No. 1 Indian Mobile Operator Airtel May Sell Stakes In 15 African Countries

By Dana Sanchez Published: January 25, 2017, 10:32 am
Airtel may sell stakes in 15 African countriesAirtel head office, Dar es Salaam. Photo: Wikicommons

Declining revenue and economic stagnation are among the biggest challenges facing mobile network operators in 2017, IT Web Africa reported.

Faced with an escalating price war in its home market in India, Bharti Airtel is looking for ways to reduce debt. The company has sold its Sierra Leone and Burkina Faso operations and some of its tower businesses. Operations in 15 more African countries could be completed within a year.

From The Guardian. Story by Adeyemi Adepetun.

Citing the need to cut debt and make its biggest overseas acquisition profitable, India’s largest mobile phone operator, Bharti Airtel Ltd. is considering mergers or stake sales at some of its Africa operations.

Some of the firm’s businesses in 15 African countries could be affected, Airtel Chairman Sunil Bharti Mittal said in a Bloomberg interview at the World Economic Forum in Davos, Switzerland.

This could result in job cuts and shrinking business in countries including Chad, Democratic Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Tanzania, Uganda and Zambia.

The cut in operations in the continent could be completed within a year. Faced with an escalating price war in its home market, Bharti is looking for ways to pare net debt of about $12 billion as of September.

The company has sold its Sierra Leone and Burkina Faso operations, and some of its tower businesses as it reorganizes assets it bought in 2010 in a $9 billion deal with Kuwait’s largest mobile-phone operator, Zain.

Bharti’s African unit lost $91 million in the quarter ended September, compared with a $170 million loss in the previous year. As part of the debt reduction, Bharti is also considering selling a stake in Bharti Infratel Ltd., its tower unit.

The Bharti chairman said a committee was studying whether the sale would be a minority stake or control of the tower unit, adding that a decision could be taken in a month.

In October, Bharti said in a stock exchange filing that it had formed a committee to evaluate options for its 73.5 percent stake in Bharti Infratel.

According to Bloomberg, Mittal’s moves come partly in response to the entry of India’s richest man Mukesh Ambani into India’s wireless telecommunications market last year. Ambani stormed into what was already one of the most brutally competitive telecom markets in the world with an offer of free voice services, forever, and free data services for limited time.

Ambani’s Jio mobile-phone service will probably force the exit of the smaller players in a market with almost a dozen operators, Mittal said in the interview. Among them is Telenor ASA, the Nordic region’s largest phone company. Bharti, which will announce its earnings for the quarter ended December on 24 January, may have been hit by India’s currency ban, Mittal said.

This time last year, Mittal said that Airtel would not exit Africa despite harsh economic conditions. Airtel has 22.14 percent market share in Nigeria and services 34.1 million customers.

There are challenges in the region, “but we are committed to Africa. No plans to exit the market,” Mittal said at the time, according to ETTelecom.com.

Market observers in Nigeria believed that the economic challenges in the country, including lack of access to foreign exchange for operators, fall in the Average Revenue per User (ARPU), and lack of disposable income among the citizens could also have escalated the challenges telecommunications operators are facing in the country. They called for quick economic recovery to avoid further economic losses.

Read more at The Guardian.

Sign up for the AFKInsider newsletter — the most compelling business news you need to know from Africa and the African diaspora, delivered straight to your inbox.

Tags: , , , , ,