Bharti changes strategy in Africa, empowers CEOs

To improve efficiencies and grow return on investment in loss-making operations

Bharti Airtel, India’s largest telecom company, is changing its Africa strategy by empowering its chief executive officers (CEOs) posted in 17 countries in the continent instead of the one-size-fits-all approach followed till now.

Each CEO, or country head, will now be responsible for his or her investments, market-related decisions, targets on sales and profits and margin improvement, against the centralised approach where all key decisions were taken in their Africa head office in Nairobi, Kenya.

Manoj Kohli leads the international operations of Bharti as managing director and CEO. Kohli, in turn, has three regional heads managing the operations in the 17 countries, with every country having its own CEO.

Responding to a Business Standard query, a Bharti spokesperson said: “At Bharti Airtel, we have always believed in empowering our people. Our Africa leadership teams are already empowered to take business decisions and this management ethos continues in Africa.”

A person close to the development said on condition of anonymity that this was being done to improve efficiencies and grow return on investment in the loss-making African operations.

Bharti entered the African market two years ago with the acquisition of Zain, but the financial performance failed to meet its expectations. “This (empowering local CEOs) is a good idea and will lead to better time to market advantage to respond to any competitor’s offerings and moves away from the one-size-fits-all strategy for all continent,” a banker with substantial exposure to Bharti shares, said.

Steep competition
Bharti is facing steep competition as its main rival MTN is spending more money in just one and the biggest market — Nigeria — than what Bharti is spending in the entire continent. In the current financial year, Bharti has reduced its capital expenditure by close to 22 per cent to $600 million in Africa. In contrast, MTN is spending $1.5 billion in Nigeria, while Etisalat, another telecom company, is spending $550 million in the country.

“Bharti has to take immediate steps to make its Africa operations profitable and it’s already demerging its towers into a separate company. A stake sale in Bharti’s Africa towers company will take place once the demerger process is over by the end of this year,” said the banker, who also did not want to be named.