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Companies

Bharti Airtel head office plan lands coveted lease

Bharti executives Mr Sunil Bharti Mittal (centre), Mr Manoj Kohli (right) and Mr Akhil Gupta pose for a photo during a Press conference in New Delhi on June 08, 2010. Photo/AFP
Bharti executives Mr Sunil Bharti Mittal (centre), Mr Manoj Kohli (right) and Mr Akhil Gupta pose for a photo during a Press conference in New Delhi on June 08, 2010. Photo/AFP 

Bharti Airtel has won a key concession from the government as it prepares to invest Sh12 billion on its network in Kenya, including the construction of its headquarters in Nairobi and the establishment of a call centre that will employ 1.000 people.

President Kibaki has instructed the ministries of Land, Information and the Treasury to help Bharti in leasing a sizeable tract of land for its investments, removing a key stumbling block investors have frequently blamed for raising the start-up costs when setting shop in Kenya.

Obtaining a government lease for property has several benefits including eliminating the high costs associated with buying land around Nairobi and paying stamp duty on the transaction at four per cent of the land value.

Although the concession has been granted in principle, lack of land at the government’s disposal for direct lease is standing in the way, making urgent the establishment of a land bank that the ministry of lands had started laying foundations for last year.

President Kibaki has also instructed the Information ministry and the telecoms sector regulator, Communications Commission of Kenya, to complete arrangements for mobile phone users to change networks without having to acquire new telephone lines by the end of the year.

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The Information permanent secretary, Dr Bitange Ndemo, said his ministry has been given a directive by the President to make sure that number portability is up before the end of the year and that the government is also looking for a suitable land where Bharti can put up their headquarters.

“The government is looking on the issue of land taking into the account of what they intend to invest and the number of new job opportunities that they are going to create” said Dr Ndemo.
“We are also working on the number portability which should be up before the end of the year.

The concessions on land and number portability were among the main outcomes of a meeting between the President and Bharti Airtel officials at Harambee House on Thursday after which Bharti said it would invest $150 million (Sh12 billion) in Kenya, build a contact call centre to cater for its English speaking operations and make Nairobi its African operations.

The call centre will initially have a capacity of 250 seats that will immediately employ 1000 staff.

Currently the company operates in two different locations in the city with Kenyan operations housed on Mombasa road while the Africa operations will be run from Westlands.

Bharti also asked for a level playing field in the telecoms sector, in particular calling for faster roll out of the technology that enables mobile subscribers to switch from one operator to another without having to get a new cell phone line, known as Mobile Number Portability (MNP).

“We are asking for level playing field and the introduction of mobile number portability to allow subscribers switch to any network they want without losing their contacts,” said Bharti international chief executive officer Manoj Kohli,

Bharti Airtel, which bought 15 Zain Africa operations will rebrand them into Bharti Airtel in October this year, although they will still be using the Zain brand name, while selling their products such as airtime cards until the end of September.

Mr Kohli said the company will focus on rural areas to boost its market share and improve mobile penetration in the country. It will target farmers by introducing rural telephony .

The company at the moment controls 10.6 per cent of the market, second to Safaricom that has 78 per cent while the two new entrants Telkom’s Kenya Orange and Essar’s Yu have 5.6 per cent and 5.4 per cent respectively.

“Kenyans on average call for 50 minutes per month but we are looking forward to increasing this by making the calls affordable to Kenyans the way we have done in India where average call time is 400 minutes per month” said Mr Kohli.

The company said it will use part of $150 million it intends to invest in Kenya to strengthen its distribution network across the country and improve on its network quality.

Other than focusing on farmers with value add products such as running joint venture with fertilizer companies and on-line veterinary services, similar to what it is doing in India , the company will also focus on the middle and the lower category of subscribers .

Bharti has also called for the government to reduce duty and tax charged on airtime.

For any airtime worth Sh100, a subscriber buys 28 per cent of this goes to the government inform of 16 per cent Value Added Tax VAT and 10 per cent excise.

Bharti see number portability as one of the weapons it has to change the market equation.

Its predecessors - Kencell, Celtel, Zain - have found it difficult to significantly eat into Safaricom’s leadership position despite stoking a fierce price war that has seen tariffs in the voice and data segments drop by more than 60 per cent in the past four years.

Analysts say attachment by many subscribers to their user numbers has prevented millions from changing service providers despite the marked differences in pricing and quality of service offered by the different players.

CCK says number portability should enhance competition and consumer convenience in the telecommunication sector by “enabling consumers to retain their user numbers whenever they decide to change service providers.”

It also enables consumers to make use of alternative networks in an area where one provider has no footprint or is experiencing a network problem.

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