Time to Bharti
Indian giant to launch in Africa
HAVING ACQUIRED Zain Telecoms, Indian cellular giant Bharti Airtel says it will launch its brand in Africa around October 2010. CEO Manoj Kohli said his company was “firmly in the driver’s seat” and predicts rich rewards from the continent.
Bharti’s initial attempt at breaking into Africa involved a suggested merger with South Africa’s MTN that would’ve formed the largest emerging-market telecoms company ever. But the deal was doomed before it began thanks to Indian legislation, disinterest from investors and other factors.
Outgoing MTN CEO Phutuma Nhleko was questioned about the failed talks and Zain acquisition at his company’s most recent results presentation and said: “They have chosen to venture into the jungle alone. We think they would have been better off had they done so holding our hand.”
Now the former potential partners are pitted against each other in several African markets, including Nigeria – Africa’s largest economy in terms of potential.
Kohli is bullish about Africa. He said he believes that Africa will grow to be a bigger market than China or India in terms of consumption. He listed a combined GDP of US$1,4 trillion for the continent and pointed to a level of urbanisation of 40% – a most meaningful statistic for providers of telecommunications.
More importantly, he cited the large and growing African middle-class that today consists of 400m people, but will soon grow to beyond 500m.
Kohli says that 27 out of 30 economies in Africa are growing well with a 5% increase in GDP/year. He also sees positive signs in democratic transformation that has been witnessed in the last five years.
To top all that, more than 20% of African GDP is being spent on telecommunications and infrastructure, and trade with other developing markets is growing well, but with a small penetration there’s still massive room for growth.
“People will soon have to choose just one brand. We will try to make that brand Bharti in the future,” he said.
With regional headquarters established in Nairobi, Bharti is ready initially to tackle 15 countries, applying a three-phase strategy. The Zain brand is being removed completely.
“First, network quality must be improved, second is service quality with call centres and other such operations being bolstered, and finally we must have good quality products ready before launching the brand. This will all happen by October,” said Kohli.