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In-house interview: Airtel GC Sameer Chugh on call drops, Jio competition, cross-border risks, and how he picks his lawyers

Airtel operates in one of the most complex and dynamic regulatory segments in India, so its lawyers have their work cut out for them...

Consumers may be Airtel’s bread and butter, but GC Sameer Chugh’s experience as a consumer of legal services is no less interesting...
Consumers may be Airtel’s bread and butter, but GC Sameer Chugh’s experience as a consumer of legal services is no less interesting...

Bharti Airtel’s director legal Sameer Chugh leads, in his words, a “fast-paced” industry.

As the top in-house lawyer at India’s largest telecom operator and the Indian telecom industry’s leading cross-border player he regularly dodges curve balls from the regulator as well as from competing players – the call drop regulations and Reliance Jio’s allegedly predatory pricing is a case in point.

At the same time, he is also the first to fight for and experience regulatory innovations such as the eKYC norms, and dabble in multi-jurisdictional regulations.

Instead of looking for a legal advisor in the firms he instructs to support the dynamic needs of his company’s legal function, Chugh says he looks for quintessential business partners.

“My sense is that logically, if something is right, legally also it would be right,” he says.

The Supreme Court seemed to agree last year when it struck down the Telecom Regulatory Authority of India (TRAI) regulation that made network operators liable to compensate customers with up to Rs 3 per day for calls dropped by the network.

The Department of Telecommunications (DoT) having made it possible for telcos to hand out prepaid and postpaid mobile connections through verification linked to Aakdhar cards and fingerprints (eKYC norms), is another way Chugh feels the law has been able to eventually come around to the telecom industry’s logic.

He has a regulatory team on the legal side, liasoning with the regulator to make the eKYC norms mandatory instead of optional.

He says that since telecom is a B2C (business to consumer) business as opposed to a B2B (business to business, where corporations deal with each other) operation, it is more fast-paced.

“Dealing with a retail customer on the street – he doesn’t understand [technicalities]. All he wants is: ‘my services to be uninterrupted all the time and the flexibility to get it how I want it’. So to marry the requirements of the customer and the stipulations of the regulators is very critical. Those are the biggest challenges that happen every day.”

Regulatory wisdom

“The telecom sector is highly regulated and the challenges of the regulated market are very different as opposed to the unregulated market because at the end of the day you have a regulator sitting there who in his own wisdom is passing regulations which he feels are right or wrong for the sector,” says Chugh.

“The interpretation of the regulation is your domain, and you have to take a stand which doesn’t hurt you but in the long run ensures compliance as well.”

Chugh recalls the time when TRAI attempted to deal with the menace of call drops by charging telcos Rs 1 per call drop, totalling up to Rs 3 per day, to compensate affected customers.

“At the end of the day why are call drops happening? Because of connectivity issues. If you have an urgent call to make, by getting Rs 3 per day will your experience change? What is important to me [as a customer] is to get quality rather than Rs 3,” he explains.

“This regulation created a huge problem for the organisation and the sector because the implementation of such a regulation is impossible. It is very difficult for me to turn around and see the reason for a specific call drop.”

A step beyond black letter law & beyond being a cost centre

He says that where the scope of a law firm may end by ticking items off a checklist which asks if the authority passing the regulation is valid and whether the regulation can be interpreted in a manner which reads right, he had to go a step further, work with engineers and finally understand that call drops are not entirely attributable to telecom operators.

“For example, in a network there are five towers. If one of them is not functioning due to an electricity issue then call will drop in that area,” says Chugh, then points out an obvious implication: “So if the electricity department is not penalised…”

He adds: “Therefore it is important to really be a part of the business and heart of the business so that people take you along, and treat you as somebody who is [their] problem solver not [their] problem creator. There are companies which will still consider the legal team as the cost centre but it is up to the General Counsel to move up from being a cost centre to a business supporter,” he remarks.

Airtel’s legal team, which is headquartered in Gurgaon, is 65 people strong, divided mainly into three teams: regulatory, litigation and corporate, covering the entire South Asia market.

And then there are several others who specialise on intellectual property (IP) and strategic M&A.

