Bharti Airtel says no price war intent in Africa, but…

Bharti Airtel, owners of Zain Africa, has declared they have no intention to enter into a price war in its newly acquired African market, but the company is already head deep in the price war in Ghana.

Bharti’s Chief Executive Officer and Joint Managing Director, Mr. Manoj Kohli said their decision was because of the healthy tariff structure and few players in Africa.

“We retained the pricing power in Africa – there is no intention of any price war by Bharti in Africa – we want competitive tariffs and we will always be competitive,” he told reporters after the company announced its July-September financial results, which showed a decline in market share and profits.

Bharti is engaged in huge price war in India, to the extent of cutting down call tariffs to less than a cent per minute of call.

In Ghana, Bharti’s Zain Ghana was the second to reduce call rates to 8 Ghana pesewas (about 6 cents) per minute from 12 Ghana cedis.

This contradicts the Group CEO’s claim that Bharti will not engage in price was in Africa.

Bharti Airtel will formally launch its brand in African in a just over a week, he said, adding the telecommunication major will focus on third generation mobile and data services in the continent.

Zain Ghana has already announced November 22, 2010 as a tentative date for the rebranding to Airtel Africa.

Mr. Kohli observed that there was no DSL (digital subscriber line) in Africa, so wireless broadband was very important internet play in Africa.

He said Bharti will focus attention on giving great broadband experience to the youth of Africa.

“We have 3G licenses in nine markets out of 16 and we will definitely fully utilize the 3G services,” he said.

Bharti Airtel hopes to grab much bigger market share in the African market in the coming quarters.

“I feel that after two quarters of restructuring of these areas, we should be able to achieve much healthier share of business. Already, we are seeing higher incremental customer addition,” Kohli said.

He said that company’s decision to enter Africa market has been very positive.

“We acquired Zain because it has the biggest future in the continent for telecom – Africa has one billion population, low penetration ranging from 20-25%, very moderate competition and healthy tariff structure,” said Kohli.

Zain was at number two position in the continent, giving Bharti a good starting point, he said.

He said in the four-five months since Bharti entered Africa, it has arrested the declining market share and revenue problems that Zain was facing.

“In these five months, we arrested declining trend, which was seen in the last 18-24 months. Declining trend in the market, declining trend of revenue has been arrested in these five months,” Kohli said.

Zain’s market share in Africa fell because of less investment and non-aggressive participation.
Bharti, in the process of restructuring, modified tariffs in 10 markets out of 16.

Despite unsustainable premium of 30-40% in some African markets, Bharti is seeing healthy revenue and growth in the minutes of use.

“We are seeing early results of positive elasticity in Africa,” Kohli said.
In July-September, its Africa revenue grew about 4% and minutes of use by 13%, he said.

By Samuel Dowuona