Bharti Airtel may merge operations in six African markets
Controls 22% market share, services 34.8 million subscribers in Nigeria
Bharti Airtel is believed to have identified six non-profitable African markets for consolidation to reduce losses and clear headroom for the Sunil Mittal-led mobile carrier to deal with financial stress in India amid a brutal price war unleashed by competitions.
According to the Economic Times (ET) of India, the world’s third-largest telecoms operator by subscribers isn’t looking to exit Africa but is exploring stake reduction or merger opportunities in Rwanda, Niger, Chad, Congo Brazzaville, Kenya and Tanzania.
The Guardian checks showed the Indian telecoms giant currently controls 22 per cent market share in Nigeria and services 34.8 million subscribers.
Analysts estimate the six markets collectively generate 26-28 per cent of Airtel’s Africa revenue. Nigeria, Ghana, Uganda, Zambia, and Seychelles are reckoned to be the profitable markets for the telco.
While no exclusive talks are currently on, one of the potential partners for Airtel could be France’s Orange SA, which had last year bought the Indian telco’s operations in Burkina Faso, and Sierra Leone. An Orange SA spokeswoman told ET the company “does not comment on market rumours,” adding that the French telecom carrier’s “current strategy is focused on consolidation.”
In an emailed statement, Airtel said it has no plans to exit any of the 15 countries it operates in Africa, but added that it is open to consolidation in some, where it is on a weak footing.
“We remain positive on Africa and are witnessing a steady growth in our operations. We have all the building blocks in place for the next phase of growth,” led by increasing data adoption, a company spokesperson said. She added, “We have always maintained that in a few countries, where the business model is not sustainable due to hyper-competition, we will look at engaging actively with other players in those markets to create a viable business case through in-country consolidations.”
In January, Bharti Airtel Chairman, Mittal said the telco is considering mergers or stake sales of some of its African assets within a year as part of a rationalisation exercise, especially where it’s not in top two positions, in an attempt to cut its mammoth $14.3 billion debt and turn operations profitable.
One of the people in the know of Airtel’s Africa move said the consolidation model could see Airtel becoming “a minority shareholder in the combined entity in a particular African market,” much along the lines of the company’s strategy in Bangladesh.
Last year, Airtel merged its unit in Bangladesh with Robi Axiata – the new entity, in which the Indian telco now owns a minority stake, forming a strong number two operator.
Earlier this year, Airtel and Millicom International Cellular also inked a pact to merge their respective units in Ghana to create the second-largest mobile carrier in the country.
The second person in the know of the move said that while there could be other potential partners, Orange is known to be a long-term Africa-focused player. “Orange is the only aggressive consolidator in the market. It would surely be open to further expanding its Africa presence in the francophone markets and in those that are contiguous with its existing footprint, provided it gets attractive valuations,” the person said.
Airtel’s Africa revenues for the nine-month period ended December 2016 stood at roughly $2.75 billion.The net loss in Africa, which the company entered in 2010, widened to $93 million in the December quarter from $74 million a year ago, on revenue of $919 million.
No Comments yet