Wired for growth

In 1999-2000, Bharti BT, a joint venture between Bharti Enterprises and British Telecom, launched Mantra Online, its Internet Service Provider (ISP) brand.

Within a year, Mantra rustled up nearly 4 lakh subscribers and was among the country's top three ISPs (along with VSNL and Satyam).

The trouble was, this success came at a price. Literally. To produce a dial-up pack cost close to Rs 11 per hour, but the revenue realised was Rs 6 per hour. So the more the ISP sold, the more it lost.

Regulations at the time didn't help either: no revenue-sharing was (is still not) allowed with the state-owned fixed line operators (MTNL and BSNL) "" another income avenue closed. By 2001, Bharti BT Internet was losing Rs 3 crore to Rs 4 crore a month.

By this time, it seemed a lose-lose situation all round. Some Bharti companies weren't doing well either. Bharti Broadband Networks, which was to set up data centres, was in the product development stage.

Bharti BT Vsat was making losses of Rs 30 lakh to Rs 40 lakh a year. Matters came to a head in 2001 when BT decided to exit the joint venture.

The only option was to merge the three firms. And considering the lack of revenues in the retail sector, there was but one choice "" to switch focus to the corporate sector.

Cut to three years later. The Broadband and Data Group, as it is now called, is a division of Bharti Infotel, one of the two umbrella companies of the Bharti group.

Its turnover is expected to cross Rs 230 crore in 2003-04, up from Rs 115 crore the year before. It has a customer base of over 800 companies, of which more than 250 are large corporations such as ICICI, Infosys, Microsoft, General Electric and American Express. The corporate sector now accounts for almost 80 per cent of the division's revenues.

By March, the division is confident of capturing a 50 per cent marketshare in the Internet bandwidth and international private leased circuit (IPLC, used mainly by BPO outfits) segments. (2004-05 estimates for the market put it at 10 to 12 gigabytes "" it is not generally valued in rupee terms.)

By that time, say Bharti officials, it will also have a 30 to 35 per cent share of the corporate data segment (2004-05 estimates: over 90 gigabytes). "We have everything," beams Rajiv K Sharma, CEO, Broadband and Data Group.

Clearly, the focus on the corporate sector was a good strategy. Explains Kobita Desai, principal analyst (telecom), Gartner India Advisory Services, " On average, this segment accounts for 38 to 40 per cent of the total data transfer market. Those who establish a foothold can be assured of continued business."

But how did the group get "everything"? For starters, the company leveraged the group's infrastructure and technology expertise. (Mantra continued to exist, but a decision was taken to stop building on it; existing customers were serviced until they exhausted their Internet packs.)

Bharti could offer satellite services, optic fibre connectivity, Internet bandwidth and mobile telephony.

Says Sharma, "We told firms: 'we'll take care of all your data needs. We can provide hybrid solutions (those that involve different modes of connectivity like satellite, Internet protocol and fibre)'."

But Bharti's proposition was not unique. Companies like Satyam and Global were selling integrated solutions, where they bought Internet bandwidth, satellite services and fibre cable connectivity, and sold them as a package.

But they charged a premium for the service and the options they offered were limited by what they could buy. And, as Ashok Juneja, corporate director, Bharti Tele-ventures, then CEO of Bharti Broadband, points out, "The corporate sector does not like to pay extra".

Also, the group's credentials had not been established. Initially, therefore, the Broadband Group worked in partnership with Satyam and Global, but pushed for solo contracts too.

The biggest learning at this time was that clients required future-proof solutions "" solutions that would not be overtaken by technological developments in the future. Customised solutions also proved a key selling point.

A solution that the Broadband Group created for American Express, for instance, is now becoming the norm. In 2002, the Broadband Group switched AmEx's credit card customer call centre to a GSM network.

Earlier, a customer from Ghaziabad would hesitate to call the Gurgaon call centre because it involved STD rates. Bharti gave the client a mobile number; all calls are now routed through Delhi to the call centre.

Similarly, foreign banks that were delaying opening branches in smaller cities because brick-and-mortar customer care centres in each town meant crippling expenditure could now opt for a mobile number from Bharti's network "" it spans 15 states and covers all towns in each state.

Of course, all solutions weren't successful. Working with ICICI Bank, the group created a mobile ATM, placed it on the back of a truck, which travelled all over Mumbai.

Connectivity was ensured through GPRS (global packet radio system, a wireless mobile communication technology). The concept was unique but didn't take off: customers' perception is that banks are stable structures, not mobile.

Solutions and options like these were worked out by the Broadband Group's "business solutions group" (BSG), which was set up in 2001.

Typically, the connectivity design is created by a hard-core designer and then sold by a hard-core commercial person. The BSG, on the other hand, is a techno-commercial team "" a first in the business.

The design team was trained in the commercial aspects of the business "" evaluating problems from the client's perspective and understanding concepts such as investment protection.

There were changes on the people front. Employees whose skills were relevant to the retail sector were shifted to other group companies, others who suited corporate markets were brought in and retrained. The company claims there were no layoffs after the merger, only some reallocation.

More changes took place last year when the Broadband Group adopted a multidimensional focus. Apart from regional heads, industry-specific heads were also created. National heads have been created on about seven businesses (IT, telecom, services and so on).

This means each account manager has two heads, both pushing him for results. The new approach seems to be working: against a targeted Rs 300 crore in bookings, the Broadband Group claims to have netted close to Rs 420 crore in commitments. This year, the company will extend the industry-specific break-up to 20 sectors.

Of course, the turnaround hasn't been entirely due to Bharti's efforts. Certain environmental factors also helped. The incumbent service provider was BSNL. Only, the "service" element was missing in what it offered.

The Broadband Group wooed customers, offered them customised solutions and guaranteed results. Service level agreements (SLAs) now form the backbone of the data transfer business for all companies.

Another advantage has been that the group hasn't been too troubled by direct competition. Telecom industry sources say that integrated service providers like Satyam and Global are losing out given Bharti's lower rates (since it owns the infrastructure).

Says Gartner's Desai, "Carriers, especially those that have their own network infrastructure, are in a league by themselves. It's not good business practice for systems integrators to compete against them."

Now, the Broadband Group can expect rivalry from Tata Enterprises Business Unit and Reliance, both expected to become active integrated players this year.

Sharma isn't worried. "Theoretical knowledge is not enough. Others will have to go through the same teething troubles that we underwent," he says.

In 2004-05, the Bharti group is expecting Rs 800 crore from its data initiatives. That includes enterprise solutions (which the Broadband Group provides), Internet services sold to both corporate and retail customers, Vsat services and long-distance and international connectivities.

Of this, the Broadband Group is expected to bring in Rs 450 crore. A Delhi-based telecom industry analyst thinks that's not too-unrealistic. The targeted 50 per cent marketshare in Internet bandwidth and IPLC, though, seems iffy. "Bharti may be overextending itself with that figure," he cautions.

Sharma is setting his sights now on the SME (small and medium enterprises) and SOHO (small office-home office) segment.

"We'll design solutions specific to them," he says. After all, if broadband takes off at the consumer level in a big way "" and it will, in two to three years' time, asserts Juneja "" that's where the growth will be.