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Anxiety as Airtel mulls exit, stakes offload in nonperforming African economies

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As economic downturn rages in Africa, more foreign direct investors are still reviewing their investment statuses with a view to either leave for greener pastures or sale off stakes to cover running costs.

Top in the lead of this business decision seemed to be India’s largest mobile phone operator, Bharti Airtel who is currently considering mergers or stake offloads of some of its Africa’s non performing operations with the aim of cutting debts and returning to profitability line.

Chairman Sunil Bharti Mittal said in an interview with BloombergQuint at the World Economic Forum in Davos that the moves would pare the size of operations in the continent and could be completed within a year.

He said some of Bharti’s businesses in 15 African nations, including Nigeria would be affected.

Statistics show that Airtel is even faced with an escalating price war in its home market, Bharti is looking for ways to pare net debt equivalent to about $12 billion as of September. The company has sold its Sierra Leone and Burkina Faso operations, as well as 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.

Bharti’s African unit lost $91 million in the quarter ended September, compared with a $170 million loss in the previous year.

But in working towards debt reduction, Bharti is also considering selling a stake in Bharti Infratel Ltd., its tower unit. A committee was studying whether the sale would be a minority stake or control of the tower unit and a decision could be taken in a month, Mittal said. 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.

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 was among those in discussions to buy Telenor’s India business, Mittal said.


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