Strategies employed by Airtel Africa in enhancing performance

Abstract

Strategies are adopted by organizations in order to achieve a more favorable position. The current high level of competition amongst businesses necessitates organizations to implement sound strategies to remain competitive. To adopt effective strategies, managers in an organization need to be aware of realities in the business environment. Strategy adoption thus begins with scanning of the external as well as the internal environment of the organization. The number of mobile operators with live operations in Africa (excluding mobile virtual network operators), rose by more than 10%, from 158 in the first quarter of 2008 to around 175 at the end of 2010. Airtel intended to replicate its low cost model in India in the African market and rolled out a number of strategies to augment its place in the telecommunication sector. Key among these strategies were; the 3G mobile service, Outsourcing, Airtel‟s Tower sale and lease back, as well as Mergers and Acquisitions. This study sought to establish the strategies adopted by Airtel Africa in enhancing its performance, as well as to determine the relationship between the strategies employed by Airtel Africa and its performance. This study adopted a case study design aimed at getting detailed information regarding Airtel Africa‟s different strategies and its effects in enhancing its performance. The case study design was preferred because it allowed the researcher to place more emphasis on a full contextual analysis of fewer events or conditions, and their inter-relations. Data was collected using both primary and secondary means. Primary data was collected from respondents using an interview guide. The interviewees consisted of senior staff involved in strategy formulation and implementation at Airtel Africa headquarters, in Nairobi. Secondary data was collected from relevant published materials both in print and online. Content analysis was then used to analyze the data as per the objectives of the study. Based on the findings, the study concluded that 3G strategy had led to an increase in the data footprint, customer acquisition, retention and drive, as evidenced by increase in subscribers; an increase in data revenue, an increase in customer market share growth, revenue diversification, amongst others. The study noted that Sale and Leaseback of towers had led to improvements at Airtel Africa in relation to; debt reduction resulting from the proceeds of the sale, balance sheet optimization, cost reduction overtime and capital release to fund new investments in marketing and product development. In addition, the study concluded that Outsourcing led to operating cost reduction, by using an effective and experienced tier 1 company, management of the subject matter expertise portfolio, and increased efficiency through exemplary performance by outsourced staff at Airtel Africa. It was further concluded that, Mergers and Acquisitions within Airtel Africa had led to increased customer market share and profitability, shareholder value, as well as company and brand enhancement across Africa. This study recommended to all mobile operators currently operating in the country to imbibe the culture of employing competent vendors for their outsourcing jobs and should re-invest or plough back most of their profits into their businesses so as to improve their present infrastructural roll out. This will enhance good quality network services throughout the country as well as easy accessibility in rural areas of the country. The researcher encountered quite a number of challenges related to research and most particularly during the process of data collection. Some interviewees were very cautious about the information they were sharing and thus did not give information considered as confidential.