Strategic Analysis of Airtel Networks Zambia PLC

THE UNIVERSITY OF ZAMBIA
GRADUATE SCHOOL OF BUSINESS
MBS5022 - Strategic Management
Assignment: Business Strategic Analysis Report – Airtel Networks Zambia PLC
STUDENT: DANIEL NG`ANDU
COMPUTER NUMBER: GSB202184
LECTURER: DR MARTIN L. CHASHA
DUE DATE: 14th
JULY, 2021

Strategic Analysis Of Airtel Networks Zambia PLC DANIEL NG`ANDU GSB202184
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Table of Contents
ABBREVIATIONS............................................................................................................................................2
1 Introduction...........................................................................................................................................3
1 External Environment ...........................................................................................................................3
1.1 Industry Overview ........................................................................................................................3
1.2 Industry Life Cycle and Market Share Concentration ..................................................................3
1.3 Industry Demand Determinants and Profitability Drivers ............................................................3
1.4 Porters Five Forces Analysis of the Telecommunications Industry..............................................4
1.4.1 Threat of New Entrants: Moderate ......................................................................................4
1.4.2 Threat of Substitutes: High...................................................................................................4
1.4.3 Bargaining Power of Buyers: Moderate to Low Pressure..................................................4
1.4.4 Bargaining Power of Suppliers: Low to Moderate Pressure..............................................4
1.4.5 Intensity of Competitive Rivalry: High to Moderate ..........................................................4
1.5 PESTEL Analysis for Airtel Networks Zambia PLC ...................................................................6
2 Internal Analysis of Airtel Networks Zambia PLC Corporation ..........................................................7
2.1 Airtel Networks Zambia PLC Core Competence..........................................................................7
2.2 Airtel Networks Zambia PLC SWOT Analysis............................................................................8
2.3 Airtel Networks Zambia PLC Key Strategies...............................................................................9
2.4 Airtel Networks Zambia PLC Financial Performance Analysis ...................................................9
3 Recommendations...............................................................................................................................10
4 Works Cited.........................................................................................................................................11
Appendices..................................................................................................................................................12
Appendix 1: Telecom Services Market Report Scope .............................................................................12
Appendix 2: Statement Of Profit Or Loss And Other Comprehensive Income.......................................13

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ABBREVIATIONS
ZICTA - Zambia Information and Communications Technology Authority
GSM - Global System for Mobile
3G - 3rd
Generation GPRS
4G - 4th
Generation GPRS
ZAMTEL - Zambia Telecommunications Telecom Telecommunications
MNO - Mobile Network Operator
Telecoms – Telecommunications
Telcos – Telecommunications
m – million
K/ZMW/ZMK – Zambian Kwacha
TV – Television
MTN - MTN Zambia Limited

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1 Introduction
The telecommunications industry began in the 1830s with the invention of the telegraph, the world's first
mechanical means of communication. It reduced communication time from days to hours, much like
modern mobile technology reduced the time required to send large amounts of data from hours to seconds.
With each new invention: telephone, radio, television, computer, and mobile device, the industry expanded.
These technological advancements altered people's lifestyles and business practices. The industry is
constantly expanding as a result of the public's desire for more efficient and convenient communication.
Telco players have a variety of strategies for effectively offering services that people are willing to pay for
and stay with in their respective countries. Airtel Zambia is the subject of our analysis.
Airtel Networks Zambia plc is a prominent telecommunications company in Zambia that provides cellular
radio services to both residential and corporate users. Celtel Zambia plc was the company's name until it
changed in 2013. Bharti Airtel Zambia Holdings BV owns Airtel Networks Zambia, which is a subsidiary
of Bharti Airtel Zambia Holdings BV. Caller ID, call waiting, international calling tariffs, roaming,
voicemail services, chat and SMS text services, and Internet services are among the many products and
services available. Airtel Marketplace, a service that helps people find jobs, products, and post ads; Airtel
Football, which provides the latest information and updates on national soccer fixtures; Siliza, a service for
requesting or borrowing airtime; Airtel Portal, which provides breaking news stories and sports updates,
ringtones, wallpapers, video clips, and games and entertainment; and Airtel Sports, which provides the
latest information and updates on national soccer fixtures. Airtel Life Insurance, Airtel Misses You, Caller
Ring Back Tunes, Airtel Radio, Airtel Games Club for downloading and playing games, Airtel Hello Tunes,
Learn French, Me2U for airtime sharing, and 121 for connecting buyers and sellers are among the value-
added services (African Financials, 2021).
1 External Environment
1.1 Industry Overview
Airtel Networks Zambia PLC continued to have relative dominance in market share 33.9 percent according
to the 2019 ZICTA annual report (ZICTA, 2019).
As at 31st December, 2019, Airtel Networks Zambia PLC had total customers of 5.9m whilst data customers
were 3.4m representing circa 60% of total customers (Airtel Zambia, 2020).
1.2 Industry Life Cycle and Market Share Concentration
This industry, telecommunications, is in a mature stage with a medium level concentration. Airtel Networks
Zambia PLC to have relative dominance in market share 33.9 percent according to the 2019 ZICTA annual
report (ZICTA, 2019), giving them considerable market power in determining industry trends.
1.3 Industry Demand Determinants and Profitability Drivers
Today, the telecommunications business is a critical enabler of productivity in economies and society
around the world. The telecom business not only contributes significantly to a country's economic

