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India’s Bharti hints of tariff war in Nigeria

June 14, 2010 • Mobile and Telecoms, Top Stories

Manoj is the CEO & Joint Managing Director of Bharti Airtel Limited. (Image credit World Economic Forum photostream))

TWO days after concluding the acquisition of Zain at $10.7 billion, Bharti said it would introduce the concept of ‘affordable tariffs’, a move that may initiate a price war in Nigeria.

Bharti, known for its low tariffs in India had on Tuesday confirmed the conclusion of its acquisition of Zain’s Africa assets with the appointment of Oba Otudeko as chairman of the Nigerian unit.

Speaking on the approach to the African business, Bharti Airtel CEO in charge of International Operations, Manoj Kohli, said: “We will not go for tariff cut.

We will go for a long-term affordability strategy which is good for the customer and for the company.

“The monthly usage is 60-70 minutes per customer in Africa against 450-500 minutes in India.

“There is a pent-up demand. Tariffs are high in Africa. Our objective is not to introduce low tariffs in Africa… Our objective is affordability. We will see what the level of affordability a normal customer wants is,” said Kohli.

Cheaper call rates and multiple tariff plans have pushed up India’s mobile subscriber base, where a minimum of 13-15 million users are added every month.

He said Airtel would introduce more tariff plans suiting the customer profile and pay capability in each of the 15 African countries.

The average revenue per user is $7 in Africa and the average tariff is more than 10 times that of India. In India, the lowest call charges touch 10-15 cents.

He said Airtel would invest about $800 million “this fiscal in Africa for network roll out and services, though this figure is yet to be finalised.”

He said the company can extract more utilisation for this capex as it will get an Indian business model and Indian rates of capex.
Kohli, who will shift to Nairobi this week to head Bharti Airtel’s Africa business, said the company would finalise vendors for the African operations in the next two months.

IKECHUKWU OSODO in Lagos, Nigeria

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