Airtel appears to be strengthening its presence in Africa: The company will buy Warid’s Uganda business, giving it a combined user base of 7.4 million customers in Uganda – 4.6 million with Airtel and 2.8 million with Warid – which it says amounts to a market share of 39% in the country.
This is the second Warid business that Airtel is buying, after it acquired 70% in Warid Bangladesh in 2010. The price being paid for Warid Uganda has not been disclosed, and the deal is subject to regulatory and statutory approvals.
Airtel in Africa
Airtel has a presence in 17 African countries, with over 62 million customers at the end of quarter ended December 31, 2012. Last month Airtel increased its stake in Airtel Nigeria to 79.06%, buying 13.36% stake from some existing shareholders.
Airtel is investing significantly in Africa, despite not meeting targets of $5 Billion topline and $2 billion EBITDA by 2012: the company launched 3G in 13 countries, Airtel Money in 15 countries. Manoj Kohli, MD and CEO (International), Bharti Airtel had said on the company’s conference call that they intend to invest more. “There were two gaps of judgement. At that time (of the acquisition), the Africa market growth was 15%, and we thought we could grow 20%, but that didn’t happen because the market growth came down to 8%, and in some markets, to 6%. The infrastructure of network, IT, Brand, organization design, processes was weaker than we expected. I thought we could restructure that is 12 months, but despite the speed of Bharti, it took us two years. That extended the turnaround period.” In a majority of the markets, Airtel has 15% marketshare, versus “gorillas with 50-60% marketshare.”
Kohli had set two goals for this year, for Airtel in Africa: “The first is to get the cash right. Our goal is to cover cash cost of even acquisition interest, apart from all investment. That way it is not putting any pressure on the group. The other plan is to grow the topline faster. There are countries where we are earning profits, but there are others where we are not. Each country has an improvement guide path. Each market should be PAT positive.”