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activity, but also to the expansion of other industries. Because of the impact it has had on developing
countries' economies, this industry has seen tremendous transformation in recent years.
Basically the need for people to communicate with each other efficiently and conveniently has made the
telcos industry a billion dollar industry, valued at USD 1,657.7 billion in 2020 and is expected to expand
at a compound annual growth rate (CAGR) of 5.4% from 2021 to 2028 (Grand View Research, 2021),
with the Airtel Group being present in 14 countries and having a collective total of 110.6m subscribers
and a revenue of $3,422m (Airtel Africa PLC, 2020). Airtel Zambia specifically having ~5m subscribers
(33.9% market share from 17.2m subscribers as of the 2019 ZICTA report) as of the 2020 annual report,
translating to K340.56m as of year-end, 31st
December,2020(see Appendix 2).
1.4 Porters Five Forces Analysis of the Telecommunications Industry
1.4.1 Threat of New Entrants: Moderate
• The industry’s saturation is moderately high with a monopolistic competition structure.
• For new entrants, the initial investment is not significant as they can lease stores, equipment etc. at
a moderate level of investment.
• The expected retaliation from well-established companies for brand equity, resources, prime ad
locations and price competition are moderately high, which creates a moderate barrier to entry.
1.4.2 Threat of Substitutes: High
• There are many reasonable substitutes to offerings from players like MTN or Zamtel.
• There are no switching costs for the consumers for switching to substitutes, which makes the threat
high.
1.4.3 Bargaining Power of Buyers: Moderate to Low Pressure
• There are many different buyers in this industry and no single buyer can demand price concession.
• It offers vertically differentiated products with a diverse consumer base, which make relatively low
volume purchases, which erodes the buyer’s power.
• Even though there are no switching costs with high availability of substitute products, industry
leaders like Airtel`s prices its product mix in relation to rivals stores with prevailing market price
elasticity and competitive premium pricing.
1.4.4 Bargaining Power of Suppliers: Low to Moderate Pressure
Almost every company in the Telecom Services - Domestic industry gets its raw materials from a variety
of sources. Suppliers with a strong position in the market can reduce Airtel Networks Zambia PLC's market
margins. Suppliers with clout in the technology sector utilize their clout to extort higher costs from Telecom
Services - Domestic companies. Higher supplier negotiating power has the overall effect of decreasing
Telecom Services - Domestic profitability.
1.4.4.1 How Airtel Networks Zambia plc can tackle Bargaining Power of the Suppliers
• By building efficient supply chain with multiple suppliers.
• By experimenting with product designs using different materials so that if the prices go up of one
raw material, then company can shift to another.
1.4.5 Intensity of Competitive Rivalry: High to Moderate
• The industry has a monopolistic competition, with Airtel Networks Zambia PLC having the largest
markets share and its closest competitors also having a significant market share, creating significant
pressure on Airtel.

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• Consumers do not have any cost of switching to other competitors, which crates high intensity in
rivalry.
• But it’s important to note that Airtel Networks Zambia PLC maintains some competitive advantage
as it differentiates its products with premium products and services, which cause a moderate level
of intensity in competition.
• The industry is mature and growth rate has been moderately low which cause the intensity of
competition among the companies to be moderately high due to all of them seeking to increase
market shaper from established firms like Airtel Networks Zambia PLC.
• This industry does not have over capacity currently and all these factors contribute to the intensity
among rivals to be moderately high.
• Looking at the Porters five forces analysis, we can get an aggregate industry analysis that the
strength of forces and the profitability in telecoms are Moderate.

