Airtel Africa’s Asset-light Business Model is Working

The Airtel Africa asset-light business model is working. The firm outsources some heavy infrastructure investments and projects, focusing on customer experiences as I have noted in the past. This is a clear evidence that business model can transform a company besides whatever technology capabilities you may possess. Few years ago, Airtel Africa was about running out of town; quickly, it changed its strategy and today, it is a “telemoney” firm where the business is growing  with mobile money at 47% and data revenue at 38%. Yes, being a quasi-financial institution is working for Airtel Africa.

In May 2018, I explained why Airtel Nigeria would continue to grow: asset-light business model where outsourced partners do the core infrastructure works while Airtel stays ahead running the customer experiences. Doing that means it can grow faster because it can deploy dozens of partners (who get paid only when they deliver services) working across Nigeria at the same time. It is a very risky business model as the weakest link is now the weakest delivery partner. But it has a solid positive: Airtel Nigeria can largely leave Nigeria with a briefcase, largely unhurt by any turmoil. The only thing it has is the mobile license and the logo: others carry the risks!

This is a summary from TC Daily: Airtel Africa, one of the continent’s biggest telcos, has posted $1.64 billion in revenue for the first half of 2019. The company grew its data revenue by 37.8 percent and recorded a 46.5% growth for its mobile money business. The company, which is present in 14 African countries, now has 100 million subscribers on the continent. Airtel Africa completed a $750 million initial public offering (IPO) with a market capitalization of $3.9 billion. Going forward, the telco says it is prioritizing 4G expansion in its 14 markets.

“In the first six months of this financial year, we delivered revenue growth of 11.4 per cent in constant currency terms, with even higher underlying Earnings before interest depreciation and amortisation (EBITDA) growth as we continued to improve our operating leverage and tight focus on costs. This performance underlines our ability to consistently grow in double digits, powered by our growth engines of Data and Airtel Money growing at 37 per cent and 46 per cent respectively,” he said.

New Business Model Powers Airtel Nigeria over Glo to Second Mobile Operator

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