Airtel goes back to drawing board


A planned restructuring targeting mid-level management at Airtel is causing boardroom unease at Kenya’s second largest mobile provider by subscriber base.

Several senior staff have quit in a huff as a result of a process expected to commence in the next two weeks.

Already, Network Director John Barorot and top Customer Care Manager, Alice Kirumba have since resigned. According to those in the know, the restructuring process is aimed at streamlining operations.

As part of this process, the Indian-based Bharti Airtel has seconded new directors to Airtel Kenya with an express brief to push for a quick turn-around to recoup its investments in the Kenyan firm.

Local directors are, however, reported to be ill at ease with the move, with some of them saying it is unrealistic for Airtel to seek to recoup all its investments, especially within the first year of acquisition in a market with a dominant player controlling about 65 per cent share.

This has set off an icy relationship between the new directors and those inherited from Zain when Bharti acquired the firm.

In an email response, however, Airtel Chief Executive Rene Meza dismissed all this talk about boardroom unease as rumours.

The discontent at the mobile provider has trickled down to junior staff and last week, customer care staff went on a go-slow to protest against working conditions.

"Talk of restructuring has brought things to a standstill. Even junior staffers are unsure of what will happen next," says a senior employee who left the company a few months ago.

Another sticking issue of disquiet is the hiring of Neil Suarez as new Commercial Director for Airtel Kenya. Ordinarily, Suarez is supposed to be at the same level with other directors at the Kenyan office who all report to Rene.

However, this is not the case because Sales and Distribution director, Hassan Saleh Ali, Corporate and SME director Lucille Aveva and Director of Airtel Money, Sieka Gatabaki who are supposed to be at the same level as Suarez all report to him, disclosed one of our sources.

Last week, Airtel Kenya Chief Executive Rene Meza was quoted by a section of the media denying claims that he had resigned — a pointer perhaps of the depth of anxiety at the firm.

While he remains the firm’s public face, it is said the real nexus of power at Airtel Kenya has since shifted with the Chief Executive of Airtel Africa Manoj Kohli and Gyant Khosla who is in charge of Anglo-phone Africa calling the shots. They both sit at the company’s regional headquarters in Nairobi.

Kohli has largely remained out of the public eye but is believed tohave initiated a business-mainstreaming programme that seeks to reduce overheads by creating a leaner and more efficient staff.

This is expected to culminate into retrenchment of some staff members in a fortnight.

Low priced regime.

Despite these concerns, Airtel remains one of the largest corporate tigers in the economy and has managed to stabilise phone tariffs by operating a fairly low-priced regime borrowed from the company’s parent arm’s operations in India.

Last week, Bharti Airtel hiked call tariffs by 20 per cent in six major circles in India including New Delhi, Andhra Pradesh and Uttar Pradesh.

Bharti Airtel, which has 169.2 million subscribers in its network in India alone and renowned for the low-priced tariff model, has had a firm grip on the Indian market courtesy of this model, which it has been trying to replicate in other markets, including Kenya.

This new direction by Bharti India puts into sharp focus the ability of its Kenyan operation to continue with its low calling rates. Industry experts believe that if the strategy has changed for India the Kenyan operations could also witness a price review.

Up competition

The turmoil at Airtel Kenya could have been precipitated by the decision by the Communications Commission of Kenya (CCK) to suspend the implementation of mobile termination rates (MTR) by July 1, as had been stipulated earlier and slow uptake of Mobile Number Portability (MNP).

The reduction of MTR could have allowed other operators, which have pitched the battle for subscribers on lower call rates further room to adjust their prices downwards and stiffen competition for market leader Safaricom, but its implementation was suspended following an intervention from President Kibaki who ordered CCK to put it on hold.

The MTR, which is the fee operators pay to each other when their subscribers call rival networks, were reduced by CCK to Sh2.21 last August and were set to reduce further to Sh1.44 on July 1. The recommended termination rate for SMS would also have reduced from the current 60 cents per SMS to 20 cents if CCK had adhered to the initial deadline.