Interview: Airtel Nigeria CEO – Cash-flow positive in 18 months, no low price market strategy

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With the changing of the guard at Africa’s mobile operators, their CEOs seem to be in the mood for a significant degree of disclosure. Last week it was the turn of Bob Colleymore, CEO of  Kenya’s Safaricom. This week, it’s Rajan Swaroop, CEO of Airtel Nigeria. He talks to Russell Southwood about the performance of this most important and largest of all of Airtel’s country markets.

Q: What are the differences you see in Airtel in Nigeria and from your experience in India?

A: There are two reasons for differences. Either because the company has been managed in a different fashion or because the people are culturally different. Most of the differences I see arise from the way the company was managed. In India, there is a high level of accountability. Here things like quality and cost might have been forgotten and this may be as a result of the last management or multiple past managements.

There is an issue of (employees) understanding where their boundaries are. We’re an entrepreneurial set-up and there are few boundaries. Here there was an attitude, I’ve done my bit, I don’t go outside my boundaries. That’s not cultural, that’s a people issue.

Q: How might this affect your ability to compete in the Nigerian market?

A: There is a difference in the way the whole industry is here. It is more competitive and therefore operators themselves have speedier systems to market. It’s about getting ahead of the competition and this has been a good ground for MTN. There has not been significant competition to them (in the past), only pockets of competition.

Q: So will you adopt the low tariff strategy that Airtel has introduced in places like Kenya?

A: We have not dropped prices significantly (in Nigeria). It’s no good having a too good N12 product that is actually a N14 product. But with our new tariffs, we’ve created excitement and pull.

Q: Has it actually changed your overall market share?

A: There’s not been huge numbers but there has been some change. We wanted to see what kind of reaction there would be to this kind of offer and galvanise our sales distribution process. The question was: can we galvanise our own teams. If the answer was positive, then I think we can stand and fight. We didn’t want to do disruptive price packages because we don’t believe the lead to customer stickiness or loyalty. I’m going to see how I can take some customers from others but we don’t want to destroy the value in the business.

Q: That’s voice. What’s happening with your data offer in Nigeria?

We’re building a 3G infrastructure and by the time we’re finished, we will have covered 70-80% of the population and that’s maybe one year away. We currently have 100,000-150,000 subscribers but we believe the overall potential for is something like 2 million subscribers out of an overall  total of 16 million.

Q: Are you going to be offering data to the home like some of your competitors elsewhere?

A: Data to the home is driven by FWA and DSL and we’re not going to be doing that. We’ll stick to data on mobile.

Q: Glo has been testing LTE. Will you also be doing it?

A: Not yet.

Q: What is happening about the introduction of Zap Money in the Nigerian market?

A: Regulation of this sector is governed by the Central Bank of Nigeria and it has come up with its own criteria for mobile commerce. A bank would have to hold the licence for this activity. But it’s not clear how things will work out. The Central Bank of Nigeria has asked for proposals from the banks and then it will licence them. The model will be one where the banks and mobile operators all sit on the same platform in partnerships. It may take up to a year for anything to happen.

Q: What’s the position in terms of the international fibre and your acquisition of capacity?

A: We have taken capacity on both cables (Glo One and Main One). The price per meg is down to US$300-350 per meg per month at volume and this price is a substantial drop and what was available previously. We will probably double our capacity in the next 6-12 months and prices will come down again. They are currently pretty high compared to rates across the world. In India, it’s sub US$10 per meg.

Q: So what are you keeping satellite for? Remote base stations?

We’re in the process of exiting existing contracts and we only have a very small number of base stations on satellite.

Q: Basic mobile services are all very similar outside the branding. How do you differentiate yourself?

Services are sometimes down from one network therefore customers use another network. Therefore the first thing to do is to have a high level of availability. We want to take it from 95% to 98%+. The closer you get to the higher number, it gets more difficult. We need architectural changes and to manage infrastructure differently. Unfortunately factors like theft of diesel at base will not allow us to reach the levels achieved in India. This is a key enabler for loyalty.

Q: What about customer care which operators often say differentiates them?

A: We need to provide higher levels of customer service. 90% of our customer care calls failed to get though to the call centre. We’ve added 1,400 people and bought this number down by 30%. By April this year, we should have cleared the backlog out and got that figure down to 5% or less. We’re also enabled customers to use self-help services. And for example on what’s the balance a the end of a call?, we pumping up capacity on that. We’re setting a level of quality of service we should be able to sustain.

Q: How is the business performing financially?

A: Over the last 12 years, the performance of the business has been declining. Therefore the question is: how do you not allow it to decline? We have a major investment in infrastructure but that should be self-funding and we hope to be cash-flow positive in 18 months time.

We want to encourage the regulator to introduce Mobile Number Portability. Then the best provider will be successful.