I’m a middle-class guy: Bharti Airtel CEO after he spooks the market

In a disclosure on the National Stock Exchange,the company said Kohli sold 70,000 shares in the company on March 9. Estimated on the basis of the closing price of the company at Rs 587.75 on March 9,the value of the transaction is Rs 4.11 crore. Earlier on March 6,Kohli sold 53,000 shares valued at Rs 3.13 crore.

A statement issued by the company after market hours announced a major restructuring at the top fuelling speculation about “tension” in the top management. Sanjay Kapoor was elevated from President,mobile services,to a newly created position of Deputy CEO. Kapoor will lead the Mobile,Telemedia and DTH businesses and report to CEO Kohli who,the company said,will focus on strategy development,governance and organisation development.

Denying rumours of an exit,Kohli said: “I am happy to confirm that I continue as CEO and joint managing director of the company,” he said. Speaking to Financial Express,Kohli said he was amused by the reaction,which he apparently never expected. He refused to read too much into the timing of the sale. “I am a middle-class guy,” he said. “(The sale) is for a personal reason and only my wife can interfere in such decisions.”

A close family friend,speaking on the condition that he not be named,told The Indian Express: “Manoj Kohli sold his shares when they were at rock-bottom prices. He’s been looking to move out of Gurgaon and buy a property in New Delhi.”

But analysts raised several questions. For one,they said,he could have always pledged his shares to raise funds or taken a loan from the company. “The market is worried why all of a sudden the CEO had to sell his holding,” said R K Gupta,managing director at Taurus Asset Management. He said investors were jittery about such insider stake sales after recent corporate scandals,including the alleged fraud at Satyam Computer.

Kohli said speculation that he was quitting was baseless. “I still hold more stake in the company than I have sold. I still have 180,000 options in the company,some of which are vested with me and the balance would be vested by 2010”,he said. “I am totally committed to my job and find it the most exciting job and there’s no question of my exiting the company.”

Records with the National Stock Exchange (NSE) show that Bharti Airtel director Akhil Gupta and Company Secretary Vijaya Sampat also sold stakes in small lots over the last three months. Akhil Gupta sold 91,136 shares of Bharti Airtel in the last three months,bringing down his stake to 10,91,692 shares. Vijaya Sampat sold 16,000 shares in December 2008,as per the company’s NSE filings.

Analysts said the share sales could also be linked to the slowdown in the sector. Said Harit Shah,telecom analyst with Angel Broking,“Telecom companies were doing well in the first three quarters of the fiscal 2008-09. Their margins are under pressure in the fourth quarter. This is because telecom companies were incurring higher network expansion costs and lower ARPU (average revenue per user).”

Moreover,the government had announced a 33% reduction in interconnection usage charge (IUC) which will impact the sector’s revenues. GSM operators opposed the move saying a cut in termination charge (levy paid by an operator to another on whose network the call ends) would affect their revenues. Bharti Airtel share price has fallen 42 per cent from Rs 950 since April 28,2008.

In other management changes announced by Bharti today,Atul Bindal,who was leading the telemedia business,will take over as president,mobile services. And K Srinivas,till now executive director (East),mobile services and in-charge of Sri Lanka operations,will take over as joint president- telemedia services.

Bharti has been one of the best performers in the stock market despite the crippling October-December quarter of 2008 where most companies moved into massive losses. Bharti’s net profit was up 25% to Rs 2,159 crore while revenues were up 38% at Rs 9,633 crore.