Click to play videoNew Delhi: Bharti Telecom’s Sunil Mittal is known to make friends easily. It was this friendship that resulted in a partnership which first brought the world's largest telco – Vodaphone - to India.
Now, as Vodafone embarks on its own Indian journey by winning the Hutch bid, it has Mittal to thank for a crash course how to make money in low cost emerging markets.
So while partners turn competitors to fight it out in the market, Bharti insists Vodafone will be its growth ally and not a cut-throat competitor.
As per a Memorandum of Understanding signed between the two, Vodafone will not completely exit its current 10 per cent stake in Bharti and will retain the remaining 4.6 per cent stake purely as a financial investment.
Bharti, on its part, has agreed to buy back Vodafone's 5.6 per cent stake for $1.6 billion.
The Bharti management believes that there wouldn't be a conflict of interest in Vodafone continuing to have a foot in Bharti's pie.
“We will be more like relationship partners more than just partners. They wont sit on the management team, they won’t sit on th board anymore. So it’s more of a relationship than partnership now,” says Joint Managing Director, Bharti Airtel, Rajan Mittal.
Here’s how are Bharti and Vodafone going to collaborate even as they compete:
- Bharti, Vodafone to share 70,000 cell sites
- Bharti to be Vodafone's preferred vendor for long-distance telephony.
- Vodafone to use only Bharti's NLD and ILD network for leased lines
- Bharti to get 50 per cent of Vodafone's inbound roaming traffic for three yrs.
“Infrastructure sharing gives a huge leverage to both the companies to manage the efficiencies and ensures better service, more coverage, more depth and width in the market,” says Mittal
For Bharti, Vodafone's acquisition of Hutch-Essar is a positive as it doesn't change the market dynamics.
If Reliance had bagged Hutch, Bharti would have been pushed to the No. 2 slot and would have given Anil Ambani a firm footing in the GSM space.
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