Airtel buys five acres in Nairobi to set up headquarters

The government has allocated Bharti Airtel five acres of prime land valued at Sh550 million in Nairobi to house the conglomerate’s Africa headquarters.

The land, opposite Yaya Centre in Hurlingham, was previously owned by the Postal Corporation of Kenya.

Prime Minister Raila Odinga said, during dinner to mark the company’s entry into the Kenyan market after it bought out Zain, that the 99-year-lease property was awarded in response to Airtel’s request for suitable land.

“The company will pay for the value of the land and any other taxes. We have sold the parcel to a single buyer to speed up their construction process,” said Information ministry PS Bitange Ndemo. The request was made to President Kibaki in June when Bharti announced it would be investing Sh12 billion in the next 18 months in Kenya. The company has since revised the investment upwards to Sh24 billion.

“The lease will help the company realise its long-term objectives including creation of jobs, a key goal under Vision 2030,” Mr Odinga said.

Expand network

Airtel intends to expand its network to reach more rural areas and create 7,000 jobs by 2013. Through partners — IBM, Tech Mahindra, and Spanco — it has outsourced its back office operations such as a Business Process Outsourcing (BPO) and IT operations.

Dr Ndemo said the calibre of Bharti’s partners would attract other international companies to set up operations in Kenya. “Every job they create will yield three more in the informal sector, while the government will benefit from tax revenues,” he said.

Airtel Kenya managing director Rene Meza said Bharti Group doubled the amount they intend to invest in Kenya to increase the capacity on its 2G network to accommodate other operators, under site sharing agreements.

Joint ventures

Airtel will also embark on the roll out of its 3G network to stay abreast of the competition in technology, which is key to successful forays in the data market segment where the company is targeting value added services.

The company will run joint ventures with fertiliser companies and on-line veterinary service providers, similar to what it is doing in India. Since its entry into the African market four months ago, the company has put up a spirited fight in the voice segment by lowering the tariff by 50 per cent, which has been replicated by other mobile operators. Though competitors say its current rates are not sustainable, Airtel has been of the view that it is not in the business to make profit within a short period but in it for a long haul.

Kenyans on average call for 40 minutes per month compared to Indians who call for 400 minutes. According to a report by Citi Group, mobile operators have witnessed increased minutes of calling by between 20 and 25 per cent since the tariffs came down.

Another report by Deloitte says only 40 out of every 100 Africans have a mobile phone. However, demand is growing at an average rate of 25 per cent annually.