The one thing in business which is of paramount importance is – Market Leadership. And, it is of strategic sense when a company tries to do that in Africa. WATBlog was one of the first in Digital Media space to report that Bharti Airtel inked the Zain deal. With this deal through, Bharti under its group company Zain Kenya is planning to invest US $ 308 Million in the next 18 months to reach to the top of the Mobile Services provider in Kenya. To add on, another surprise is that this expected investment into Zain Kenya is approximately double of what was initially planned by Bharti.
Rene Meza, Managing Director – Zain Kenya, was excited on this investment plan and shared his feelings when he told Requters, “For the first time in eight years, we have the right majority shareholders with the understanding and the mindset of what it takes for us to do in Kenya, to become market leaders“. This news has already shook their rivals Safaricom, which is the biggest telecom solutions provider company in Kenya & also accounts for more than half of the shares traded on Nairobi Stock Exchange. To further create shockwaves in its competitor group, Zain has already implemented decisions such as Post-Paid connections for the rich segment & Pre-Paid Scratch Cards for the lower end users, at as less as 20 Shillings.
The other plans which Zain will implement soon are –
1. Increase its Distributor Base over 2.5 times from the existing 80 to 200 in number.
2. Launch Third Generation (3G) internet connections by Q3 End, FY 2010-11.
3. Focus on increments in revenue generated and subscriber base.
4. Injection of Massive Economies of Scale which would enhance productivity & net profits.
So, The Analysis of Zain’s Strategy is somewhat based on the Model which Bharti implemented in India. It majorly seems to hover around Low Cost structures, Aggresive expansions by increasing distributor centres & being the lowest to afford across the cost segments. The understanding of Bharti of the Kenyan Markets and its related demographics also seem to be pretty good enough.
The Challenge for Bharti & Zain lie in further penetrating the market when the Lower Inter-Connection fees has already been announced a week back. The decision was made by keeping those investors in mind who are not able to enter into a market which is dominated by a Numero Uno. However, I don’t think Bharti would be remotely bothered with this step. It’s approach in India is already a Case-Study which should be followed by other companies in the world. To add on, the potential impact of this decision is more likely to be hard-hitting on Zain’s competitors in Kenyan Markets, as they don’t have a backing as big as Bharti.
