Airtel to merge Indian, African units in facelift

Telecom firm Bharti Airtel is said to be considering restructuring its Indian and African operations, merging them into one, in an effort to cut costs and improve efficiency.

In a report widely circulated by the Indian media on Monday, the world’s fifth-largest mobile operator is said to be planning to have the two units managed under one global CEO.

According to the Economic Times of India the restructuring may put the current Airtel Africa’s boss, Mr Manoj Kohli, in the new global post.

The process is expected to be completed by mid next year.

Consolidate operations

The restructuring is an extension of “One Airtel” strategy, currently being carried out to consolidate the telecom’s Asian operations.

When contacted by the Nation, the firm’s Nairobi office did not confirm or deny the reports, noting only that the company does not comment on market speculation.

The restructuring is seen as an effort by Airtel to boost falling profits and earnings from its operations in Africa.

In August, Bharti Airtel’s financial results indicated that profits had declined for 10 straight quarters with increasing competition in India. The firm’s shares also hit their lowest level in two years.

At the same time, the company had about Sh1.02 trillion in debt partly accrued through its purchase of Kuwaiti’s Zain Africa operations in 2010.

Airtel has adopted a strategy of increasing customer numbers with low-priced products in Africa. This model seems not to be working, especially in Kenya.

Airtel has recently accused the Communications Commission of Kenya (CCK) of frustrating its expansion ambitions by failing to lower the mobile termination rate, a move that would have paved the way for the firm to offer reduced mobile tariffs.

In April this year, officials from the company indicated that they might drop the low-cost model in Africa since it was not producing the expected results.

Despite this, the latest CCK statistics indicate that Airtel gained the largest subscriber market share in the fourth quarter of the 2011/2012 financial year. Its subscriber base rose by about 316,000 customers.

Earlier this year, Airtel appointed Mr Shivan Bhargava as managing director of its Kenyan outfit, reinstating a post that had been scrapped following the exit of Mr Rene Meza last year.