Is the new coping mechanism even working for Airtel?
The African subsidiary of the Bharti Airtel or simply Airtel Africa, now on its way to be known as Africa’s leading provider of prepaid, postpaid mobile & 4G services with a user base of just over 227 million. The Indian telecom giants are known to operate in almost all parts of Africa including Burkina Faso, Chad, Republic of Congo, Ghana, Kenya, Nigeria and others.
Raghunath Venkateswarlu Mandava, the main man behind the operations of Airtel in Africa assisted by Christian Defaria as the executive chairman along with other regional heads have definitely planned for ways by which they can bifold the current valuation of the company.
Airtel’s strategy in Africa has been one of establishing a presence (paved by its acquisition of Zain) and also making local friends. Over the past few years, it has been trying to capture the African market through local deals. It has made three small-ticket acquisitions in Uganda, Congo Brazzaville and Kenya. Livemint reported that, in October, Airtel signed a deal with Millicom, which operates the brand Tigo, to combine their operations in Ghana. After this deal, in December, Airtel’s subsidiary in Rwanda announced the accession of Tigo Rwanda Ltd, making Airtel the second largest network provider in the country.
Bharti Airtel is facing an immense competition in its motherland, India from the new yet powerful telecom giants Reliance JIO under the ownership of Mukesh Ambani, JIO being a new entrant in the telecommunication market managed to cross the 300 million users mark in less than 3 years! which they achieved by offering lucrative deals and presenting very low data rates as compared to that of Airtel. The exponential growth of user base for Reliance JIO surely did induce sweat on the brows for their newly decided rivals Bharti Airtel which lost almost 14 million customers in the same month of march when JIO added 9.4 millions . To ameliorate the effects of the big bite from its consumer base Bharti Airtel decided to prioritize more on its African subsidiary and especially Airtel Nigeria.
Airtel in Nigeria has listed shares of its Nigerian subsidiary on the local bourse, confirmed by Nigeria stock exchange (NSE). The listing is Nigeria’s third largest till date. Also to strengthen its roots further down in Africa, the company (Airtel Nigeria) partnered with Ericsson on a network upgrade project back in 2017 to pave the way for faster mobile broadband services and enhanced user experience.
The cost of broadband in Africa
All these expansions into the companies structure come at a cost which is obviously carved down from the customer base, the users in African continent pay the most per GB of internet which the companies take advantage of by setting sky rocketed rates often uncontrolled. It should be duly noted that for the sub Saharan African countries where the average income per person per annum is $2041, selling 1.5GB data for almost 3$ for a month on the 4G/5G spectrum is too unfair also taking in account the speed at which your data is consumed in these spectrums.
Bharti Airtel in the leadership and vision of Sunil Mittal is desperately trying to cover up the losses it suffered in the Indian markets by leeching onto their African consumers. Reliance JIO in India brought down the rates amounting to a total of $5.80 for 126GB of data equally distributed over a period of 84 days which obviously attracted the customers from all the network providers but the most damage was suffered by bigger brands like Airtel because “the bigger you are the harder you fall”.
Despite being lower than Airtel in terms of coverage area, JIO has still managed to grab a huge consumer base within a short amount of time, clearly Reliance JIO’s tariff war is continuing to take a heavy toll on the large surviving service providers like Airtel with no signs of immediate recovery. Bharti Airtel’s combined revenue DROPPED 10.5% to 19,634 crore primarily because data and voice tariffs in India fell further.
The future of Airtel Africa
What Airtel Africa should do in Africa is to offer data and voice packages for cheap to woo a bigger user base drawing it from its competitors like MTN. For Airtel to stay in the game among the top lads, they have to stop seeing the African consumer base as the money making tool but they shall change their perception and start seeing them as a part of a bigger investment which will give them fruitful returns if fostered carefully. Hurts to see that the hosts are out of the tournament but honestly Bharti Airtel has almost negligible chances to stand back in their position with JIO still in the game. Airtel should now start preferring its African subsidiary more than its Indian roots for major future investments.