Why Airtel Nigeria is Growing

Why Airtel Nigeria is Growing

By Q4 2018, Airtel Nigeria will jump ahead Glo as the second largest telecom operator in Nigeria, behind MTN. There is a reason for that: Airtel has moved fully asset-light. Yes, it is now fully-outsourced, shifting infrastructure risks to partners and freeing up cash to invest in customer service and experience.

Glo remains a brand that is largely for the bottom of the pyramid. 9Mobile has lost the premium old Etisalat Nigeria image which was built for the upper middle class in Nigeria. MTN cuts across social strata but Airtel is evolving better as a competitor for the ‘everybody network”. Airtel is growing well faster than Glo. MTN is larger and certainly has lesser room but on pure subscriber count, Airtel does better.

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.

I do believe that Airtel is well positioned at the moment to unlock more values in Nigerian telecom sector. Its business model is certainly better provided it can have quality technical partners to depend upon.

Source: Asoka Insight

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