Bharti Airtel and Millicom International Cellular have finally merged their operations in Ghana into a 50:50 joint venture. Roshi Motman, the current CEO of Tigo (Millicom’s operation in Ghana), will take charge of the merged entity. Whereas opportunities for growth in Africa seem so obvious and plentiful, the truth is that telcos have been finding the going tough in this continent. The telco industry in Africa is undergoing an upheaval of sorts with slower acquisition of subscribers and vicious price wars, leading to depressed average revenues per user and regulatory challenges that grow more complicated each day.
In Uganda, Bharti Airtel bought out Warid back in 2013, with a deal that was supposed to shore up Airtel’s numbers and achieve market leadership. Ward had been outplayed by Ugandan operators for quite some time. Hardly a year later, Essar Group finalised the sale of its Kenyan Yu operation to rivals Safaricom and Airtel Kenya for USD 120mn. Under the terms of the transaction, Safaricom took over Yu’s passive network infrastructure, frequency spectrum, IT and office infrastructure. Airtel acquired Yu’s subscriber base. Yu had been struggling for quite some time; management changes failed to change its fortunes so this was hardly unexpected.
These examples serve to show that despite the much touted market potential of Africa, the cake is not that big and not everybody will get a seat at the table. Some operators run the risk of being edged out unless they can identify synergies with their competitors.