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| Rajeev Chandrashekhar |
Here’s the funny thing about Rajeev Chandrasekhar. Actually, here is a whole list of funny things. Funny thing one: more people have heard of Chandrasekhar now than had ever heard of him when he was actually running his business. Now that he has sold BPL Mobile to the Ruias of Essar (and therefore, eventually, to Hutch), he is on every TV channel and in every business paper. Selling a company for a figure north of $ 1.1 billion will do that for you every time.
Funny thing number two: everyone sees his picture in the papers and assumes that he is some rich kid, part of the BPL dynasty, who has struck some big deal that has made the family rich. Actually, this is not quite true.
And funny thing number three: though his is a genuine new economy success story on par with Infosys, Wipro and all the others, Rajeev – like all the telecom whizkids – never gets the credit that is his due.
From Intel to India
The thing to remember about Chandrasekhar, no matter how many times you see him on CNBC holding forth about telecom policy, is that he is not really from the world of business.
Like the Nandan Nilekanis before him (he is a decade younger than Nandan and thus part of the next generation of tech whizkids), Chandrasekhar has not a drop of entrepreneurial blood in his veins. His background is solidly professional: his father was an air force officer. The young Rajeev grew up in a series of air force stations, in Jorhat, Ladakh and Delhi Cantt. He had no interest in business and never believed that he would run a company.
He claims to have been solidly average in academic terms but got into Manipal to do an under-graduate degree in engineering. Even so, his memories of college are not the usual geek stories that the IIT types who dominate the IT industry are fond of retelling. His strongest memory is of being part of a gang of bikers called the Junk Sangh (ironic, in the light of the friends he made later in life, but don’t even ask) who would drive down to Bangalore for concerts by the few rock stars who came to India in the 1980s: Wishbone Ash, Uriah Heep, and the other washed-up Brit bands who had hit the Third World trail.
In 1984, he went to the Illinois Institute in Chicago for a postgraduate degree and his chief memory of August 1984 is of being mugged on his first day in the US. But he can’t have been as moderately intelligent as he now claims to have been. He finished his degree in nine months and gained a mentor to beat all mentors, Vinod Dham, then not quite the legend he was later to become at Intel.
Chandrasekhar had many offers when he finished his degree, but he chose Intel over Microsoft because of Dham’s influence. It was a wise decision. He got to Silicon Valley as the boom was just beginning and the tech whizkids were still entrepreneurs and hadn’t yet bought their yachts and Merlot vineyards.
He has records, he says, of meetings he attended where Bill Gates was another participant and he remembers discussing things with Larry Ellison in the Intel café. Chandrasekhar was one of Intel’s fastest rising stars and became one of only three engineers who were CPU architects, working on the next generation of chips. Every Intel 486 processor ever manufactured, contains his initials, along with those of the thirty other engineers who worked on the project.
Why then, did he come back from Silicon Valley?
At the end of the 1980s, he met Anju, who was doing an MBA in Boston and the two decided to get married. Anju was the daughter of the founder of BPL and after what he calls the usual round of Malayali investigations – ‘making sure I didn’t have an American mistress on the side’ – her parents were pleased to consent to the match. Rajeev says that they never minded that his own family was solidly middle class; the Nambiars of BPL, like all good Malayalis, valued education over wealth.
He took a year of absence from Intel after getting married and came back to India. Through one of those coincidences that end up changing lives, his father introduced him to Rajesh Pilot, whom he had taught to fly during Rajesh’s air force days. Rajesh took him to meet Rajiv Gandhi – who was then in Opposition – and asked him the obvious question: why not come back to India and help prepare the country for the electronic revolution of the twenty-first century?
Chandrasekhar was intrigued. He was having a great time in Silicon Valley.His career was zooming and he was listening to B.B. King and Robert Cray – live. But somewhere in his heart, he knew that there was a life beyond the blues.
A life in Bangalore, perhaps.
Reality check
In 1991, when Rajeev Chandrasekhar first got into business in India, he rejected the software option in favour of something that seemed even more novel. In the early 1990s, mobile telephony was not big in the US though there was a boom in Europe. But Chandrasekhar found good partners in France Telecom and Craig McCaw; used his father-in-law’s brand name; and bid for the first round of cellular licences.
In 1994, when the licences finally came through, after endless rounds of litigation, he moved to Mumbai from Bangalore, hired a 1,000 square foot office in Arcadia at Nariman Point, borrowed Rs 100 crore from IDBI, staffed his operation with youngsters and ex-military men and tried to drag India into the cellular age.
Almost from the word go, things went according to plan. The bidding process was completely transparent. Nobody asked him for a bribe at IDBI. And Rajeev began to believe that he would repeat the experience of the software successes and create an honest, world-class business for the new India.
In 1996, when Sukh Ram, then telecom minister, announced another round of bidding, Rajeev was not perturbed. In the last five years he had never needed to meet a minister so when the bureaucrats told him to call on Sukh Ram, he was not only surprised but also quite excited – ‘it seemed like a real big deal to have a one-on-one with a minister,’ he remembers.
