Bharti sets strange tone for India’s global push

Loose connection. An Indian billionaire is getting a strong reception overseas. Freshly knighted by Britain's King Charles, Sunil Bharti Mittal's $4 billion investment for 24% of UK telecom operator BT was welcomed by both the target and New Delhi; Commerce minister Piyush Goyal lauded the move as proof of the South Asian nation's growing economic prowess. The strategic rationale behind the tycoon's move is ambiguous, however.

He answered a call for a buyer of the stake from Patrick Drahi's indebted Altice group but the Indian expects more of his peers to invest overseas. Mittal told journalists India's government is continuously encouraging a handful of companies who have gone global to accelerate the process. Indian firms have announced acquisitions worth $7.6 billion this year, overtaking the $6.4 billion tally for the entire 2023, per Dealogic.

While his peers are diversifying domestically into new sectors, from green energy to chips, and global firms set their sights on tapping the market, Mittal is looking far away and sticking to a sector he knows. His family's core business, the $105 billion Mumbai-listed Airtel survived a price war from Jio of Mukesh Ambani's Reliance Industries, and is now the second largest operator in a quasi-duopoly.

Yet the deal also suggests the Mittal family sees better use for their capital in a mature market than in India's fast-growing economy where profits are limited by the population's low incomes. While Airtel's market value is five times BT's, its estimated net income for financial year 2025 is only slightly higher than its British peer. In June, Indian telecom operators raised tariffs for the first time in three years. By contrast, Mittal is optimistic about BT's potential to deliver higher cash flows as its new CEO Allison Kirby commits to boosting profits after years of cost-cutting.

Perhaps Mittal's empire-building, with London as an emerging centre, might appeal to his adult children. His son Shravin heads Bharti's overseas investment arm and is based in the city, where the group's Airtel Africa business is also listed. Meanwhile satellite operator Eutelsat, where Bharti has a controlling stake, is backed by the UK government.

The family won't have to answer to public shareholders if it seeks a larger stake in BT or a full takeover because the stake purchase is routed through a private company. Indian politicians wanting for more private investment in their own country might eventually pose the hardest questions.

Context News

India's Bharti Enterprises said on Aug. 12 that it would acquire a 24.5% stake worth about 3.2 billion pounds ($4 billion) in British telecom operator BT from tycoon Patrick Drahi. "The Indian government is continuously encouraging a handful of companies who have gone global to accelerate the process. Yes, more companies will come and invest outside. For that, one thing is important that you need to be strong in your home market," Chair Sunil Bharti Mittal said, the Financial Express reported, citing comments made on a call with journalists following the deal's announcement. Indian firms have announced acquisitions worth $7.6 billion so far this year, overtaking the tally of $6.4 billion for entire 2023, per Dealogic.