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1.5 PESTEL Analysis for Airtel Networks Zambia PLC
PESTEL Table for Airtel Networks Zambia PLC
Category Factors
Political • Uncertain political atmosphere as the country heads to the polls.
Economic • Increasing inflation may affect customer behavior and potentially lead to
customers spending less on data and voice products.
Social • Urban areas are the major market for this company.
• Decline of population growth affects the number of customers and
consequently low product consumption and stiffer competition.
• Customer behavior has changed due to the COVID-19 pandemic by
increasing the consumption of data and voices services due to working from
home
Technological • Airtel Networks Zambia PLC has also used social media to increase its
popularity
• It is also focusing on bringing 5G services. It has diversified digital TV and
Music services.
Legal • Strict consumer protection policies have seen the MNOs pay fines to ZICTA
due to non-compliance.
• Introduction of the Cybersecurity and Cybercrimes Bill.
Environmental • The impact on the environment is uncertain.
• Airtel is working hard to contribute towards the environment. Airtel
Networks Zambia PLC and Ericsson, recently partnered to drive responsible
e-waste disposal and recycling in Zambia.
• Recently started sharing tower infrastructure with competitor’s mobile
network which reduced the need for separate towers for each MNO and helps
in saving energy.
To summarize, the PESTLE Analysis of Airtel Networks Zambia PLC reveals the numerous factors that
influence its company success. This knowledge aids in determining the importance of external business
aspects for any brand.

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2 Internal Analysis of Airtel Networks Zambia PLC Corporation
2.1 Airtel Networks Zambia PLC Core Competence
Airtel's core competency has been its ability to leverage their cornerstone product differentiation strategies
effectively through the provision of products such as Tonse Data Bundles, My Airtel App, And Airtel Tv,
just to mention a few.
Its other core competency is its human resource management team's values-based approach to developing
extremely strong internal and external relationships with suppliers, which enables the successful execution
of its business strategy of organic expansion into international markets as Airtel Group, horizontal
integration through smart acquisitions and alliances, and long-term strategic objectives through acquisitions
and alliances.

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2.2 Airtel Networks Zambia PLC SWOT Analysis
Figure 1: SWOT Analysis for Airtel Zambia.
STRENGTHS
• relative dominance in market share of 33.9 %,second only from MTN
• Market leader in mobile money due to first mover advantage.
• Airtel mobile money service has more service agents across the
country than any other MNOs.
• Airtel has more than 30% 3G & 4G coverage.
• Airtel mobile money has more than 4 millionaccounts since its
inception. More than the other 2 MNOs.
• The company is not significantlyexposed to credit risk on the retail
side since the majority of its customers are on the prepaid plan and
majority of the distributors /dealers are primarilyon cash basis, or
their credit is covered by a bank guarantee.
• Wide range of services: Complete communications services including
fixed broadband, video content, mobile, cloud and Internet of Things
(IoT) business solutions.
• Strong brand name
• Good brand visibility and advertising
• Provides movies, music etc through various apps
WEAKNESSES
• Airtel recording the highest complaints volume and slow resolution
rate.
• Spent less than 1% on CSR activies. Less than the other two MNOs.
• Severe price competition in the market
• Mobile Number Portability to competitor networks can reduce
customer base
• Price competition from other telecom players means limited market
share.
• User privacy is an allegation which the brand has had to face
• Price wars means less profitability and lesser margins
OPPORTUNITIES
• MNOs have been alowed to offer financial services such as loans via
their mobile money platforms
• International integrations with payment platforms like
paypal,mastercard, visa etc,.
• Untapped rural market can be a huge potential
• Spending morre on communityactivities via CSR can further boost the
brand reputation and customer perception.
• Latest and low cost technology can help the brand grow
THREATS
• MNOs may face backlash from banks as there are seen as competition.
• COVID 19 threatens to change customer behaviour.
• Changing political environment.
• Increased load shedding has potential of increasing operational costs
such as buying powerbanks,backup generators.
• As mobile phones evolve into personal data hubs, end users are facing
privacy and security dangers that are escalating and multiplying, as
threats converge from a range of environments, including SMS, MMS,
Cloud, Web 2.0, and Mobile Apps. As a result, customers are now as
concerned about data integrity as they were about to call quality a few
years back.
• Growing competitive pressure could reduce market share and
profitabilityas new players enter the market i.e Beeline
Telecommunications.
• Too many expansions can lead to loss of focus
• Mobile Number Portability to other competitors can reduce subscriber
base
• New entrant's low price offering affects Airtel's profit margins

