Bharti Airtel Talks Divestment In Parts Of Africa, No Plans To Exit Continent

Bharti Airtel Talks Divestment In Parts Of Africa, No Plans To Exit Continent

From Reuters and CapitalFM.

Bharti Airtel, the largest Indian cellphone carrier, has no plans to exit Africa, it said on Tuesday, despite announcing exclusive talks with France’s Orange to sell four of its units there.

Orange said on Monday it was in discussions to buy Bharti subsidiaries in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone, triggering market speculation that this might be a first step towards a complete Bharti exit.

With operations in 20 countries including 16 in Africa, Bharti Airtel claims to rank among the top four mobile service providers globally by subscribers.

The negotiations come as Orange president Stephane Richard pursues his drive to ramp up the telecom’s development in Africa — an effort that previously raised the possibility of the French group acquiring Bharti Airtel’s African units last February.

At the end of 2014 Orange had 97.5 million clients in Africa and the Middle East, a regional customer base the company is looking to increase rapidly.

According to consultancy Deloitte, the number of smartphones in use in Africa is expected to double by 2017, fuelled primarily by increasing sales of low-cost handsets.

Active in 29 countries with 247 million clients, Orange is a major global telecoms player — generating 39 billion euros ($42.2 billion) in sales last year, and employing 155,000 people worldwide.

Bharti does business in the following African countries: Burkina Faso, Chad, Democratic Republic of the Congo, Gabon, Ghana, Kenya, Malawi, Madagascar, Niger, Nigeria, Rwanda, Seychelles, Sierra Leone, Tanzania, Uganda and Zambia.

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But the Indian group said on Tuesday that the operations put on the block represent a relatively small percentage of its overall Africa business. A sale, it said, would help it “establish a sharper focus” on the remaining countries.

“We remain fully committed to our Africa operations and will continue to invest in its growth and building a profitable business and accordingly have no plan to exit,” the company said in a statement, in response to a query from Reuters.

Bharti ventured into Africa in 2010 with the $9 billion purchase of Kuwaiti telecom Zain’s cellular assets in 15 countries, at a time when growth in its home market had started slowing and a price war was hurting carriers.

But high costs of operations there squeezed margins, meaning Bharti has yet to turn a profit in Africa.

The sale of operations in four countries, which accounted for around 16 percent of its African revenue in the 2014 fiscal year, should also help Bharti cut down a net debt burden of $10.7 billion as of March. Bharti’s debt had been swollen by the Africa buy.

Bharti Airtel’s stock rose as much as 5.4 percent on Tuesday to its highest since October 2009 as analysts said a possible Africa exit could lead to a re-rating of the stock.

Bharti is also selling its mobile phone masts in several African countries, again to cut down debt. It has so far raised $1.3 billion from the sale in five countries.

Read more at Reuters and CapitalFM.