Sunday, June 30, 2013

In Uganda what you wed isn't what you marry - Airtel and Warid Part II

In a recent blog post I was talking about what the buyout of Warid by Airtel meant for Uganda. And now that the wedding campaign has come out and we know that the fact for sure is that it is real I think it’s going to be exciting to see how the in-laws work together to make sure the marriage stays together or doesn't. Well from an industry standpoint the issues to fix will be many.

Well, because not unlike human relationships marriages (or mergers) are not easy. The first issue normally comes with choosing which side of the bed. A small issue but you see in the end even when the wife will take her husband’s name she will have great influence on how happy he is for the rest of his life. So he has to make certain concessions. I think things like that can be deal breakers and impact the relationship deeply.

It is my strongly held view that while Airtel has its merits it also has challenges that will not allow it to get the most out of its new “wife”.  Its like how you date the most enviable girl on the market and you marry her. The truth is that all the other guys wanted her but didn’t have the cojones to approach her. But in reality while you had the balls in a moment of courage you can’t tame her or keep her down or whatever male subjugation of women is called these days. She had a life of her own before you came and you are hoping she dims her brightness for you. Ugandan women – no chance. You must find your place in her shadow /spotlight or another wife.

As the most enviable brand in the market people were aware of what they were buying. They knew where Warid was at every point in the value chain. Known for the most innovative product offers on the market that bright star considerably dimmed when compared to the lackluster and modular Airtel charade. The truth is that integration of products can happen but when push comes to shove most of Warid’s innovative products will be dropped in order to drive a more streamlined brand agenda and product profile. The sad thing is that those were the things people loved about Warid in the first place. So the wife must assume the position and prepare herself. Things like the Entrepreneurship Fund don’t have equivalents on the robust aggressive Airtel side of things. Like marrying a man who never puts the toilet seat down when he goes to the washroom, he never knows why you get UTI after UTI. If he changed his behavior he might be able to afford that little dress you want.

Buyouts are different from mergers in that the guys who get bought out never get a choice on whether they stay. Most times a young blue-eyed auditor from a world renowned audit firm works out the optimum “offload capacity”; how many resources the buyer is able to take on with the buyout and therefore the rest will have to be offloaded. Now it might mean more revenues for Allen and her cohorts at the URA but if more than 50% of the current employees at Warid get laid off she can expect that much less in taxes and probably not as much an increase in boda boda revenues as their new chosen professions start to emerge. Kind of like a guy telling you after getting married that you have to drop your single wild partying friends since they “aren’t in your class anymore” and yet that brother met you in club!!

Most times the husband determines the sex positions the relationship will assume. Sure when you are dating he might let you ride on top a few times but my feelings are that this normally tends to change once the ring is slipped on. Similarly, if it was not previously determined how the customers are going to get screwed, there are going to be issues about this. Mass market pricing and continuously communicating seemed to have worked around what Warid was doing however whether this will work for the aloof new head of house is another matter. We wait and watch for changes coming soon. For now I would tell the customer to assume the position.

Speaking about positions, when the hottest girl on the market gets taken other girls get jealous most especially her friends. It says they weren’t worthy enough of the ring; especially when some of them have been on the shelf for a longer period of time-openly looking to be picked up, attending weddings, being at funerals, showing open interest, going to the gym so as to hide the cellulite [read UTL]. It simply isn’t fair. It makes them seem less attractive and openly speaks about their value to the market. But then what I think is that such behaviour prompts the lady in muzigo number 3 to get all antsy and start asking for her own wedding (no more akawundo kakubye’dirisa – Luganda for cohabiting). And we can already see this behavior with freebie Fridays, bonus weekends, etc. We are going to see a lot more “promos” from MTN before the market settles. Whether that is a bad or good thing we are yet to see but I can tell you that all the miniskirts are going to come out now.

Meanwhile back at the ranch
Now how about the step children? Anyone in the industry and who knows their products well knows that Warid Pesa was the most superior mobile money product offering on the market. Some have argued it was a technology thing [a superior IN] and others had it down to the Chinese invasion [Huawei and ZTE]. Either way the erstwhile sheltered child of the home Airtel Money was not as boasted or even as robust. With the marriage comes the scenario of the mother saying to the father “don’t let your child spoil my child with his bad manners”. One of two scenarios could result. The stepchild is abandoned; Warid Pesa gets chopped up for pieces or some modules but is overall co-opted into Airtel Money. In the second scenario; the stepchild thrives and shines – someone thinking straight takes Warid Pesa and gives it its true place in the spotlight and watch it make money for them.

When I first said the reason for the buyout was because Airtel needed a superior product to compete with across the continent, it was argued that Uganda was the last place to look for such a thing – since as my former boss used to say “Nothing good grows out of Uganda” but consider this for a minute. If you buy Warid in Uganda you not only get a challenger brand and 3 million customers, you also buy a mobile money product superior to anything you have anywhere on the continent in 17 countries, complete with its copyrights. Now the details were not disclosed but if I were an Indian billionaire I would think that’s 17 stones to pay for 2 birds. Like marrying a girl and finding out can also cook, and think business. Don’t laugh, in Kampala it’s like a venn diagram to find a girl who can do all three!! The third quality? That one they can all do – with bells and whistles!

I think that we are bound for some turbulence ahead but then again like most things Ugandan, someone who is NOT the ordinary citizen will win. We can celebrate now and we should because after all who doesn’t need a party in these dark times but we should always keep an eye on that shiny horizon for the sky rumbles and cloud billow with the wind of changing times.

Monday, May 27, 2013

what does it mean to insulate our friendships?

