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The beauty of the Minutes Factory is that it can add small capacities fairly rapidly and economically. The key to this is an array of partnerships that “manufacture” the minutes. The speed comes because each partner is a specialist and can do its bit better than anyone. Financially this works because Bharti doesn’t have to invest in equipment and towers in advance. Read more: http://forbesindia.com/article/cross-border/bhartis-minutes-factory-moves-to-africa/12502/1#ixzz3uPZyZAt4
Bharti Airtel‟s decision to opt for the SPV route makes a lot of sense since it will not impact the parent‟s balance sheet in the near term At the end of the quarter to December 2009, Bharti Airtel‟s debt-equity ratio was 0.4 and this would have shot up to 1.2, had Bharti Airtel taken the loan on its books.38 That would have limited Bharti Airtel‟s ability to raise funds in the future for expansion into new third generation technologies through participation in the 3G spectrum allocation. Hence, Bharti Airtel has structured the acquisition strategically and routed it through the SPVs keeping Bharti Airtel‟s standalone financials intact. However, that does not absolve Bharti Airtel from overall responsibility of a borrower since it has provided a guarantee to bankers for the loan that will be in the SPV‟s books.
Indian mobile service providers including Bharti Airtel have adopted a „matchbox strategy‟ of distribution, which essentially means any shop that sells matches should also sell mobile SIM cards and top-up vouchers, helping build a vast dealer network.
Hunger to win customers for life.
To be the most loved brand in the daily lives of Africans by 2015 by
providing life enriching products and services.
To enrich the lives of our customers.
obsession is to win customers for life through an exceptional
To make every life we touch better through the transformative power
Attractive growing market after Asia.
Mobile user increase at 20% every year.
ARPU was better than India.
Tariff was around 10 cent a minute.
Less competition compared to India.
To Compete with larger, global Telcos: UK-based Plc, Norway-based Telenor
2nd largest in Africa after MTN Group.
Operations in 15 countries in Africa
42 million subscribers in Africa
Less per subscriber cost compared to MTN
Full control over assets in Africa over the ‘Only board control’ in MTN
How vision aligned to acquisition?
Airtel’s vision of building a world-class multinational.
With this acquisition, Bharti Airtel will be transformed into a
truly global telecom company with operations across 18
countries fulfilling our vision
Zain has operations in 17 African countries and Bharti has
acquired all, but those in Sudan and Morocco.
The African business would widen Bharti's reach, which was
hitherto restricted to Asia and Indian Ocean region with
businesses in Sri Lanka, Bangladesh and Seychelles.
Free cash flow
It had SPV’s around the world which helped for
LBO in Africa
The capex in the Indian operations had started to
decline and hence the free cash flow was likely to
increase even further in future
High Brand Equity
Zain had presence in 15 countries in Africa.
Zain had not invested sufficiently in key things
like brand and billing
Penetration level in Africa- 33%
ARPU- $3-$25 (Africa) ; India- $1.5
Tariff was high in Africa(10 cent/ min) as
compared to India(1 cent/min)
Growth of mobile phone user base= 20%
Some countries started using 3G
Economy weakness with crude fall
Tough competitive and regulatory
Africa EBITDA is near all time low
Corruption and political instability
( by end of
42 mn 100 mn 63.4 mn
$3.6bn $5 bn $3.76 bn
• Lack in understanding
• High Cost
• Experiment with tariff
• Failed strategy of
minute factory model
• Human Resource
• Poor infrastructure
• Integration difficult
• To leverage the now-famous minute factory model which will bring down the cost.
• To tap into the 3G technology services which was still a very new concept in India
around 2008 by providing 3G smartphones called “Airtel Red”.
• Dynamic Sim Allocation (DSA) was launched in Nigeria and provides Airtel the
ability to supply market with blank sim cards.
• Airtel started digital drive in the form of App store, micro insurance, internet
discovery portal, video entertainment store, etc. to promote their network in
• To acquire a target subscriber of 100 Mn by March 2013.
• To acquire $5 Bn in revenue in less than 3 years of its
• To get into the 3G technology business to offer faster data
• To enter into mobile broadband technology in Africa.
• To extend Airtel Money schemes in Africa.
• To recruit and retain a diverse workforce to meet the needs of the
• To outsource work force to retain the same quality of work.
• To align the performance with the goal of the organisation.
Was Strategy Successful?
Successful in Long Term
Penetration is just 33% so the customer base can be
Higher ARPU (3$ as compared to 1.25$ in India) which
can lead to profitability
5th largest service provider in terms of customer base
then today ranks 3rd .
African telecom are improving in network infrastructure.
Once achieved can yield fruitful results.
Other factors than Zain acquisition
The following other factors lead to dip in profitability for
3G Spectrum Auction
Investment in Network Infrastructure to launch 3G
services and initial plans for 4G as less
Highly Competitive Market
Introduction of new competitor in India like NTT Docomo
and Tata Teleservices’s Tata Docomo
Introduced pay per second - lowest pulse to measure
Major Strategies in 2014
Introduction of four Strategic Business
Selling towers to generate revenue
1. Elevating Customer Experience
2. Digital Drive
3. Product Innovation