Manoj Kohli: "We Need to Build a Global Business Model"

What has been your experience so far at Airtel? You have worked with other promoter-led companies like DCM and Escotel. In what way is Bharti different?
It has been one of the most enriching and gratifying time in my career. Not only have I contributed a lot but I have also learnt a lot. Bharti is different as a company [vis-à-vis other companies that I have worked with]. This company is run by heart and passion, run by entrepreneurial spirit and positive energy, enthusiasm and humility. Sunil [Mittal] personally symbolises an entrepreneur on one side with strong hunger and aspirations to grow and also has the humility to professionalise the management. He has the security that if he leaves it to professionals the results will be better.

How empowered is the team? Isn’t it true that Sunil Mittal is still deeply involved in all strategic decisions?
We have near 100 percent empowerment for AMB [Airtel Management Board]. But alongside, we also have very robust process of information flow and verification in a very transparent manner. [This empowerment] it also brings accountability. This balance [of empowering the team and yet keeping a constant track] not many industrialists have been able to do. Bharti started being a EE [entrepreneur-entrepreneur] company, moved to EP [entrepreneur-professional], now it is PE [professionally-entrepreneur]. Sunil does not want this to become PP [professional-professional] company which makes a company bureaucratic, formal and slow.

I have used Sunil as sounding board for risky decisions. I remember in 2003, we were rolling out and investing big money. Sunil said “you take the decision. It’s my neck on the line.” He looks beyond today. Always think five steps ahead.

What’s the difference between Manoj at 40 [when he had joined Airtel] and Manoj at 50?
At 40, I had achieved a lot. I had 20 years of career behind me. I had worked in the US and Europe. What I did not do was scale and build a world class organisation or a MNC or a global corporation. At 50, I can say I have worked for a world class corporation. Perhaps, Manoj at 60 will be one which has worked with a global brand, global business and global corporation.

Talking about Manoj at 60, are you in effect denying all rumours of you leaving the company?
Sunil and Bharti as a group is the best place for professionals to achieve their dreams. I am here. I am not going.

What will it take for Bharti to transform into a global organisation that you are talking about?
Three things. First, we need to build a global business model. Our India model is a unique model of two cents and we are making healthy margins as well. Our next challenge is to build a global business model. What we need to do is build this Indian model into a global model in geographies like Asia Pacific, the Middle East, Africa and Latin America.

Second, we would like to drive a profitable growth.

Third, we need to build global leadership capabilities, robust pipeline to take global positions, understand global cultures, have global sensitivity. We are weak here and we will need to build.

Also, even as we grow we need to retain the soul of a small company, retain the DNA of our entrepreneurial culture. In business, we should continue to behave as if we are a small company, not letting bureaucracy, hierarchy creep into the company. In large companies these things vanishes very rapidly.

You constantly refer to the entrepreneurial, informal culture. Tell us in what way Bharti is really different?
I think we are non-bureaucratic and informal. Everybody is on first name basis. You can directly talk to CEOs. Decision making is fast. There is an element of risk taking. You are allowed to take risk and make mistakes. You are constantly asked for new ideas. At Airtel, you will not be allowed to go into your comfort zones. Some can enjoy this and many do not.

Tell us what are some of the things your successor will need to have as he takes over the reins at Airtel?
In our next phase of growth, sustainability of our past success will be important. We will have to be a far stronger marketing company, far stronger in processes and structures. I envision us to fully tap into our 200 million customers for all their needs [that we can cater to].

We are also focusing on building internal talent. In the last five years, we have picked up external talent. Now, the focus is on grooming internally. Business models too have to become leaner even as the brand needs to be kept irrigated.

While Airtel has been fairly entrepreneurial in culture, now with scale comes the structures and processes. Will things change?
You need to constantly maintain balance. Think long-term and short-term together, balancing operations and strategy. Every leader at Airtel is expected to do both. While leaders here need to do the operational bit, he [is] supposed to think of transformations in his area of control. They need to balance speed with quality and scale with complexity. We are confident that we will be able to maintain balance. We don’t want PP culture. It leads to hierarchy, bureaucracy, formality not speed. That’s against our DNA. All leaders we are building will need to have this balance.

How difficult was to outsource key components of your operations?
We succeeded because we didn’t know how difficult it was. We walked into this with a strong direction and a passion that this is right for us. I remember Sunil gave personal guarantees to all the employees who were being transferred to the partners’ payroll that if you want to come back anytime in the next three years, you can come back. That assurance helped.

You are getting into new territory — near saturation in the high-Arpu [average revenue per user] urban customers. New customers in the rural areas will have low Arpus. What are the challenges you see ahead?
The next three years and that journey will be very different than our past. While acquisition machinery will continue to acquire overseas, in India, our focus will remain on rural and youth consumers. Among the existing 100 million, we need to gain a superior wallet share through our new services. Our engagement levels with them must increase. Branding and marketing will have [to] play a very important role.

We are exploring new revenue streams through our three screen strategy in telephony, internet and TV. M-commerce should play an important role. Our tie-up with IFFCO and huge work in that area should help. Our capabilities so far is a lot about yesterday. We need to be a telco of tomorrow, address the changing lifestyle of the people.

How much will Airtel need to stretch as it harbours global ambitions?
Last year, we invested $3.5 billion. This fiscal, we are investing $3 billion. We are a cash flow positive and our net debt is around $600 million, so we have a strong balancesheet. 3G auction is likely to happen. Capex will come down in the coming 3-5 years.

You spoke about scope of being a leaner organisation. What are some of the areas you are working on?
Our business model is committed to making things leaner and meaner. For example, energy is half a billion dollar of my cost. That could be one area we could look at. Along with our equipment partners like Cisco, Huawei, Indus, Ericsson, Nokia, who are our data centre partners, we are exploring. Service costs — or cost to serve our customers — we are trying to bring that down. We are also trying to push up our manpower productivity — in the last one year it has doubled. This year, we are planning to double it again. There has to be much more prudence on expenditure. We are getting cost conscious about every penny we spend.

While you have been rolling out new services, in a relative sense they hardly contribute to the kitty. DTH, for example, is a very competitive business where not many are making money.  What’s the roadmap you see for these businesses?
The new business will give us major upsides in the long term and we have to have the patience to keep at it. We are confident that long-term revenue leadership will come from our new revenue streams.

Tell us about your international plans?
Indian business has reached a threshold level. We have reached peak capex level in India. We have free cash flow. We have unique business models for developing markets. It’s a great opportunities for other markets. I want to say this that the focus on India will be 100 percent. All resources that India needs will be 100 percent. India needs will be fully met.

But, its time for us to take our business model to other markets of the world. We want to build a DNA beyond India and build a global corporation. But we will be a different kind of MNC. It won’t be PP but PE — swift, agile, informal and speedy decision making. A company which has good smell of people and has hunger for growth.

Our focus will remain on mobile and on markets which have scale. But the valuation has to be right.

Your visions for Airtel ahead?
Our 2015 vision is that Airtel should be beyond 200 million in India and among the top admired brands. It will be an emerging market leader in wireless space.