BackWe completed Zain agreement in just 45 days
We completed Zain agreement in just 45 days
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New Delhi: Manoj Kohli is moving to Nairobi to run Africa’s second largest telecom service provider, following the completion of Bharti Airtel Ltd’s acquisition of Zain’s assets in that continent. He speaks about his ambitions, which include climbing Mount Kilimanjaro, in an interview. Edited excerpts:
How did the deal happen and what were the hurdles you faced?
We have been looking at Africa for three years now. The second MTN closed in September, we did have Zain on our radar. On 15 February, the opportunity arose and the iron was hot. At that time, Sunil, Akhil and me went to Kuwait and it took us one and a half days of negotiations and uncertainty to clinch the deal. Once we signed the MoU (memorandum of understanding), we never looked back.
We formed different teams— the financing team that was raising the money; accounting team doing the accounting due diligence for the past couple of years; regulatory team that was going through every country’s regulations; legal team that was drawing up agreements; country visit teams that visited all countries, etc. The commercial discussions were led by Akhil while I was coordinating all this activity.
It was very well organized and structured—all the teams worked together and in 45 days, which may be a world record, we completed the deal and signed the definitive agreement on 30 March.
You plan to have 100 million customers, $5 billion (Rs23,500 crore) revenue and $2 billion Ebitda (earnings before interest, taxes, depreciation and amortization) by March 2013.
These will come from the synergies from our business model. We are talking of synergies of capex, opex, IT (information technology) sales and distribution among many others.
We are planning a new partnership for growth where we are not only talking to our present partners but we are also talking to our new partners are participating. There are new RFPs (requests for proposals) of which the evaluation we will complete in the next few months. These include Nokia Siemens, Ericsson, Alcatel and IBM, who are our existing partners, and new participants, including some BPO (business process outsourcing) partners, Huawei, ZTE, HP, some Indian IT majors are also participating. A couple of BPO companies have offered to build BPOs specially for us in Africa.
All the partners of Bharti have responded very swiftly and have established offices in Nairobi and even made commitments to build infrastructure on our behalf. There will be new deals but the baseline of India will be utilized.
To what extent will there be infrastructure sharing?
In passive sharing, we are planning to build the tower company in each country. We are also planning to share all infrastructure like fibre optics, etc.
We believe that sharing is very important—on the one hand, we compete with the operators and on the other, we collaborate with them. Sharing brings down the cost structure and brings affordability for the customer. Not sharing would lead to duplication and triplication of the network with no benefit to anyone.
We haven’t finalized any plans for active sharing as yet. Zain has a very high quality network with very good customer perceptions.
Scalability is not a problem. Our business model is used to that. In India you see metros that are very intense like Delhi or Mumbai. There are some circles that are also very intense, like Uttar Pradesh or Kerala. And then there are states like Rajasthan or Jammu and Kashmir, which are very far-flung, which are a lot like Africa. We are doing very well in those circles in terms of revenue and Ebitda margins.
Do you plan to dip into Bharti’s existing talent pool to help run the Africa operations?
Our headquarters in Nairobi will have around 80-90 people, out of which 25 will go from India and 45 from Zain in Bahrain. The remaining senior people, including the CMO or brand chief, will be recruited from there itself. In the countries, there may be another 20-25 people from here—maybe two or three per country. The total from India will not be more than 50. There will be a lot of Indians at the second or third level (of management) as we need to intersperse our talent. There are some very bright African leaders that we already have in place.
What happens now?
I am leaving on Friday and then next week we have our first Africa leadership workshop, where 130 senior people are coming. We will all sit together and co-create the vision for 2015, including the right business model for Africa.
How long do you expect to stay in Africa?
Maybe a couple of years. We need to get this into a very good growth trajectory and get the business model and brand established. In five markets, we are not leaders, which needs to change.
What about other businesses— towers, enterprise?
Those are very important businesses—we will build a tower company in every country and build an enterprise business for long distance, data connectivity business for larger corporations and SMBs (small and medium businesses). And wireless broadband, which is the biggest business. We have 3G in many countries and the PC penetration is very weak. International connectivity is also very weak. We will build a lot of capacity and become members of consortiums of many submarine cables, and build cable landing stations.
shauvik.g@livemint.com
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