Insulating our friendships means doing things or taking actions that will protect your friendship from strong, sudden or violent forces like relatives, family, drama, sudden windfalls, ex-girlfriends, unseen circumstances.

It means taking action:  you sacrifice, you protect, you defend, you give up things you want, you talk about uncomfortable truths, you affirm people so they know how you feel about them, you reassure them when they are uncertain, you fight for them, you bleed for them, and you forgive them, you learn the things they like…

Because all these actions create an "insulating" layer that make you a friend worth keeping in all circumstances.

They say without doubt and in black and white "you are precious to me and I value our friendship"

….and I don’t think anyone can do more than that.

Friday, May 3, 2013

The Airtel - Warid Buyout: The Grim Agency Future Ahead

Two weeks ago when the news broke that Warid Telecom, Uganda’s 3rd largest telecom company had been acquired by India’s Bharti Airtel in a move that has effectively polarized the market there was a lot of acrimony over “another change” just as people had grown to love and enjoy where they were getting comfortable. The truth is that Airtel has changed its name 5 times since it first launched and still bears residual angst towards it from the public because of their very early transgressions when they launched as Celtel. Let me point out here that despite all appearances the seemingly apparent reason for the merger is to take on South African telecom behemoth MTN.

After reading Ruthaine’s thoughts on the matter I started asking what would happen to the employees of Warid. Poor suckers. The usual toll of a merger is that about 75% of the acquired firm is shed and replaced with more technologically efficient systems. And with over 500 employees, there would be no less than 350 jobless people soon. Then it hit me even harder what about the advertising agency? Those who know what I am saying a company’s advertising and marketing agency is critical to its success and in most cases has its fortunes interred with those of its clients(it must be said though, those retainers always create comfortable cushions for agencies to sit on).
A new Airtel promo where they are promoting the Nokia Lumia 620 

Airtel’s advertising is done by the experienced Moringa Ogilvy team seated in Bugolobi. They have done quite nicely for themselves. The Moringa Ogilvy team gets its Ogilvy name from its Ogilvy Africa affiliation by paying a nice handsome fee every year to ensure they keep using the name. In return, they get first pick of any Ogilvy businesses coming into the market territory. Ogilvy East Africa was bought out by Scangroup back in 2010 where they acquired the larger share of Ogilvy Africa’s holdings outside South Africa. What did this mean? That Ogilvy East Africa would go under Scangroup. When Ogilvy &Mather pitched for and won the Airtel Africa business, they rested it there because Scangroup, the parent company was already handling too many telecom accounts what with Safaricom, Vodacom, Warid and Tigo across the region. Anyway this explains how the affiliate agency in Uganda ended up with the Telecom account. Anyone who has had to pitch for a telecom account will tell you how serendipitous it must be to just have one handed to you.

Attaining Superbrands status in 5 years, the Warid brand is a force unto itself.
On the other side of the pond Scanad Uganda, largest and by far the most efficient ad machine has been handling the Warid advertising and marketing account. It must be said that they did not give Warid the Pakalast name and fame, that award goes to a smaller but equally ingenious agency – Maad. What they did do was bring Warid to a point where it has had all of its competitors shitting bricks with ad campaigns that have literally remained top of the public’s mind year in year out and have created such a high bar for the industry and anyone trying to get people to remember anything. If you think I am lying ask anyone next to you to tell you the Samona or Omo or Standard Chartered tagline or ask them who Onesmus, or Milton or the Kungfu Master is? Simply marveling. Scanad is part of Scangroup. Their revenues are reported as part of the Scangroup success story. Now that they have lost their beloved Warid Telecom what will they do?

If I were Bharat Thakrar what would I do?

Airtel Nigeria proved that you don’t need to work with an Ogilvy affiliate after they appointed STB McCann to run things for them (with all the ensuing drama). This simplifies the task of Bharat explaining to Sunil Bharti Mittal that the Airtel Uganda should sit with Scanad Uganda. I presume the conversation would go as follows:
  1. Scanad Uganda has a larger; more experienced team directly connected to the Scangroup resource superstructure and therefore would present as a better agency to work with.
  2.  Because Scanad is directly linked to the group and is not an affiliate its revenues would be going directly to Scangroup hence revenues and profits would be kept within the group.
  3.  If market prevalence/awareness is anything to go by Scanad have produced more memorable work in the last 2 years which gives them the best advantage in their david-goliath match up against MTN – the market leader if they were to lead the Airtel onslaught.
  4. After this article and recent news in Tanzania and if the move of buying Warid was for Airtel to solidify their numbers, grow their revenues, increase the brand’s market share in order to eventually offload the telecom to Vodacom/Vodafone while they focus on West Africa where its bloody, then they would need an agency that had the capacity to deliver on that promise – Scanad.
  5.  In the worst case scenario, this account goes to a pitch in order to give the existing account holder (Moringa) a chance to compete. I personally think this would be the cruelest thing anyone could do; put your worst enemy in a pitch against Scanad because even hell won’t forgive you. Resources, tools, manpower and experience all seem like mundane things which are merely business jargon but nowhere else, and I mean NOWHERE, do they coalesce with such fervent ferocity to petrify and debilitate as when pitch fever is at fever pitch.
So that is how I see it and while I’m very very happy to be wrong you have to consider the possibility that I might not be. Any chess player will tell you “you don’t look at the now, you look at five moves ahead” So the market just got a bit tighter for the smaller agencies out there and since markets, like businesses are grown and shaped by the players in them it safe to assume that also much like in the jungle, we shall all eat when the lion is satisfied.