<div id="attachment_326" style="width: 272px" class="wp-caption alignleft"><img loading="lazy" decoding="async" aria-describedby="caption-attachment-326" class="wp-image-326 size-medium" src="/wp-content/uploads/2017/04/Airtel-037-262x300.jpg" alt="" width="262" height="300" />Manoj Kohli</div>
Forget oil and gold, there is new treasure in Africa—mobile phone subscribers. By the end of 2011, Africa will have surpassed the half a billion mark in mobile phone subscribers and the number is rising. In 2008, there were 246 million and three years later, this number has nearly doubled.
Manoj Kohli is at the heart of this growing business as the CEO (international) and joint managing director of Bharti Airtel. It launched in November 2010, after acquiring Kuwait-based mobile telecommunications company Zain for $8.3billion. The company inherited operations in 15 countries, cementing its position as the world’s largest single country mobile operator.
As of March 31, 2011 the operator had 220 million customers around the world and $5.9 billion in revenue. At the time of this interview, Airtel had hit 50 million paying customers in Africa; its target is 100 million customers by 2013.
“The Bharti Airtel business is doing well and we are satisfied with our first year in Africa. We are making good progress on all fronts, in terms of financial performance, market growth, market share growth, cultural aspects, government relationships and brand equity. We are happy that the first year has gone very well,” says Kohli on the seventh floor of Parkside Towers, the Bharti Africa headquarters in Nairobi, Kenya.
Bharti, the number one player in India, landed in Africa knowing that it was going to have to fight it out with established players like Britain’s Vodafone, South Africa’s MTN, France Telecom (Orange) and Luxembourg’s Millicom.
“India has a population of 1.2 billion and Africa has about one billion. India is very diverse; Africa is more diverse not only because it is large geographically, but it also has different communities, different countries and therefore different governments and regulations—whereas India is one nation, with one language, one government, one currency, one time zone, and one cricket. Therefore, in that aspect India is less diverse than Africa. Both have scale in terms of population and opportunity, but because Africa is more diverse, it makes it more complex. India has 13 to 14 competitors, which is not viable for any market. Africa has anywhere between three to five major competitors but the quality of competition is good,” says Kohli.
The Airtel brand made its presence felt by slashing call rates, sparking a price war in major markets. In Kenya, for example, where Airtel is number two—with 3.6 million subscribers by June 2011—there was a major decline in average tariff for on-net calls from KSh3.92 ($0.04) per minute to KSh2.67 ($0.03) per minute, according to the industry quarterly statistics in May from the country’s industry regulator, the Communications Commission of Kenya. Bob Collymore, Safaricom’s CEO, was quoted as saying that the price cut was “morally reprehensible”. Safaricom is Vodafone’s brand in Kenya. As the new kid on the block, Airtel was not letting up and Safaricom followed suit.
As Kohli looks back at Bharti’s performance in the last year, he says the company has established its brand. This, Airtel has successfully done by associating itself with the youth and the two big passions in Africa—music and football. In 2010, the operator brought together American R&amp;B musician R Kelly and eight African music superstars—2Face, Amani, 4×4, Movaizhalene, JK, Alikiba, Fally Ipupa, and Navio.
In football, Airtel has partnered with Manchester United in launching the Airtel Rising Stars program for under-17 boys and girls in 15 African countries.
The second major milestone, says Kohli, has been replicating Bharti’s Indian business model in Africa.
“It is still a work in progress, but all the initiatives of bringing in our global strategic partners like IBM, Ericsson, Nokia and Huawei have kicked off, which is a huge transformation for Africa. For example, IT education, training and employment will go up because IBM has come along with us to various countries in Africa.”
Bharti has entered into a 10-year agreement with IBM where the latter will install and manage the operator’s information technology infrastructure and applications in line with its objective of ensuring affordable and innovative mobile services in Africa.
In the coming years, Bharti has several strategies. One is taking networks deep into Africa’s small towns and villages not currently covered by mobile networks. The second is a wide distribution.
As Africa opens up, thanks to fiber optic cables, Bharti is keen on enhancing the internet culture in Africa through 3G data. Already, the operator has 3G licences in 12 African countries. In November 2011, Airtel was awarded licences to operate 2G and 3G GSM services in Rwanda.
Although Bharti is betting on 2G and 3G services to increase penetration, the telecom brand is also eyeing a mobile money service, already  a major cash-cow for Safaricom—to date, $1.8 billion has been transferred through its money transfer service M-Pesa, which was launched in 2007.
Kohli admits mobile money has been a small aspect in the business because in India, the business has had to comply with strict restrictions by the Central Bank. “Our M-commerce product will be a great differentiator for us in the long-term,” he says.
According to Jupiter Research, the number of active users of mobile money services will exceed 200 million by 2013. Nearly 40% of active users by 2015 are expected to be in Africa and the Middle East.
Looking into the crystal ball, 2012 will be about supremacy and transformation of wireless broadband. “There are many countries that are already mature on the voice side, but on the broadband, they would like to have more capacity and better experience. In Africa, where the average subscriber age is 18 years old, there is a propensity for youth to need voice (2G) and internet (3G),” says Kohli.
As far as mobile use in Africa goes, the only way is up; 2012 is likely to see massive investment aimed at increasing internet penetration through wireless internet.
The other growth will be driven by penetration into Africa’s smaller towns, not covered by wireless. This expansion will see the further growth of M-commerce as more of the unbanked population log on.
For new technology, Kohli says his company will test 4G in India first.
“Regulators in Africa will have to make licences for that and it could take anywhere between two to three years.”
Bharti Airtel will invest nearly $1.5 billion in its 2011/12 financial year. Also in 2012, there will be HSPA+ (an evolved high-speed packet access) to Africa. This will see internet speeds of up to 21 megabytes per second.
So does Kohli see more investors coming to Africa in 2012?
“I believe that in small countries, the viability of operators beyond the third is not likely. In small markets, I don’t think you will have more than three players. In larger markets, it could be four; I think that is the right level of viable competitive intensity for Africa, primarily because huge investments are required for Africa and it is very important that the operators are financially healthy for them to make all those investments in the coming five years.”
As a first-time investor in Africa, Bharti is grappling with poor infrastructure and power shortages. For a company that has to run its networks round-the-clock, it has forced the operator to turn to diesel generators which is obviously pushing up operating costs.
“That is why we are converting many of these sites to be run by solar and wind energy because the diesel cost is high and we want to avoid polluting the environment.”
The other hurdle for Bharti has been a high cost structure. The operator is benchmarking with its Indian operations, where costs are significantly lower. To deal with this, the operator is exploring economies of scale and sharing. “We are currently engaging regulators and competitors to support sharing of passive towers, networks and fiber optic. In some countries we have already had positive responses.”
In an earlier interview, Kohli told telecomasia.com that Bharti was talking with Etisalat, MTN, France Telecom, Millicom and Vodafone.
Bharti also has to handle the problem of weak telecom skills in Africa. “Ideally, we would like 100% of employees in each country to come from the country itself. However, this is not possible today because many skills are not available locally. Therefore, we have to bring skills from other countries in Africa, as well as from India. But we are determined that in the next two to three years, we will invest a lot in building these skills in each country and grow young African leaders to lead our operations in their home countries,” he says.
Kohli adds that, despite the challenges, Africa is still a great place to do business because of the available opportunities of growth and a growing population that is embracing technology. “In India, infrastructure only improved in the last 10 years. The cost structure is lower because India has a local manufacturing and service sector whereas in Africa, the manufacturing and service sector is not as big. India has gone through that improvement period in the last decade and I am confident that Africa will go through a similar improvement period in this decade.”
With unemployment plaguing the continent, Bharti wants to contribute towards job creation by involving young entrepreneurs in its business operations.
“We are developing young entrepreneurs who like technology and would like to sell technology as distributors of our various services and products. There is tremendous scope. Silicon Valley and India have many entrepreneurs doing outstanding work for value-added services, content creation, new applications. I am confident that in the next two to three years, young talent from Africa will also work towards development of new value-added services and applications.”
Kohli believes telecom can be the growth engine for the continent.
“Because the infrastructure in Africa is weak—roads, rail and air connectivity—it makes telecom an integrator that can bring speed, efficiency and productivity to Africa. With internet wireless broadband coming, I think the contribution of telecoms will be far greater in the next three to five years in building Africa into a strong economy, with growth going up from 4-5% and maybe 8-9% in the coming five years.
“India went through the same curve. We had a 4% rate of growth and because of IT and telecom, we have gone up to 8-9%.”

