Thursday, August 25, 2005

Bharti diversifies, yet again

One of the top stories of today is that Bharti entered the life insurance space with AXA. Bharti isnt exactly known for insurance, and is a major player in India in the mobile phone segment through its Airtel brand. Airtel, incidentally is among the largest players in the Indian mobile telephony segment and is known for quite a few innovations.

From the bharti website
...Bharti Enterprises has successfully focused its strategy on telecom while straddling diverse fields of business. From the creation of 'Airtel', one of India's finest brands, to becoming the largest manufacturer and exporter of world class telecom terminals under its 'Beetel' brand...

...While a joint venture with TeleTech Inc., USA marked Bharti’s successful foray into the Customer Management Services business, Bharti Enterprises’ dynamic diversification has continued with the company venturing into telecom software development. Recently, Bharti has successfully launched an international venture with EL Rothschild Group owned ELRO Holdings India Ltd., to export fresh Agri products exclusively to markets in Europe and USA...

It recently outsourced its network maintenance to Ericsson (a first in the world where a provider outsourced his core technology backbone), its call centers to the best set of service providers and its DR operations to IBM. On the services front, it provides micro prepaid cards through Airtel which are as low as rupees 50 (about 1.5 USD) and enables Airtel to tap the "bottom of the pyramid".

While the cellular division has been making all the news, Bharti is also into things as diverse as agriculture and infrastructure. The former is through a venture known as FieldFresh foods and the latter through BTV. And now it is into Insurance. What is the synergy between mobile telephony, airports, agriculture and insurance is something I dont know, but if a business sees a sector as sunrise, why not?

...The joint venture is expected to have a capital base of about Rs 500 crore within the next 3-4 years. Under the present laws, an insurance company has to have a minimum capital of Rs 100 crore. While Bharti will hold 74 per cent stake in the venture, AXA Asia Pacific Holdings Ltd will hold the remaining 26 per cent...

While I looked for synergy across all these sectors, one sentence caught my eye: The (new insurance) company would also seek to leverage the telecom customer base of Bharti. Thats interesting news for all the present players in the insurance sector including old hand LIC (Life Insurance Corporation)

No comments: