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.
The Chairman, Sunil Bharti Mittal, who stated this in an interview with Bloomberg, at the World Economic Forum in Davos, Switzerland, said some of the firm’s businesses in 15 African nations would be affected.
This could result in job cuts at various levels and shrinking of businesses in countries of operations on the continent including Chad, Democratic Republic of the Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Tanzania, Uganda and Zambia.
Mittal further said that 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 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 reorganises 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 disclosed that 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 per cent 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.
Recall that this same time last year, Mittal had disclosed that the telecommunications firm, which currently enjoys 22.14 per cent market share in Nigeria and services 34.1 million customers would not exit Africa, despite the harsh economic conditions.
Mittal, according to ETTelecom.com, had noted that though, there are challenges in the region, “but we are committed to Africa. No plans to exit the market.”
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), lack of disposable incomes 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.
