Rwanda’s telecommunication business dynamics are set to change following the acquisition of Tigo Rwanda by Bharti Airtel Limited.
Airtel yesterday announced what many called a surprise 100 per cent equity takeover of the Millicom based subsidiary company Tigo Rwanda Limited.
With operations in 17 countries across Asia and Africa, sector experts have said Airtel-Tigo deal could change the model of telecommunication business in the country.
First of all, the move means Airtel will now consolidate the Rwandan telecom market and position itself as a strong contender in Rwanda with revenues of over $80 million.
And, most importantly, it means once approved by regulators, Airtel could be headed for market leadership with an overall market share of 59 per cent if we are to go by October statistics from Rwanda Utilities Regulatory Authority (RURA).
This, therefore, leaves MTN Rwanda, which has been enjoying market leadership, with no choice but to further innovation if it wants to continue leading the market.
According to RURA October statistics, Tigo’s share of the market stood at 40 per cent overall, MTN held 41 per cent and Airtel 19 per cent of a combined active subscriber base of 8,675,826 at the end of October.
The takeover, therefore, means Tigo Rwanda now joins over 370 million customers on Airtel’s global network across 17 countries and will enjoy the benefits of a superior network, international roaming, and high quality 3G, 4G speed as well as Airtel Money services.
Sector experts are confident about the take over, saying it could be a game changer in the country’s telcom business that will help create synergies with existing business and boost operational efficiencies in the market.
‘‘The Rwandan telecom market will significantly benefit from this acquisition, further reiterating our stand that in-market consolidations do not just help achieve better market positions but benefit customers and the industry as a whole,” said Annet Uwiragiye, a telecom and ICT expert based in Kigali.
According to Sunil Bharti Mittal, the Chairman, Bharti Airtel, Airtel has taken proactive steps in Africa to consolidate and realign the market structure in the last few remaining countries where its operations are lagging on account of lower market share and presence of too many operators.
Airtel and Tigo have already merged their operations to create a strong viable entity in Ghana. Today [yesterday], it has taken yet another important step to acquire Tigo Rwanda to become a profitable and a strong challenger in a two-player market, he reaffirmed.
“We are also committed to the long term viability of our operations in two other countries i.e. Kenya and Tanzania, to ensure that in 2018 all our 15 operations in Africa start contributing positive margins and cash flows towards a healthy and profitable Airtel Africa,” he added.
The agreement aims to bring together the strengths of Airtel and Millicom in Rwanda and is expected to offer benefits to customers in the form of a wider network, affordable voice and data services, and superior customer care.
Raghunath Mandava, the Managing Director and CEO, Airtel Africa, said, “The acquisition reinforces our commitment to the Rwanda market and is a significant step towards creating a stronger presence in the country.”
On completion, the proposed acquisition will undergo seamless integration, both on the customer and the network side, and further strengthen market position.
The consideration for the transaction is based on approximately 6x EBITDA multiple, payable over two years. The agreement is subject to regulatory and statutory approvals.
Over the years, Airtel has been solidifying its market position to become a key player on the continent with in-country acquisitions.
In the past, Airtel acquired assets in Uganda (Warid) and Congo Brazzaville (Warid), Kenya (yu Mobile) and consolidated operations in Ghana (Millicom).
The customers in these markets today enjoy a superior and wider network, affordable voice and data services, Airtel Money and better customer care, according to Mandava.
According to Mauricio Ramos, the CEO of Millicom, the sale of business in Rwanda is in line with the company’s strategy to focus on providing advanced fixed and mobile data services in Latin America.
“We are very grateful to the Government of Rwanda for their support throughout the last eight years, which allowed us to extend digital inclusion to thousands of Rwandans,’’ he said, adding that the company equally appreciates its employees, whose drive and commitment enabled Tigo Rwanda to become a leading provider of digital services in the country.
“We are confident that Bharti Airtel will build on the strength of Tigo Rwanda and enhance the services provided to customers,” he noted, adding that the deal indicates that Airtel will make the payment for over two years.
RURA speaks out on consumer protection
Meanwhile, the Rwanda Utilities Regulatory Authority told The New Times they are aware of the agreement and will ensure it stands on grounds for both consumer protection and investor’s appetite for profits once the deal is on the table for approval.
“Yes, we are aware of the deal and the regulator is waiting for them to apply for the approval. It’s a normal practice worldwide and companies do agree on mergers or takeovers. The agreement become effective once approved by the regulator,” said RURA’s Spokesman Anthony Kulamba.
With a presence across 15 African countries, Airtel is one of the largest telecom service providers across the continent in terms of geographical reach and had close to 83 million customers at the end of quarter ended September 30, 2017.
Globally, Airtel is ranked as the third largest mobile services provider in terms of customer base.
Meanwhile, subscribers from both sides expressed optimism about the deal, saying they expect better and more improved services going forward.
Christopher Dushimimana, a Tigo Rwanda subscriber and businessman in Kigali, said he was hopeful the take over will improve service delivery in terms of network connectivity.
“As a subscriber, I would care who is buying or selling, I only expect enhanced and more efficiency in terms of service delivery,” he told The New Times.
Maureen Murebwayire, a mobile money agent in Kigali, called the acquisition a great move that will benefit subscribers.
“From a business perspective, it means less competition but more innovation, especially for us that deal with mobile money services,” she noted, adding that the battle for business has shifted to two firms that must now become more innovative to meet customer demands.
Bharti Airtel Limited is a leading global telecommunications company with operations in 17 countries across Asia and Africa.
It is headquartered in New Delhi, India.
Bharti Airtel had over 386 million customers across its operations at the end of October 2017.