Can Airtel’s new CEO, deliver the company to the promised land?

Airtel’s acquisition of Warid in early 2013 was one such attempt to getting closer to the market leader’s MTN. Unfortunately, a series of bumps along the way in terms of changes in Airtel’s top leadership, poor execution of the Warid consolidation exercise, inconsistency in the implementation of the marketing and promotion strategy, and failure to leverage from Airtel money has failed the telecom to perform optimally.

Also read: Airtel in leadership crisis, as MTN celebrates 10 million subscribers

Top leadership changes

For the past five months since the departure of V. G. Somasekhar. Airtel has lacked a substantive CEO. In August 2014, the company recruited the services of Tom Gutjahr as the new managing director. Gutjahr previously worked as CEO for Millicom Paraguay – Tigo, Millicom Rwanda – Tigo, Millicom Chad – Tigo and Orascom Algeria. A multilingual, he brings lots of experience and could be the man Airtel has been waiting for. However, in Rwanda, MTN beat him flat and wait to see how his coming to face off with a highly-capitalized Airtel Uganda will fare against a well-grounded MTN Uganda. Specifically, Gutjahr’s good telecom marketing experience and knowledge of the telecoms landscape are his assets in a very fluid market like Uganda where business conditions just change. For example, in May 2013, MTN woke up and her telecom market share in terms of number of subscribers had been slashed to just below 50 per cent as a result of a move by the regulator to allow an existing telecom company buy another – something this magazine found anti-competitive and extensively wrote about.

Uganda is a market of relationships – people do business with people whom they know. Gutjahr now has to get out of his desk and go invest heavily in Kampala’s social life. This is something that made Mazen Mroue, MTN Uganda’s outgoing CEO, a game changer for the brand. Workmates describe him as an extraordinary leader with exceptional networking and social skills. But that will be an insight for another issue.

Tom Gutjahr has a huge task before him, not only to maintain the momentum set by his predecessor but also take on the mighty MTN who recently reorganized their commercial department, making it very vibrant and a pace setter. You have probably seen the latest innovations. MTN business innovative cloud services are becoming a business necessity.

The year of new faces

Usually leadership changes aim at bringing fresh perspectives at the top. Never in the history of Uganda has the market experienced changes in top leadership at the same time. With all telecom companies having new faces at the top, analysts say, the first year of these CEOs will determine who will be the next industry leader. This year has seen the big telecoms: MTN Uganda, Airtel, Orange and Uganda telecom get new CEOs. They are all on the same footing.

Whether this is the window of opportunity for Airtel to become a market leader or at least close the gap that already exists with MTN, will be determined by the strategies and energy of the new boss especially along mobile money, data, customer retention and tapping into the corporate class.

In an interview with this magazine, the Orange CEO Mr. Vincent Poujol  noted that Orange would use its unmatched network quality to outcompete its rivals, stating that “quality has a price, and overtime, already Ugandans are beginning to appreciate this and we hope to back on this to get the numbers we want.” It is not by surprise that the company has decided to focus on data by positioning as the #1 internet providers.

Of  Somasekhar’s huge shoes or not?

Top on the list that Airtel new boss faces is the keeping up with the great expectation. Telecom analysts including staff within Airtel agree that the former Airtel CEO, V.G Somasekhar, was ‘‘extremely good” despite leading the company at the time of several changes and market dynamics.

Also read: How V.G Somasekhar transformed Airtel Uganda

Insider sources refer to him as a man who set high standards, despite some glitches that existed, which is normal, anyway. He survived a consolidation exercise and managed to get Uganda Cranes sponsorship from MTN. As such, his successor at minimum must at least leverage from those achievements. Already, the visibility of Uganda Cranes players, upcoming matches and the swagg that MTN Uganda used to give Uganda Cranes is slowly disappearing. The new CEO must prioritize the sponsorship of the national team through aggressive marketing and promotion of the players and upcoming matches to ensure increased team visibility and support.

Somasekhar was a man of lean structure, something that former colleagues reminisce with mixed opinions. During his time at Airtel, he is said to have ‘killed’ the position of a Chief Finance Officer (CFO).  Insiders say all directors used to report directly to him which meant heavy workload and information overload. Such leadership style is said to be the reason why the acting Managing Director Arindam Chakrabarty did not live up to the promise. For the same reason, the first task of the new CEO is developing a new structure and finding the right people to work with. Airtel’s new CEO finds himself in the same shoes as Man United’s new manager, and the moves being made at United should be expected at Airtel if change is to happen. SBR will surely let you know in our January 2015 issue.

Stiff competition from MTN

The new boss also faces many challenges: trying to make Airtel money gain on MTN mobile money – a task that is not easy. The acquisition of Warid gave Airtel opportunity to catch up; however, the consolidation took longer than envisaged.

Market intelligence reports reveal that Airtel has four million active subscribers (number of people calling at any one time) against MTN’s six million customers. That is a huge difference by far keeping in mind that some of Airtel’s customers are on ‘free calls’ (read the ‘corporate mega bonus’). It is not by surprise that MTN’s average revenue per user (ARPU) remains the top, after Orange which leverages on their data plan and enjoys a middle and high-end clientele.

Also read : Airtel vs. MTN U: How big is the gap?

It is not by surprise that MTN is looking at data with renewed vigour. Orange aside, market reports reveal MTN has close to two million active internet users against Airtel’s 0.8 million active users. The challenge with Airtel customer base is that many of their subscribers are in the low-end bracket — the kind of people who are price sensitive as they load internet for social errands like Facebook and WhatsApp – instead of using it for serious business. These load about Ugx 300 for a day. On the other hand, many of MTN internet customers are corporate ones.

Opportunities in mobile money

Mobile money has now become a new normal. It makes sending and receiving money within the country so easy. With the right strategy and support, Airtel has opportunity to reduce the huge gap that exists with MTN. According to analysts, MTN has one challenge which can be an opportunity for Airtel. For now, they (MTN Uganda)’s mobile money is at full capacity unless they focus on expanding their ecosystem.

Airtel has an opportunity – converting all their customers on GSM to Airtel money.  Since the start of 2014, Airtel has been working on their ecosystem. Their partnership with Total fuel service stations across the country as Airtel money agents aimed at easing access. Previously, it was difficult for Airtel mobile money customers to withdraw amounts above Ugx 100,000. Reason?-many of Airtel money agents  lacked adequate  float. With such partnership, Airtel customers can now easily access and withdraw up to Ugx 1m at various Total stations countrywide.

However, Airtel has a huge task of increasing on their mobile money agents. With just 20,000 agents across the country, some of whom lack adequate float, Airtel commercial department needs to do some homework. It is important to note that Airtel usually fails at implementation. Remember the partnership Warid had with Uganda Revenue Authority? Since the acquisition of Warid by Airtel, nothing has been heard about the partnership. Everything is now in the background.


March 20th, 2018 | by

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