Sukh Ram went round and round in circles and then invited him for a second meeting. After this encounter when Chandrasekhar still failed to see the point, he finally asked in desperation, ‘ Isn’t there any older person in your house whom I can talk to?’ But there wasn’t. Because this was a young business. And though Sukh Ram did his little fiddles to benefit Himachal Futuristic, denying BPL Mobile some of the circles it had bid for, Chandrasekhar was able to say that he had managed to become the biggest operator in the mobile telephony business without paying a single significant bribe.
Till then, he says, with just a trace of irony, his experience paralleled that of his software billionaire Bangalore buddies.
The Idea that went wrong
By 2001, BPL Mobile was the largest cellular operator in India. And Chandrasekhar had become the poster boy of the telecom revolution – the Intel engineer who came back to India to prepare us for the twenty-first century.
Then, things began to go wrong. He made one mistake. And he suffered one assault from which he never quite recovered.
The mistake was to get involved with what was then known as the Batata Conglomerate. Kumar Mangalam Birla, Ratan Tata and AT&T decided to come together to create a new company that would be professionally managed and would have no controlling shareholder. Chandrasekhar decided to merge BPL Mobile into the big Batata, recognizing that his company, by virtue of its size, would be the single largest shareholder in the new entity.
An MOU was signed in 2001 and Chandrasekhar sat back. He did not invest further in the business, did not prevent subscribers from migrating and waited for the new conglomerate to take shape.
And take shape it did. Except that BPL Mobile was not part of the entity that eventually became Idea. In 2002, the MOU expired and Idea said that it had no interest in renewing it.
Despite having lost market share, Chandrasekhar and BPL were on their own.
What went wrong? Market gossip has it that the Tatas were content with the deal but that the Birlas were not comfortable with the idea of playing junior partner to Rajeev Chandrasekhar.
So, was he diddled by Kumar Mangalam Birla?
Rajeev Chandrasekhar looks disturbed. ‘I’m not going to point fingers at anybody. Let’s just say the deal didn’t work out,’ he snaps shortly.
Battle won, war lost
Though nobody saw this at the time, the Batata fiasco marked the end of BPL’s national ambitions. Chandrasekhar had been willing to sit back when rivals were grabbing market share. And now, that smugness came back to haunt him as competitors like Airtel raced ahead of BPL in the national marketplace.
One reason why the enormity of the error remained hidden was because Chandrasekhar was back in the news for much of this period as the head of the cellular operators association, fighting a very public battle for reform of the licensing policy.
Even as he explained why the industry was doomed unless the arrangement was shifted to profit-sharing, few people noticed that BPL had missed out completely on the bidding for the fourth licences. Had there been no Idea merger on the cards, BPL would certainly have bid for Delhi. But the entire expansion passed Chandrasekhar by and as new giants emerged, BPL lost its pre-eminent position in the Indian cellular market.
But even as he was losing market share, Chandrasekhar won the bigger battle for the cellular industry. The government agreed to migrate to a profit-sharing arrangement and the operators, many of whom were hugely in debt, found their fortunes swinging skywards.
His success in that battle probably made him less prepared to face the WLL/CDMA onslaught.
When the cellular licences had been issued, the operators had been assured that nobody else would be allowed to offer cellular services. But the Vajpayee government turned this rule on its head by declaring that private operators who were offering fixed line services could also offer cellular operations, provided they used CDMA or WLL technology rather than the GSM technology favoured by the existing operators.
This move was sought to be justified on socialistic grounds. CDMA was a new technology, we were told. It was much cheaper than GSM. The new CDMA phones would be janta mobiles, available to the common man for a song compared to the expensive, rich man’s GSM phones.
When the GSM operators objected, they were portrayed as disgruntled oligopolists fighting to prevent Indian consumers from enjoying the benefits of cheaper, newer technology. Everyone could have a mobile now, the government said, if only the GSM operators would allow this new cheap technology to reach the masses.
These arguments still anger Chandrasekhar. ‘First of all,’ he says, ‘ we didn’t choose GSM. The government chose it for us. Secondly, both technologies are contemporary. CDMA is not the latest technology. Thirdly, it is not cheaper than GSM. CDMA phones are actually more expensive than GSM phones. Fourthly, the only reason it would be cheaper in India was because the CDMA operators were not being charged the high start-up costs that GSM operators had been subjected to. And finally, there was a moral issue: the GSM operators were paying for licences to operate cellular services on the understanding that the market would be restricted to a certain number of players. If we had known that the market would be opened up for free to new CDMA players, we might never have got into the business.’
These are good arguments, but though the GSM operators, headed by Chandrasekhar, made their case forcefully, they never had the impact they had hoped for. All talk of a telecom scam fell flat – until recently, when one by-product of the battle between the Ambanis was the revelation that the BJP government was clearly on the take – and there was little public pressure to amend the policy.
