Airtel's innings in Africa

Competition and unexplored avenues which can bring in possible potential revenues pushes the companies to spread their wings globally. This article is the analysis of Bharti Airtel’s expansion to Africa by acquiring Zain, a Kuwait based telecommunication firm which has operations in 15 countries in Africa. Airtel was foraying into Africa again after their earlier attempts to gain foothold in Africa through MTN deal resulted in failure.

Zain was not doing brisk business in Africa compared to their operations in the Middle East. Airtel saw the potential profitability in acquiring Zain as their entry to African market. In India, Airtel is the pioneer in making the best use of technology in providing communication services. It was their superior technology and minute based revenue which fetched them 33 % market share. Airtel strongly believed that integrating their technology with Zain’s existing platform would be cost effective for them.

Airtel also benefitted from Zain’s Zap, a mobile money service which enables the payment of groceries bills via mobile which in India is still in very nascent stage. They can implement this in India to further strengthen their market share. Low procurement cost, high market penetration, and replication of low cost business model provides ample scope for growth in Africa but at the same time, they also have to contend with operations overhaul and integration challenges. Each percentage increase in tele-density in a continent like Africa brings a GDP growth to India.
The competition is also less in Africa compared to India. In Africa they have the advantage of competing with only 4 competitors where in India every now and then a new service provider is coming into the market.

I will say that slowly but surely Airtel is moving in the right direction to tap the potential in African telecommunication market which is on an upswing. But still it is going to be a big challenge for Bharti Airtel to make money out of Zain's African assets.