How time flies – this was a company which was rumoured to be leaving Africa. Of course, Airtel had no other option than Africa as its home nation of India was under a redesign, with Jio changing the industry with market-shaping products and services. Across all metrics, Airtel had no chance in India! Having no alternative, Airtel retooled its business model, and became a quasi-financial institution which offers telecommunication services. Yes, Airtel outsourced some infrastructure components of its business, improving its CAPEX and by doing that, have money to invest on its customers. The result has been superb: Airtel has logged its 11th consecutive quarter of double-digit revenue growth, HI 2020 data shows.
Airtel Africa has logged its 11th consecutive quarter of double-digit revenue growth. In its H1 2020 financial report, Airtel Africa noted a 16.4% increase in revenue in the first half of its current financial year, and a 19.6% increase in Q2. The operator said mobile revenues increased 15.3% in H1 due to growth in voice and data, while its mobile money operation Airtel Money saw revenue growth of 30.4%.
Growth was recorded across all regions, with Nigeria up 20.2%, East Africa up 21.9% and Francophone Africa up 4.4%. Noting a growth of 12% across its customer base, Airtel Africa now counts 116.4 million customers across 14 markets, which span Eastern Africa, Francophone Africa and Nigeria.
In May 2018, I explained why Airtel Nigeria would continue to grow: asset-light business model where outsourced partners do the core infrastructure works while Airtel stays ahead running the customer experiences. Doing that means it can grow faster because it can deploy dozens of partners (who get paid only when they deliver services) working across Nigeria at the same time. It is a very risky business model as the weakest link is now the weakest delivery partner. But the company has managed any risk very well.
Many quarters ago, Airtel was seen as a company that would abandon Nigeria. In the depth of the recession, the company struggled: it had so many underperforming assets. As the nation exited recession, Airtel upgraded its business model. Today, Airtel is leaving the infrastructure business, outsourcing all to partners across Nigeria. Typically, such enables companies to conserve cash. The impact is now visible in the subscriber numbers. Provided Airtel continues to find partners, it would continue to grow at a faster rate than its peers.
Telecom equipment leasing and outsourcing of critical infrastructure pose risks – your quality is determined by the capabilities of the partners. Most people like to be in charge of their destinies. But today, it is working for Airtel since the services are largely matured with very competent players who can deliver them.
The future of rural telephone and broadband services will move faster for Airtel in Nigeria since doing such will just require signing contracts with partners. The gestation period between investment and revenue is largely out because it does not have to worry about community negotiations, fees and other issues which make simple things hard in Nigeria. Airtel partners would have to deal with many of those issues.
The Airtel Africa transformation is a great case study of the power of business model: you must invest to get a working one. Most times, the problem is not the market but your business model. Blaming customers will not grow the business. Hello, Nigerian insurance companies!
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