Daybreak - Why Airtel is witnessing an exodus of its regional CEOs

Episode Date: December 23, 2022

While the Indian telecom sector is expected to grow by 12.5 billion dollars every three years, the rate of attrition in the industry is at a six quarter high. But the nature of the exodus is slightly different at Bharti Airtel, the country’s second largest telco.Its regional CEOs who helped it fight the big war against Jio are leaving the company.Tune in to find out why.

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With that, back to your episode. Telecom sector in India is going through a shift. On one hand, there is 5G that is pushing the industry towards growth really fast. Reports say that the country's telecom sector is expected to grow by $12.5 billion every three years. And on the other hand, there is a crisis looming. On Monday, the Economic Times reported that attrition in the telecom sector in India hit a six-quarter high between October to December this year. In fact, birds are saying that it is only going to rise further in the next quarter.

There is almost a kind of a war going on right now between companies to hire tech talent in order to meet the sector's changing needs. And it's not just in telecom. The same is happening in many other tech companies too. It is actually the convergence of technology and telecommunication that has led to this exodus of staff who specialize in artificial intelligence and the internet of things. Companies across sectors are now looking for talent with 5G related skills. Now, this attrition is common across all telecom companies. But Bharti Airti Airtel, the second largest telco in India, has been witnessing an exodus of a slight,

different nature. Senior and mid-level executives have been leaving Airtel. We're talking about employees who are veterans of the great telecom battle, the ones who helped Airtel fight Gio for nearly half a decade. Why are they leaving? Welcome to Daybreak, a brand new podcast from the Ken. I'm your host, Nick Dha Sharma, and in each episode, I will tell your business story that is current, significant,

and most importantly interesting. Today is Friday the 23rd of December. When Geo made its entry in 2016, it disrupted the market for all telecom companies with its free calls and low prices. The introduction of 4G and LTE had already been pushing for a change in the sector. LTE stands for long-term evolution, which is a standard for wireless data transmission that allows faster download of data. Now, this meant increased digitization and automation. The use of analytics became common now. And it is around this time that something began changing at Airtel to.

The nature of the company's corporate structure almost flipped. It slowly became more centralized or headquarter-centric. And what is really interesting is that things at Airtel now started working a lot like how they worked at rival Gio. The Airtel headquarters organically assumed a more dominant role over its regional operations. Power began to shift back to the corporate headquarters. And this is when senior and mid-level executives decided that it was not worth sticking around at Airtel anymore. And it is not like companies, especially those who operate on a utility scale, do not go through a churn.

But it is a question of how much? because some executives say that right now attrition at Airtel is as high as 30%. This has never happened before. A former senior executive who quit Airtel earlier this year told a Ken reporter Pratap Vikram Singh who covered the story that the move to trim regional operational leadership is sending a signal to executives within Airtel. That people will not grow within the company.

So a generation of leaders who fought tooth and nail to give Gio tough competition, were effectively left redundant. And not all could find positions in the company's corporate headquarters because those require different skill set and a different subject matter expertise. Airtle's Africa operations became an opportunity then for the Circle CEOs to move up the organizational ladder.

But Airtle Circle or regional CEOs who manage sales and operations in states or metro cities like Delhi and Mumbai have left. Many season circle executives are also on the move. Some are actually moving to its rivals like Reliance Geo and Vodafone Idea. The former CEO of Airtel's Uttar Pradesh East and West Circles, Shalindar Singh, joined Vodafone Idea in May as an operations director. The Ken was able to verify all this through people close to the company and updates on the professional networking site, LinkedIn. To find out why this exodus from Airtel began, we need to understand why these regional leaders

thought there was no scope for them to grow anymore in the company. In 2016, when Gio disrupted the telco market, Airtel managed to stick around and put up a fight. And even though Gio is the biggest player right now, Airtel is still its biggest and most formidable rival. And all this is largely because of how Airtel was operating. It has a federated structure with 22 telecom circles in India, and nearly all of them have their own CEO. Each circle operates like a local kingdom where the circle CEO you could say is the king. They have the power to handle pricing, product, vendor management, network deployment,

marketing and customer support within their circles or areas. It was an expansive role, so it was not surprising that the salaries of these circle CEOs were as high as 2.5 crore rupees per annum. So for a while, when Airtel was growing really fast in India, all the action was actually happening in these telecom circles. These circles essentially were mini replicas of Airtle's corporate headquarters. It was during 2012 to 14, which is often called the land grab phase of Indian telecom,

that the circle's importance really grew. A former circle CEO of Airtel, told Pratab that the faster they networked, the faster they grabbed subscribers in their region. Let me give you an example of the kind of power that Airtel's organizational structure gave these regional leaders. When Pratab's story came out, my colleague Praveen Gopal-Kristin was reminded of a close friend of his who started his career as a zonal sales manager at Airtel. This was about 10 years ago when Gio wasn't even around. And here is how Praveen described him in his own words, and I'm quoting. He had real power. Every major mobile phone dealer, seller and vendor in

his city knew and feared him. He could carelessly walk up to any Kirana or Mom and Pop store and add prepaid credit to any phone instantly. They all had sales targets for SIM cards, recharges and connections. And if they couldn't meet them, they would get a call from him. The reason he and others like him had this kind of power was because of Airtel's corporate structure. But now Airtel's Circle offices are being headed by much younger executives. Every circle has three sales leaders. All these leaders report to the Circle CEO administratively. And one of these sales leaders is now the new CEO. A former senior executive told us that all Circle CEOs at Airtel are B category executives now. And the $2.5 crore

package has been reduced to one crawl. Now here is where the story gets even more interesting. While Airtel is going through this churn, something is happening at Gio2. Geo, which has been always a very headquarter-centric company, seems to be hiring and expanding its regional teams. Someone close to the company told Pratab that execution has been a weak point for Gio. But the problem is, Gio might be doing this by poaching former Airtel executives. Multiple people in the two companies have already confirmed this to us.

Gio has already poached four circle-level leaders from Airtle. One of them is Sharon Shetty, who was the head of Airtle's Karnataka Circle till July this year. And Gio is still actively reaching out and offering strategy rules to other circle leaders as well. This is bad news for Airtel, especially now because rolling out 5G and business to business segment is becoming a priority for all telecom companies. Circle leadership will have an integral role to play in this. So whatever strategy CEO Gopal Wittal is following right now,

it is going to have consequences for Airtel in the next few quarters. And as someone who worked at Airtel told the Ken, if this strategy does not work out for Airtel, Gopal Wittell will do course correction, but it will come at a huge cost. What do you think? Tell me because I would love to know. You can write to me at daybreak at the ken.com.

Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature story, newsletters, subscriber-only apps and podcast extras. Head to the can.com and click on the red subscribe button on the top of the website. I am Sniqda Sharma your host and today's episode was edited by my colleague Rajiv Sien.