IBM follows Bharti Airtel into Africa
Monday, September 20, 2010 at 12:09AM 
You remember my WPR telecom special feature a while back, where I highlighted Indian firm Bharti Airtel's purchase of Kuwaiti firm Zain's mobile customer base in Africa. In that piece, I noted the Bharti model of subcontracting most of the basics while concentrating on expanding the customer base.
Here, in an NYT blog, we see how Bharti is pulling along longtime partner IBM to the tune of a $1.5B investment:
Samuel J. Palmisano, I.B.M.’s chief executive, doesn’t jet around the world to make an appearance every time the technology giant wins a services contract. But the announcement Friday morning in Nairobi is different, says I.B.M.
[Bharti Airtel Samuel J. Palmisano, I.B.M.’s chief executive, left, with Sunil Bharti Mittal, the chairman of Bharti Airtel.]
I.B.M. will supply the computing technology and services for an upgraded cellphone network across 16 nations in sub-Saharan Africa. Its customer is India’s largest cellphone operator, Bharti Airtel, which paid $9 billion a few months ago for most of the African assets of Kuwait’s Mobile Telecommunications Company, or Zain.
Under the 10-year agreement, I.B.M. will handle customer service for Bharti and provide the hardware, software and services to run everything from billing and call-traffic management to delivering new services like music and video. The deal takes the broad partnership between Bharti and I.B.M., begun in 2004, beyond India. I.B.M. is not disclosing the dollar size of the deal, but analysts estimate it at more than $1.5 billion over the decade-long span.
The Bharti contract also punctuates I.B.M.’s Africa strategy. The company’s presence in Africa dates back 50 years, but in the last five years I.B.M. has invested $300 million in the region to build data centers, add country offices and foster technology training programs — and it plans to expand aggressively in the region.
“This is a huge step forward for I.B.M. in what we think is the next major emerging growth market — Africa,” said Bruno Di Leo, general manager for growth markets for I.B.M.
Though it looms small in the global technology market today, Africa is primed for growth, according to Frank Gens, an analyst at IDC. “And I.B.M. is, as it’s done before, getting in on the ground floor,” Mr. Gens said.
The company’s strategy calls for the growth markets — not only the well-known BRIC countries, Brazil, Russia, India and China, but also dozens of others — to increase as a share of I.B.M.’s revenue from 19 percent to 25 percent by 2015. That is the equivalent of $1 billion in new sales a year.
In these nations, I.B.M. is targeting the linchpin industries of economies including telecommunications, banking, transportation, health care and energy.
Same logic Enterra brought to our Development-in-a-Box work in northern Iraq: focus on the fastest connections to be built.
A serious example of how seriously multinationals (nay, globally integrated enterprises--to quote Palmisano) are beginning to appreciate Africa's growth trajectory.
Reader Comments (1)
Some comments from a mate in Africa:
"Nokia Siemans Network already has a managed services contract with Bharti for MEA, with major focus on Africa (offices in 10+ countries). "
"NSN just bought Motorola. Over 1500 additional employees to Africa by December 2010, in over 15 countries......."