It is now a year since Ashish Malhotra took over as CEO at Airtel Kenya, the second-largest telco by market share in the country.
The Business Daily sought to understand his strategy to turn around the firm that has remained in the loss-making territory for decades.
Can we now say your low-cost strategy has failed in Kenya given that you are yet to return a significant profit despite your pricing?
First of all, we have been making losses for the last 12 to 13 years but in 2022 we started making small profits and this is despite a lower network than our competition, which is what we are working towards right now to fill the gaps.
Our performance is turning into a profit courtesy of keeping the products affordable. We understand that costs are part of it and that profitability is important, but we firmly believe that having affordable products in a country like Kenya is very critical and that has been our core focus.
We have to run a tight ship and be a much more efficient organisation so that we give better services to our customers.
But if we say that because of inefficiencies over here, we are going to increase the prices, how will that work out? I don’t think it will be liked by most Kenyans.
We recently saw the entry of Elon Musk-owned Starlink into the country. How would you react to that or what does it mean for the company that you lead?
It’s a very interesting development that has happened in the country. It means there is Internet and digital connectivity at the need of the hour, ensuring that all underserved areas get connected.
So it is a very opportune time to welcome this initiative, which comes at a time we are also investing very, very heavily in this market.
So you don’t see Starlink as a direct threat to Airtel’s business?
No, I don’t view it as a threat because it is not on mobile at the moment. But we will wait to see how they enter the market and how they have lined up their strategies.
Do you feel the dominance question has been resolved?
You see, fair competition is always welcome, and creating a level-playing field is always welcome. To catch up on that, this is where we seek help from the government in areas such as the reduction of the mobile termination rates (MTRs) so that customers can comfortably call any network.
Apart from that, we are investing very heavily in the network. We already have the most affordable products in the market, both data and voice and what we were lacking was on the network side.
Finally, we will be bringing our services even closer to the people.
Today, we have about 2,100 Airtel shops across the country and our dream is to have at least one shop in every ward, or two to three shops in every ward.
It is nearly a year since MTR was lowered. What benefits have you derived from that?
The benefit is more on the customer side. There’s no quantifiable value that we would say we have derived.
Well, there’s an indirect benefit because more customers sign up and we grow our customer base but MTR itself is not a revenue source.
Are you still pushing the regulator to reduce the rate further to the level you requested earlier?
Discussions with regulators are ongoing and when the announcement is made we will welcome it.
We always say it is good for the customers and when they announce it we will come up with stronger products for the customers.
The government has moved to drop the requirement for multinational firms to give up at least 30 percent of ownership to locals. How do you react to that?
As Airtel Kenya, we wholeheartedly welcome the development. It gives us more confidence to invest in the country.
This is not just a welcome change for Airtel, it is for the entire ICT sector and you will see in the coming days big names coming into this country.
A lot of investments will come into the country and in the process, more jobs will be created and economic growth will be much faster.
It’s nearly a month since you launched the 5G network. What is the response from the market?
First of all, we are the second operator to launch the network in the country.
We have 370 sites plus we are adding another 120 sites in the three months’ time, so our network width of 5G is becoming approximately 490 sites in the next three months.
Right now, 5G is available on phones as well as on routers and now we have launched a very innovative product for the very first time on a wireless network.
So our response has been good though the 5G-enabled smartphones are just almost one percent of our devices. It is purely an issue of the cost of devices.
What are the subscriber numbers so far?
It’s too early to share the numbers, it’s just been less than 30 days and we have just started to advertise. We are getting good responses and that’s I can say at the moment.
We will be able to give good approximations of the numbers in about six months because customers are already picking up the home routers.
Let’s talk about this once the $40 device being manufactured through the government programme gets into the market.
I’m sure the prices of 5G-enabled smartphones will also come down, it’s a revolution that is happening.
So, apart from the shortage of compatible devices, what other challenges are you facing as you roll out the network?
Well, it’s the ecosystem, which is there. Device prices have to come down, and then customers have to know what possibilities exist and so it’s about the communication part of it.
Voice and SMS are on a continuous decline. What is the impact of this on Airtel?
What you are saying holds true for the western part of the world where smartphone penetration is more than 90 percent.
In Africa, smartphone devices are only 50 percent, which means the other half of the country is still having those analogue devices.
So, I don’t think Kenya or Africa will have a voice stagnation or decline, at least in the coming three to four years.
We will still have growth happening in the data market and mobile money. It will take up to four years for voice and SMS to stagnate and get overtaken by data.