Ideal external advisor: How to get on Airtel’s panel

According to an anecdote of Chugh’s, the partner of a law firm that Airtel now instructs regularly, walked into its empaneling exercise saying: “If I am not able to anticipate what you want I don’t know what I am here for.”

Every firm on Airtel’s panel was able to voluntarily tell the company, during the empaneling exercise, the big challenges the company would face in the next two years, and how the firm could support it against those challenges.

What makes Airtel run in the other direction is when a law firm is not able to drop one of two clients with conflicting interests. “A conflict of interest is something which makes us put them in a bucket where we would never go back to them again. That is something we don’t take lightly.”

The company’s two-step empanelling exercise consists of first sending an invitation to the firms for a note elaborating on the help they could provide the company.

This is followed by a roundtable discussion where around four employees of the company engage per firm, and understand its proposal. Chugh says its empanelment of four to five law firms is “pretty scientific” and based on selection criteria such as the profiles of its partners, its experience and the kind of work the firm has done in the past, its understanding of Airtel’s business and its availability.

“They may be the best but are no good if they’re not available when you want them.”

Some of the firms on the panel include, most prominently, AZB & Partners Delhi, which appears to have been handling nearly all of Airtel’s M&A mandates over the years (Airtel’s $1bn Telenor takeover being the latest in a long line). Also on Airtel’s roster is Seth Dua & Associates and a lot of independent counsel.

Cross border activity

Seven years ago Airtel became the first Indian brand to go truly global with a footprint of over 1.8bn people, with Bharti telecom spreading operations into 18 countries across Asia and Africa and growing to a customer base of 180 million after Bharti Airtel’s $10.7bn acquisition of Africa’s Zain Group – to date the largest ever telecom deal in emerging markets.

It now has operations in 20 countries across Asia and Africa, addresses a population of over $2bn and Bharti Airtel is also the existing partner of Singapore-based Singtel which is South East Asia’s largest telecom operator. Its most recent cross border acquisition was of Netherlands-based telco Augere.

“I would divide these transactions into two parts. One is the legal part – what the documentation ought to be and making sure that the requirements of both jurisdictions are actually turned around and adhered to.”

“The second part is [the assessment] of stakes and rights that determine whether you are investing in the right place and for the right return.”

Another issue Chugh often deals with are cross-border indemnities and liabilities and the challenges they present in terms of obtaining Reserve Bank of India (RBI) approvals on account of liabilities of residents to non-residents.

“From the perspective of money coming in, the government intends to ease the whole Foreign Investment Promotion Board (FIPB) approval process and has said that the proposals are going to go into the concerned ministry. We are yet to see how that will happen but it is a very good move.”

“Also, when you’re dealing with people outside [India] there is a very big cultural difference. [Investors] come into India and expect to see European or US working style but India is a different ball game. Here you have to make sure they understand the practical aspects of doing business in India, and the time taken.

“Globally everything is online. Here a lot of paperwork and physical approvals are required.”

Predatory competition

Chugh believes that it is better for the “highly competitive” telecom sector – with 10-12 players vying for the same business – to consolidate in the interest of the consumer. (Bharti Enterprises chairman Sunil Bharti Mittal came out in support of the Vodafone-Idea merger and industry consolidation in general)

On Reliance Jio’s competition strategy, however, Chugh remarks: “Reliance Jio has come in. It is a new player, has disruptive thinking and actions.

“We are not going to be sitting idle. I don’t think there is any other company better than Airtel today to be able to take on Jio. It is important to introduce a fair competition which is not predatory and is in the interest of competition and consumers. In the long run if the industry suffers it will be the consumers who will suffer.”

Chugh’s foresight comes from hard-won experience across several in-house roles, before finally moving into pure telecom work at Airtel: since his 1997 LLB from Pune University he has worked on M&A in the law firm Kochhar & Co; for the NCR Corporation India on outsourcing and setting up operations; at British Telecom he had leading roles on major M&A transactions; at Essar he did telecom and M&A; and he followed that with exposure on the manufacturing side at Cummins India, which has 17 plants in India, before joining Airtel in 2014.

But throughout the progression of his career, for Chugh there has always been one end game. “Every general counsel’s dream is, or what would give them a kick is, when the business comes and says: ‘You’re my solid dependable business partner’,” he muses.

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