The Battle For  The Ear Of East Africa

Indian companies like Bharti Airtel are pioneering the telecommunications industry in Africa using bold business strategy and the experience they gained from opening up communications in their own country 20 years ago.
“When we took charge of Zain’s African operations, we made a commitment to bring world-class, affordable mobile services to customers in Africa and take our networks deep into rural areas,” says Manoj Kohli, joint managing director and CEO of Bharti Airtel’s international operations. This radical move immediately established Airtel as the world’s fifth-largest mobile service provider, immediately gaining 42 million customers. This unique business trend is being employed by Indian companies in Africa, who have adopted a strategically integrated approach to doing business. By integrating socially, politically and economically into 15 African countries, they differ in strategy from their Chinese counterparts, who tend to operate in isolation, importing Chinese workers and goods. Arthur Goldstuck, an expert analyst in telecommunications in Africa, says Airtel’s aggressive marketing strategy of cost cutting and increased volumes is making inroads into the East African market.
According to Goldstuck, this approach to price fighting in Africa and bringing down the costs of calls, SMS and data has dropped the average tariff in Kenya from 12 shillings in June last year to three shillings. Kohli believes it is incorrect to look at tariffs alone. “We have simply corrected the 20-30% premium that Zain was charging over the normal price. This was unsustainable and we brought the tariffs to more affordable levels for the customers.”
The socio-economic spin-offs of Airtel’s presence has contributed greatly to improving the lives of people, especially in the remote areas, says Dobek Pater, telecommunications and market analyst at Africa Analysis. An increase of 10% in teledensity (the proportion of cellphones in use by every 100 people in an area) is almost equivalent to 1% of GDP growth in some of these countries. However, technical challenges on the continent can be enormous. Initial investment is required to develop infrastructure, which can be very high. Extensive rollout of base stations is necessary for any network to expand into Africa, which is both expensive and time consuming from a regulatory and infrastructural point of view. Airtel has received support from governments across all markets, who share its vision of taking the benefits of telecom to every corner of the respective countries.
The Indian business strategy of social and political integration is key to doing business in Africa, and is the ingredient that has seen Bharti and Neotel successfully expanding their networks and distribution to cover a larger population, particularly in rural areas. The sharing of passive infrastructure in African countries also avoids unnecessary infrastructure duplications and helps bring down costs for the industry. Sunil Joshi, CEO of Neotel, says their approach to human capital development is unique and effective. The establishment of the Neotel Training Academy, where 30 people are currently being trained in telecommunications, is a benchmark of social and economic integration as 70-80% of these people will be employed by Neotel. “We believe in leveraging local resources within South Africa and getting the local context by engaging with government and ICASA. Our approach is to socially align with what the needs in the country are. For example, currently we employ 1,000 people in South Africa, of which the majority is local. We are also very proud of the fact that in terms of BEE we have a level three listing, which shows that we give the right focus in terms of the local dynamic.”
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The Battle For The Ear Of East Africa

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