Right signals from Airtel: Next-gen must ensure professional functioning

Sunil Bharti Mittal's phased succession roadmap aims to ensure leadership continuity, shareholding stability, and long-term growth at Bharti Airtel

Bharti Airtel Chairman Sunil Bharti Mittal, 68, has chosen to follow a staggered succession plan, which is rare among Indian family-owned businesses. In an earnings call last week, Mr Mittal announced a 10-year generational shift he proposed to bring to Bharti Airtel. Having secured another five-year term as chairman, Mr Mittal will be able to start the process of leadership transition soon, while maintaining the continuity and stability of the business under his watch. While he had hinted earlier this year that succession planning was on his mind, his surprise appearance at the recent earnings call, where he outlined the road map for this, put things in perspective. The Bharti Airtel share price responded favourably to the announcement.

 

Succession planning needs both time and effort, as SBM (as Mr Mittal is referred to by his colleagues) has been the name and face of the group ever since it was founded in July 1995, coinciding with the birth of mobile telephony in India. Often cited as an example of a professionally run family-owned business, the Bharti group’s future leaders from the Mittal family will be expected to follow that model. Many of the company’s top executives, including former chief executive officer and now Executive Vice-Chairman Gopal Vittal, have had long stints and steered the core business, with Mr Mittal providing the vision and addressing the big picture. Mr Mittal’s twin sons — Shravin and Kavin — have experience in entrepreneurship. Shravin is the founder of tech startup Unbound and managing director of London-headquartered Bharti Global, the international investment arm of Bharti Enterprises. Kavin founded Hike, a tech company, which recently shut down. Mr Mittal’s daughter, Eiesha, is on the board of Bharti Foundation, a philanthropic organisation, and has an interest in the fashion and lifestyle business.     

 

While over the years, the company, under the leadership of Mr Mittal, has managed to come out of several storms, such as the disruption in the telecom market following the 2G spectrum controversy, the entry of Reliance Jio and the ensuing tariff war, the legal tangle on adjusted gross revenue (AGR) dues, the new-gen will need guidance and handholding to reach that level of competence and agility. Another point made by Mr Mittal at the earnings call is worth taking note of. He said the promoter entity, Bharti Telecom, should become the single controlling shareholder of the company, at around 51 per cent, as he hands over the reins to the next generation. Currently, Bharti Telecom holds 40.5 per cent in Airtel.

 

The shareholding consolidation that Mr Mittal referred to aligns with his focus on Bharti Airtel as a telecom behemoth. The group’s fleeting interest in the retail sector came to an end in 2013 because Bharti’s ambitious joint venture with Walmart didn’t go anywhere owing to policy flipflops, and, more recently, United Kingdom-based Prudential plc agreed to acquire a 75 per cent stake in Bharti Life Insurance for ₹3,500 crore. Within telecom, the company’s partner Eutelsat OneWeb is waiting to start its satellite telecommunication venture in India. Its international foray, especially the Africa telecom business, is also a high-attention business. Against that backdrop, succession planning, phased over years, is a step in the right direction to forestall any split and acrimony, which could affect not only the telecom sector but also the larger economic landscape of India.