. Bharti could well become a player in the reinvention of the dark continent.
Whether it succeeds or fails or meanders along in between, there is no doubt that Bharti's coming years are going to be among the most interesting an Indian company has ever had.
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