Bharti Airtel Bets on Nigeria Broadband to Chase Down MTN

Updated on
  • Indian company partners with ZTE of China on 4G services
  • Says improved dollar supply helping network expansion plans

Bharti Airtel Ltd.’s Nigeria unit said a partnership with China’s ZTE Corp. to provide 4G high-speed broadband will see it add subscribers and narrow the gap with market leader MTN Group Ltd. in Africa’s most populous country.

The Indian company is seeking “to lead the industry in terms of new customer acquisition,” Chief Executive Officer Segun Ogunsanya said in an interview in Lagos, Nigeria’s commercial hub. Airtel will start to move subscribers to the 4G service from 3G “in the next three to four months,” he said.

Airtel was Nigeria’s third-largest wireless operator with 34.7 million customers at the end of March, according to the most recent data published by the Nigerian Communications Commission. That’s 43 percent below Johannesburg-based MTN’s 60.4 million, although Airtel has recorded the highest quarter-on-quarter growth in the last two periods. Local operator Globacom Ltd. is no. 2 in the West African nation with 37.3 million subscribers.

Airtel has invested more than $1.5 billion in its Nigerian network in the past five years, seeking to tap rising demand for mobile and data services in a country with 180 million inhabitants. The government is seeking to increase broadband penetration to 30 percent of the population by 2018 from 4 percent four years ago, and MTN has also acquired spectrum to deliver 4G services.

The launch of 4G spectrum with ZTE will enable Airtel to build on its market position and “surpass achievements in recent quarters,” Sola Fanawopo, managing director of Lagos-based consultancy Emaginations Ltd., said by phone. Nigerian subscribers are “crying out” for consistent and fast data services, he said.

Airtel has seen a surge in data consumption in the country since 2015 as increasing access to smartphones enables Nigerians to use their devices for lifestyle, commerce and health services, according to Airtel’s Ogunsanya. Data is growing faster than voice and will probably account for more than half the revenue of telecommunications operators in the country “in the next couple of years,” he said.

Bharti Airtel, India’s largest wireless carrier, has operations in 15 African countries, having sold businesses in Burkina Faso and Sierra Leone to Orange SA earlier this year. The depreciation of the naira against the dollar contributed to a fall in overall sales in the year through March, the New Dehli-based company said earlier this month.

Net income fell 72 percent in the first quarter of 2017 as Airtel cut tariffs on voice and data services to keep customers from jumping to new Indian competitor Reliance Jio Infocomm Ltd. In January, Chairman Sunil Bharti Mittal said the company is considering mergers or stake sales at some of its Africa operations as it looks to cut debt.

An increase in dollar supply by the Central Bank of Nigeria has enabled Airtel to fund an improvement in service quality after a severe shortage of the U.S. currency hampered investment, Ogunsanya said. Access to dollars is “better than it was about three or four months ago,’’ he said.

— With assistance by Siddharth Vikram Philip, and Renee Bonorchis

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