Airtel to cut African workforce by 20%

BHARTI Airtel is reportedly set to reduce its headcount in Africa by between 15 per cent and 20 per cent this year, including the departure of 20 senior executives in the region.

The company is reported to be shaking up its operations in Africa in a bid to turnaround its fortunes in the continent, where it has struggled to turn a profit since entering the region in 2010, according to Economic Times of India (ET).

The move will see approximately 700 to 800 of Airtel Africa’s tower employees leaving the company over the next six months, with 20 senior executives across the group also set to depart, some after their contracts expire.

Airtel recently sold tower assets in five African countries, raising $1.3 billion, while announcing it is in the process of further divestment in six others. An Airtel spokesperson told ET many of the company’s tower employees had already moved to the acquiring entity, while others were in the process of moving as the transactions close.

As of March 1, Airtel Africa’s employee count stood at 5,130. The shake up follows Airtel’s announcement regarding talks with Orange over the sale of four of its African operations in Chad, Congo Brazzaville, Sierra Leone and Burkina Faso to “establish a sharper focus” on its other African units. Six top Airtel Africa executives have already departed Airtel Africa over the past two months, and “most of these positions aren’t being replaced”, according to an ET source.

Of the six, only two positions have been filled so far. Chief information officer George Fanthome was replaced by Andrew Kossowski and Somasekhar VG was succeeded by ex CEO of MTN Ivory Coast, Wim Vanhelleputte An Airtel spokesperson reportedly said these were not layoffs, but “based on various functional requirements, certain employees were either relocated to or hired at Airtel Africa for a specific period”.

Already, Airtel sales of its four African subsidiaries to France’s Orange SA, is expected to fetch the world’s third-largest telecommunications firm around $1 billion (Rs 6,400 crore). Airtel, which has it’s headquarter based in India, has operations in 17 African countries including Nigeria, and globally in 29 countries.

It reported a total customer base of 247 million worldwide by March 31, 2015, including 188 million mobile customers and 16 million fixed broadband customers. The firm currently has 29.5 million subscribers in Nigeria and about 17.6 million Internet users.

According to ET the Indian telecommunications firm has been making losses since its entry in 2010, which has been dragging the carrier’s consolidated financials. But sources close to the deal in India, according ET, said Airtel is looking for a valuation between $900 million and $1 billion for the sale.

The four countries in question are said to be roughly contributing about $650 million to $660 million to Airtel Africa’s top line of $4.71 billion as of Marchend. Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) for the four countries was close to $180 million in the period under review.

A statement issued by Bharti recently, said: “Orange and Airtel have entered into an exclusive agreement to explore the possible acquisition by Orange of Airtel’s subsidiaries in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone.”

However, the statement added that these were only negotiations and there was “no certainty” of any binding agreement as a result of these discussions. It didn’t provide any further details.

Africa has long been a drag on Bharti’s overall performance, often offsetting the healthy growth numbers the company registered in its Indian operations. ET informed that Airtel’s net loss in Africa for the fiscal fourth quarter of the year ended March 2015 widened to $183 million (Rs 1,155.7 crore) from $105 million (Rs 663.1 crore) a year back, hurt by forex losses.

The company’s Africa revenue had dropped by 12.6 per cent in the quarter ended March 2015 over last year to $1 billion, from $1.14 billion in the same quarter last year. The growth was limited by currency depreciation of 18.4 per cent, in reported currency terms. The company has 76.3 million subscribers in Africa that grew 9.8 per cent year on year.

Airtel had purchased Kuwait-based Zain Telecom’s African operations across 17 countries for $10.7 billion; a sum many said was hefty for the lossmaking operations. The company has been unable to turn around operations in Africa despite appointing a new Africa head, Christian De Faria, last year.