Finally, the GSM operators had their day in court. The Supreme Court ruled that the government policy had been malafide and illegal and ordered the construction of a more level playing field.
It was good news for the GSM industry. But it was already too late for BPL Mobile.
A Pit-stop in the pits
While Chandrasekhar was fighting these public battles, his company was going down the drain. It never recovered from the year he took off during the failed Batata merger and not only did his rivals race past him, but BPL Mobile’s financial problems multiplied.
He was in default to lenders, creditors lined up outside his door, and Motorola filed a winding-up petition arguing that the company was in no position to pay its debts.
It was the lowest period of Chandrasekhar’s life and he freely admits now that he spent several months wallowing in self-pity. ‘ I kept asking myself,’ he remembers, ‘how could have things changed so quickly. Till 2001, my success story was the same as any of the software guys. But by 2003, creditors were ready to close my company down.’
His conclusion: ‘ The software industry doesn’t need to go to politicians. Most of its customers are abroad. We were entirely dependent on government and on regulators who were sometimes biased or corrupt. Till 2001, the big boys of Indian industry hadn’t worried about the cellular industry. But when they did, we realized, to our cost, how completely outclassed we were. They either diddled us or swung government policy against us. I had no idea how bad or how damaging corporate sabotage could be.’
He pauses. ‘ The thing I’ve learnt about India,’ he says, ‘is that if one of the big boys wants to destroy you and knows how to manipulate the government, then there is nothing you can do.’
Life begins at forty
But, of course, there was something he could do. Chandrasekhar threw himself back into the business, determined to pull BPL Mobile out of the hole it had dug itself into. In 2002-03, the company had seen virtually no growth.
In 2003-04, growth had been 14 per cent. But with Chandrasekhar determined to do better, the business grew by an astonishing 58 per cent in 2004-05.
Against the odds, he had pulled the company back from the brink. Admittedly, he was no longer the poster boy of mobile telephony – that title now belonged to Sunil Mittal of Airtel – but he wasn’t a failure either. He had a successful business that was growing at a healthy rate.
Just when it seemed his problems were over, a new complication arose. His father-in-law decided to fight him in the courts. The Chandrasekhar position, as described by his lawyers, was that BPL Mobile was always his own business. He paid a licence fee to his in-laws for the BPL brand but that was all. He ran the business himself, found his own financing, and was treated as a separate entity by markets and bankers. The problem was that the mother brand was no longer doing well and that BPL Mobile now had lots of money. It was, says Chandrasekhar, a difficult time because of the family complications. He refused to say a word against his father-in-law, asked Anju not to take sides and continued to send his children to meet their grandparents. ‘ I decided that I would treat it as a business problem, not as a family dispute,’ he recalls.
That approach worked and in July 2005 the dispute was settled amicably. Chandrasekhar decided to give up the BPL brand and as he considered creating a new branding, he mandated Morgan Stanley to find a 40 per cent equity partner. But, the more he thought about it, the more sense it made to just sell out and take the money.When a good offer from Essar came along in June 2005, he decided to end one chapter of his life.
He is prohibited from saying how much the deal valued BPL Mobile at. He won’t even comment on market speculation that it was around $ 1.2 billion. He will admit, however, that he is now a very rich man, though his preferred phrasing is, ‘let’s just say that I am now very comfortably off.’
He has many plans: he wants to start a venture capital fund; he has a passion for publishing; a foundation is in the works; he will spend more time on the hotel he owns in Kovalam; and, of course, he is looking at new investments in the technology sector.
Given how much he has gone through in the last decade, it is sometimes easy to forget how young he is: just forty. In many ways, he still has his life in front of him.
It’s been a long, strange ride, I tell him. Has his story demonstrated that middle-class techies may do well with foreign customers but are screwed over much too easily by the experienced bania businesses?
He is not sure, he says. ‘My career had two phases. If you look at what happened to me after 2001, I would say you were right. But let’s not forget that I bid for my licences in 1991.And by 2001, BPL Mobile had become India’s largest operator without my having to go to a single politician or pay a single bribe.’
The final, inevitable question: didn’t the telecom industry commit an error by getting the stubborn and self-righteous Rajeev to fight its battle? There are other telecom entrepreneurs who are much more realistic and could have cut the right kind of deal with the government.
At first, he bristles at the suggestion. ‘I don’t think the ends justify the means,’ he says angrily. But then, he makes a valid point: ‘ You know who we were up against. If we had offered a bribe of x, they would have offered a bribe of 4x.We couldn’t have bought our way out of this one.We had no choice but to fight.’
Rajeev Chandrasekhar’s fighting days are, thank God!, finally over. He has lost seventeen kilos in four months, went easy on the food and the vodka, found more time for his Lamborghini and flew to London to catch the Cream reunion concert. He has no regrets, he says. But yes, he is relieved.
Oh yes, he is very relieved.
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