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2.3 Airtel Networks Zambia PLC Key Strategies
Airtel Networks Zambia PLC has developed strong core operations that are backed by Africa's largest fixed
and mobile networks, a sizable connected and registered customer base, an unmatched registration and
distribution network, and one of the industry's strongest brands. This is the starting point and the launching
pad for our strategic pivot. The challenges of reducing the Group's risk profile and Holdco leverage have
been brought into sharper focus in the aftermath of COVID-19. The pandemic has also brought to light the
opportunities created by the global operating environment's shift. These factors contribute to our case for
change and the necessity of revising our strategy.
In light of the global digital acceleration, Airtel Networks Zambia PLC recognizes the opportunity to win
in digital services in our markets as new customers come online. Additionally, this provides an opportunity
for Airtel Networks Zambia PLC to better align our priorities with the socioeconomic and development
agendas of the markets in which we operate.
2.4 Airtel Networks Zambia PLC Financial Performance Analysis
Airtel Zambia has continued to invest in the country, resulting in significant growth in the company's key
operating indicators. For example, total revenue increased by 20.61 percent to ZMW2,598 million in 2020,
up from ZMW 2,154 million in 2019. Additionally, operating profit increased 7.36 percent (ZMW 719
million) in the year under review, compared to ZMW670 million in 2019, owing primarily to the company's
strong revenue performance and management's consistent optimization of operating expenses in light of the
challenging economic environment.
However, as a result of the Zambian Kwacha's 52 percent depreciation against the US Dollar, the company
suffered exchange losses totaling ZMW (768) million. This resulted in a net loss of ZMW (341) million for
the company in 2020. To offset this loss, the company intends to increase its fund hedging and debt
restructuring efforts in order to ensure sustainable cash flows sufficient to meet the company's financial
obligations as they mature.
Additionally, the earnings per share ratio decreased significantly in 2020 to (3.27) from 0.15 in 2019,
indicating a decline in the company's profitability. Despite the difficult macroeconomic environment
created by continued depreciation of the local currency and rising inflation, Airtel Zambia intends to
continue providing market-leading innovative, world-class products and services, fueled by continued
investment in the network and distribution infrastructure.

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3 Recommendations
1. Airtel Group has been able to stay up with the competition in the telecommunications industry in
today's age of fierce competition by employing a variety of response techniques in all 14 countries.
We can conclude from the findings of the analysis that the global financial crisis, competition from
firms within the telecommunication industry, political instability, low technological advancements,
and regulatory registration are all challenges in the external environment that affect the
organization's operations.
2. Additionally, concentration on the following would assist the company in increasing the price of
its shares and market share:
a. Vast geographic coverage;
b. Diverse portfolio of telecommunications services.
c. Significant brand awareness
d. Increased focus on digital, cloud services, the Internet of Things, and 5G technologies
All of the above can contribute to share price growth over time if the company executes its strategy
successfully.
3. They should undertake appropriate, persuasive and sustained advertisement, marketing and
campaigns on products and services so as to increase brand value, customer perception and
potentially increase or maintain their market share.
4. The company should hire employees who possess the necessary knowledge and skills for the job
in order to minimize induction and training costs. Additionally, employees should be compensated
fairly and have better working conditions and terms to deter competitor poaching.
5. From 2014 to 2016, CSR-related activities have accounted for a greater percentage of the
company's expenditures as compared to 2017 onwards. It appears that a strategic shift has occurred,
and the company is now prioritizing maximizing shareholder returns. This move may potentially
cause the brand to lose the perception it previously was striving for to new players that decide to
use a CSR based marketing campaign.

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4 Works Cited
African Financials, 2021. africanfinancials. [Online]
Available at: https://africanfinancials.com/company/zm-atel/
[Accessed 27 06 2021].
Airtel Africa PLC, 2020. Airtel Africa PLC Annual Report and Accounts 2020, s.l.: Airtel Africa PLC.
Airtel Zambia, 2020. 2020 ANNUAL REPORT, Lusaka: Airtel Zambia.
Grand View Research, 2021. Global Telecom Services Market Size Report, s.l.: s.n.
IFC, n.d. IFC MOBILE MONEY SCOPING COUNTRY REPORT: ZAMBIA, Washington: International Finance
Corporation.
ZICTA, 2019. 2019 ANNUAL REPORT, Lusaka: Zambia Information and Communications Technology
Authority (ZICTA).
ZICTA, 2020. ZICTA fines Mobile Network Operators for poor Quality of Service. [Online]
Available at:
https://www.zicta.zm/storage/posts/attachments/ufAhyXfnfNohbKEGz1Dos8LlAs5iukgUapSxRUQk.pdf
[Accessed 27 06 2021].

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Appendices
Appendix 1: Telecom Services Market Report Scope
Figure 2: Global Telecom Services Market Size Report, 2021-2028

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Appendix 2: Statement Of Profit Or Loss And Other Comprehensive Income
Figure 3: Source, Airtel Zambia Annual Report 2020

Strategic Analysis of Airtel Networks Zambia PLC

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