With free cash, anchored on a 21st century business model [from telecom to quasi-financial entity], Airtel Africa is emerging as a fierce competitor to MTN Group in Africa. In Rwanda, after Airtel bought Tigo, it became the leading mobile operator in that innovating nation. MTN is not waiting: it recently poached former Airtel CTO Fabrice Ndatira and also picked former Airtel Deputy CEO Chantal Umutoni Kagame.
Yet, I do not think unloading Airtel guys in MTN Rwanda will change the stage in Rwanda. The fact is this: Airtel has improved on service and customers have responded. So, the business model could settle all these issues: Airtel is increasingly a platform for connecting infrastructure providers, freeing cash at scale to do other things. Those other things include investing in customer experience.
To get a clue, read this piece where it was rumored in January 2017 that Airtel Rwanda was leaving the country. Just within months, Airtel Rwanda has fixed many things and is now the market leader. It did not invent any new technology; it simply improved its business model.
Airtel Rwanda has refuted reports indicating it was closing shop, terming the media reports pointing as erroneous.
Speaking to The New Times, yesterday, Airtel Rwanda CEO Michael Adjei emphasised that they are “here for the long haul.”
“That’s not true. That’s not the case. Airtel Rwanda is not leaving the market. We want to assure customers that we are not exiting Rwanda,” Adjei.
This follows recent media reports indicating that Bharti Airtel, India’s largest mobile-phone operator and parent company to Airtel Rwanda, was exiting Africa over financial challenges.
Few days ago, the chairman of Bharti Airtel, Sunil Bharti Mittal, told Bloomberg that the firm was “considering mergers or stake sales of some of its Africa operations” to cut debt with a view of making its biggest overseas acquisition profitable.
Airtel Africa, powered on this promising business model, recently raised $1.25 billion from Softbank and other leading investors. That money is to wage market share battle with MTN Group in Africa. And since it does not have to invest so much on core infrastructure, it would be an interesting game for Africa.
As Airtel Africa redesigns its business to become a quasi financial institution, Nigeria investors should encourage it to list in the Nigerian Stock Exchange. Among all the telcos today, Airtel is closest to the sector that typically does well in NSE. We have always punished tech companies but we like financial institutions. Airtel is closer to a deal house than a telecom company as it continues to outsource core infrastructure investments. The numbers have responded as the firm is recording improving margins. The firm just raised $1.25 billion from Softbank, Temasek, etc. IPO is next.
In Rwanda, MTN is in the market to raise capital to improve its services; it is raising debt of $56.4 million. It surely needs to fight a strong battle. The good news is that if we have these companies battle in this way, consumers would win. And at the end, both Airtel and MTN would also win. African market is still growing: they just need to keep working.
The modernization and extension by the MTN Group’s Rwandan subsidiary of its network will help to ensure the loyalty of its current customers and attract new ones, in a context of increasing consumer complaints about the quality of service of the telecom company. and the fierce competition maintained by Airtel that merged with Tigo.