www.WirelessFederation.com/news: African operator Zain saga can be termed as one of the riches to rags story. Zain’s African business suffered a net loss in 1Q09 while there were several attempts to turn many of its fast-growing networks in the region into profitable businesses.
But this was not the story a year back. Let’s take a short trip in the time machine and have a glance of the past. It’s August 2008. Everything seems to be rosy for the Kuwaiti-based group which has just completed the rebranding process of the 15 African mobile networks it acquired from Celtel three years earlier. Besides the company has also unveiled a new project called ‘One Network,’ a brilliant attempt to create a single ‘cross-border network’ with an aim to unite its mobile empire across the Middle East and Africa. There are also preparations to initiate a launch in another African market Ghana.
Almost during the same period, in the other corner of the world, there was another company which was trying to expand its feet in order to make a mark on the world telecom market. India’s Bharti Airtel and another African telco, MTN, were locked in a merger talk for the second time. Repeating the history, these talks would fail, finally paving the way for Bharti to make its landmark US$10.7 billion deal to buy Zain’s Africa networks, which was agreed in principal late last month.
Back to reality. Its April 2010 and Zain now belongs to Indian telco Bharti Airtel. This is not the only reality check of the telecom sector in Africa. Market-leader MTN Nigeria has added more new customers in the first quarter of 2010 than the other eight operators in the country combined. Zain at the same time has faded away in third place and is at present entangled in a row with minority shareholders over the sale of the network to Bharti.
However, among all these recurring problems and losses, there is one good news. It is believed that if any operator possesses the necessary skills and experience to restore Zain’s ailing African operations, it’s Bharti. The company itself has somehow managed to maintain its leadership and profitability in its home market of India superseding unparalleled competition, severe price attrition and ever-tightening profit margins.
CEO Manoj Kohli had been given the charge of the new position as Bharti’s head of international operations in January. The new role underlines Bharti’s increasingly global focus. The importance of outsourcing was discussed by him at the GSMA Mobile Asia Congress in Hong Kong last year where he noted that Bharti has offloaded its network management, IT systems, call centers and retail distribution networks to third parties in order to remain competitive.
The penetration is estimated to be around 32 percent across its 15 new African markets covering a total population of around 450 million. The number presents Bharti with an opportunity to disrupt its new markets by using the low-cost network business model. The same model it has pioneered in India to build share as the markets grow. But the road ahead for Bharti does not seem to be very smooth. Especially, there is a need to work within 15 very different and often volatile national regulatory regimes. But at the same time, the zeal and strategy of Bharti reflects that it is much better prepared than Zain ever was to make a success of it.
