Airtel plans cost-cutting layoffs, denies claims of exiting Rwanda

Airtel-Rwanda is in advanced stages of a process to cancel contracts of several of its senior and mid-level managers as the telecom company seeks to trim its operational costs in an increasingly competitive industry, The New Times has learnt. The number of those to be affected by the downsizing is yet to be known as Airtel-Rwanda’s management remained cagey in a Friday statement. However, a source privy to the matter said, off record, that although those to be ‘released’ are still working, their discharge letters are ready and will be compensated in accordance with the terms and conditions of their employment. The source also dismissed claims that Airtel is planning to exit Rwanda after reportedly failing to gain a reasonable share of the market since launching its operations three years ago. “We are just restructuring our model not exiting the country,” the source said. A request for an interview with Airtel-Rwanda management last week had been granted and scheduled for 10:30am on Friday but it was postponed to 12pm after a longer-than-anticipated meeting. By noon, the said meeting hadn’t ended and the interview could not take place. ‘Strategic restructuring’ But in an e-mail, the telecom firm with foothold in 17 African countries admitted that some of its staff will be affected by the planned restructuring. “This is to confirm to you that Airtel Africa is readying itself for the next growth phase in the continent by further aligning the organisation structure with the operating model. “We have embarked upon a strategic restructuring exercise that will further align the business and reinforce its competitiveness in the various markets we operate in,” read the statement in part. “Our core objective is to create a high performance organisation as we step into the next growth phase of the business and our people strategy will also evolve to support the future needs of the organisation. As part of the new organisation design, the company will focus on enhanced skill sets and training for its employees.” The statement added that while the exercise will impact some of the employees, Airtel is sensitive toward them and is committed to minimising the impact of this exercise on the employees. “All impacted employees will be compensated in line with prevailing laws and company policy. Airtel remains committed to Africa and will continue to invest in the growth of its operations.” Struggling performance? Airtel-Rwanda has had three managing directors since 2012. The first, Marcellin Paluku, was replaced by Teddy MVS Bhullar in March 2014; in October this year, Bhullar was also replaced by Ghanaian Michael Nii Boye Adjei, who has previously worked with Tigo-Ghana. The telecom which launched its services in Rwanda at the end of March 2012 had a good start and had, by December that year, attracted close to 400,000 subscribers from 110,000 users in June of the same year, according to statistics from the national utilities regulatory authority. Rwanda’s active mobile users have increased from 5.6 million in December 2012 (53.1 per cent of the country’s total population) to more than 8.5 million active subscribers by October 2015, accounting for at least 76.2 per cent of the country’s population. In that period, Airtel-Rwanda’s numbers have also registered a steady growth from over one million active users at the end of March 2014 to over 1.5 million subscribers as of October. However, although Airtel’s numbers appear to indicate a steady upward growth, the subsidiary of the Indian multinational, Bharti, has failed to dislodge its more established rivals, MTN and Tigo, which have continued to consolidate their market dominance in the country. When Airtel launched in 2012 promising to invest over $100 million by 2015, industry analysts had predicted a disturbance of status-quo with a possibility of the newcomer dislodging Tigo from second place behind, MTN; but that hasn’t happened. Instead, Tigo’s subscribers have increased from 1.8 million as of December 2012 to three million as of October this year, consolidating a two-horse race with MTN, which has grown its own base from 3.4 million users to 4.05 million in the same period. Tough African market Airtel’s performance in Rwanda is a reflection of the telecom’s troubled operations in other African countries, prompting analysts to conclude that Bharti’s vision in the continent has ‘veered off course.’ In 2010, Airtel became the world’s third largest telecom player in terms of subscribers after it acquired Kuwaiti-based Zain Telecom’ assets in Africa at $10.7 billion of which some $8.5 billion was debt. But time seems to be exposing the deal to have been a bad one for Bharti, which has lately embarked on selling some of its lucrative assets in Africa to clear the debt. In July, Airtel announced in a statement that it had entered into an exclusive agreement for a possible acquisition by Orange of three of Airtel’s subsidiaries in Africa, including Burkina Faso, Chad, Congo Brazzaville and Sierra Leone. The announcement cast widespread doubt over Bharti’s commitment to the African market but industry analysts have projected that Airtel could raise up to $1.2 billion from the alleged planned sale of its four markets. Bharti’s African prospects seem to be deeming which is likely to fuel the rumoured full takeover by Orange Telecom of its subsidiaries, a claim the firm currently dismisses. However, there are liabilities to settle and the numbers are not looking good at the moment with the firm recording a net loss of $585 million on revenue of $4.4 billion from its African operations, at the end of March. Bharti has reportedly invested over $5 billion in Airtel-Africa to generate its current subscriber base of 76 million users but that effort is yet to bear fruit. In July, the telecom reportedly sold off its mobile towers in five African countries and raised $1.3 billion to cut its huge debt; it is also reportedly processing to sell more tower assets in six other countries in Africa, according to industry press reports. Airtel employed 5,130 workers as of March from 5127, in March 2014 but its revenues during the same period have dropped from $4.49bn to $4.40bn this year although its customer-base has increased from 69.4 million to 76.2 million. With 76 million subscribers in Africa, analysts say Airtel has the numbers but quality of the subscribers that is lacking. The average revenue generated per user stood at $4.4 by March 2015 against $5.5 at the end of March 2014, a decline of 20 per cent while its voice realisation per minute, in the same period, stood at $2.41 against $3.23, a decline of 25 per cent. Airtel-Africa’s only strength was in its Internet usage per customer, which grew by 34 per cent and averaged 130MBs per user. (It has over 30 million data users.). However, the average data revenue per user declined by 5 per cent and stood at $1.3 as of March 2015 and this, analysts say, may reduce Airtel’s bargaining power if its owners choose to sellout. editorial@newtimes.co.rw

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Airtel plans cost-cutting layoffs, denies claims of exiting Rwanda