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'Bharti Airtel Will Be A Global Corporation'
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How is Africa as a market for telecom?
Africa is fantastic and an outstanding place as a future market. A continent that is one billion today will be 2 billion in next 30-40 years. It will be more than India and China as a single market. The best thing about Africa is, the median age 17. It is the youngest population of the world; in Indian it is about 25. In the US, Europe, China, Japan—every geography, is graying. But India and Africa have the youngest population. Africa is therefore, younger than India and that is where we come in. Not many companies have taken this bet of $10.7 billion. We have taken a very big bet; no other company in the world has made this kind of an investment. This proves that this continent (Africa) is very critical for us. Globally it is seen as a last frontier of global market growth.
What has Bharti realised after a year of operation in Africa?
A Fantastic global outlook; it is very clear that Bharti Airtel will be a global corporation, global brand, with a global outlook, global culture, very open and aiming to transform the global ethos. This is a commitment that Sunil (Sunil Bharti Mittal) I and my other senior colleagues of Bharti Airtel have given to ourselves. Why shouldn't a global corporation germinate from India, why only from US, Europe or Japan? It is one mission that we all have and are confident that we will achieve it.
After one year, my conviction is that we have taken the right step at the right time as a company. We are digging our heels deep in a continent which is the biggest future market of the world. For telecom, a market is equivalent to its population. If China is going to be 1.3 billion in next 30-40 years, India is going to be 1.6 billion and if Africa is going to be 2 billion, India and Africa will be 3.6 billion markets. Add Bangladesh and Sri Lanka, and Bharti Airtel will have a coverage of 4 billion. This is the potential that we have to leverage and convert into revenues and profits. Both (India and Africa) are youthful markets.
What are the five critical lessons you have learnt in this time period?
I had set five goals for myself before I went to Africa. The first was that the integration of Africa with Bharti Airtel and Bharti Airtel to Africa, should be seamless and fast. We completed that in 90 days. This must be one of the fastest integrations after an acquisition; a large and multi-country, cross cultural acquisition anywhere in the world.
What did it involve?
It involved all systems and all processes. We met all the stakeholders, employees, dealers and distributors, government officials, banks and key people and institutions in the 16 countries. We shared with them what Bharti Airtel is and how India is coming to Africa in the form of our company.
How did the process of branding go in Africa?
Psychologically people in Africa love the red colour. Luckily there were already two good brands using the colour red: Coke and Toyota, 80 per cent of the vehicles in Africa are Toyota. We are the third red and when we launched our brand, people loved it.
Was the brand made for Africa?
No, but it was made for the youth. It is a youthful brand. We had all the 16 launches in November 2010, our commercials had R Kelly and eight African musicians, singing together and it topped the charts in Africa. The second was a commercial of a boy playing football and third was a joint ad with Nokia on bundling scheme. People loved the brand and the initial products and services that we launched. The Airtel brand was very well accepted and recognised within six months from its launch. It was not easy, since in India and South Asia, Airtel was a known brand but not in Africa. The India connect (in Africa) went to up to Airtel connect. The learning was that the consumers are the same, anywhere; we have to build bond emotions and bond of trust has to be built in with the customers in Africa or India, it is the same.
What was the next big challenge?
The challenge was to implant our unique business model (managed service) in Africa. It took us about 8 years to do that in India and we are trying to implement it within two years, in Africa. The entire network has gone to our three big partners, Ericsson, Nokia Siemens Network and Huawei. The information technology aspect has been given to our three IT partners, IBM, Avaya and Comviva. BPO and call centers have gone to another three big partners, IBM Daksh, Tech Mahindra and Spanco. We have also taken a huge number of partners for passive infrastructure, such as Kirloskars and Mahindra. About 1500 employees have been transacted to our partners some more will go in the next couple of quarters.
Can these employees come back to Bharti Airtel?
We have made commitments to these employees that in the next two years if they do not like it, they can come back. But we are confident that will not happen, because we have done this successfully in India. Not even one employee came back. So there is nothing wrong in giving a commitment that will make an employee happy and assured.
So this is part of your minute factory…
Yes this is part of it.
How do you define a minute factory?
We define it as, we will do what we know and we know five things: branding, employee motivation, smell of the customers, financing and regulation.
Our partners will do what they know the best. It is about domain knowledge; it is not about core and non-core. A lot of people confuse Bharti's model as core and non-core. The BPO call centre business has gone to IBM Daksh and network to Ericsson because they know it best, not because it is non-core.
Did you get any help from the Indian government?
Luckily the Prime Minister's announcement of $5 billion credit for Africa was timely. And we are very eager to utilise this Indian government's support for our vendors from India. So the vendors will get help from government and us. Local US, German, Japanese and Chinese companies have been helped abroad by their respective governments. It is good that the Indian government is also doing the same. I would say it is a joint venture between the Indian government and Bharti to help medium to large companies to grow beyond India.
Will there be a change in the business model…
Africa needed a structural change in the business model and Bharti has initiated that structural change. Africa's business model was more Western, a high cost model. We are now introducing this model that is unique, innovative and is lower cost. So sharing of fibre, tower etc. is a very important goal for us to change the business model, not only for Bharti Airtel but for the entire industrial sector. Tower sharing is at the initial stage but every month, hundreds of towers are being shared.
Do you think the India model will work in Africa?
I want to clarify that this is not an India model being replicated in Africa but a model that has been customised for Africa. A lot of customisation is taking place that is different from India. It may take another 6-12 months to reach perfection, but it will be an Africa model.
You said that Indian government has been supportive, what about countries in Africa?
Unlike India where you have one DoT and don't have to deal with states, in Africa each country is different with their own the rules and regulations. But the good news is that within six months we have started on a positive note, built joint agendas with the government. We have had exchanges on what each others' needs and requirements are and are jointly working towards the goal. Joint agendas take care of the objective of the government and Bharti Airtel. Today, governments are promoting sharing of infrastructure and asking why are you building new towers? The Tanzanian government for example, said, that we should build a fibre network together; Vodacom, Milicom and Bharti, four of us will build the network. I am confident that we have started a long term commitment with all the governments.
So what is for the future?
Three big plans for future: first are tower companies. We have already build tower companies in all 16 countries. They are registered as separate companies and in next two months we will start building towers in those tower companies and start moving towers from the existing companies to those new companies. Sharing has already started. Some companies did hesitate in the beginning which is normal, but when we offered our towers market suddenly opened up.
Second is broadband internet plans, HSPA, 3G service. As I said Africa has a large youth population and they will love to work on internet and download music. Spectrum has been given in for 3G in 10 countries and the balance we will get it in 1-2 years.
The third major plan is M-commerce. India has not yet seen the power of m-commerce. This is a big strategic move that Bharti is taking. Central Bank approvals are in place. By next year we would have launched this in all 16 countries.
Have you taken forward the CSR initiative in Africa as you have done in India?
As in India, we give free education and books to poor children. The hearts of the governments have been touched by this initiative introduced by Bharti. We have taken special efforts in training youth.
Is there a fear and fright of losing out?
There is no fear or fright. When we took over in the first few months, we corrected the premium that Zain maintained, which was 30-40 per cent on price over normal price in each country. It was not sustainable and so we corrected it and brought it down to competitive levels. There was no price cut, if the price was Rs 2:80 we brought it down to Rs 2. At no point, Bharti as a culture and philosophy, will go under and start price cutting. Prices are now stable; we would like to utilize the pricing power of Africa. As our costs go down because of the restructuring etc., we will see how we can bring in more affordability. I believe the last few quarters from Africa have been good. Our revenues have also grown and margins have increased.