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Bharti Airtel rules out exit from Africa

By Adeyemi Adepetun
27 January 2016   |   1:54 am
THOUGH the African telecommunications market continues to experience turbulence as a result of harsh economic conditions, Indian’s telecommunications giant, Bharti Airtel, which operates in Nigeria and other African markets, has ruled out any plans of exiting the region.Chairman of Bharti Airtel, Sunil Mittal, disclosed this at the weekend.
Sunil Bharti Mittal

Sunil Bharti Mittal

THOUGH the African telecommunications market continues to experience turbulence as a result of harsh economic conditions, Indian’s telecommunications giant, Bharti Airtel, which operates in Nigeria and other African markets, has ruled out any plans of exiting the region.Chairman of Bharti Airtel, Sunil Mittal, disclosed this at the weekend.

Mittal, according to ETTelecom.com, noted that though, there are challenges in the region, “but we are committed to Africa. No plans to exit the market.”

The fear of Bharti Airtel exit from Africa came on the heels of its recent agreement with Orange Telecoms.Orange and Bharti Airtel recently signed an agreement leading to Orange’s acquisition of Airtel’s operations in Burkina Faso and Sierra Leone.

Orange acquired 100 per cent of the two companies’ share capital. The consolidated revenue of the two companies is around EUR275 million. These acquisitions are to be implemented in partnership with Orange’s subsidiaries in the Côte d’Ivoire and Senegal.

The outlay for Orange for these transactions will be based on the financials of Airtel’s two subsidiaries for the year ended March 31, 2016 and will represent the equivalent of 7.9 times Airtel’s EBITDA in these two countries at this time. The completion of these transactions remains subject to approval by the competent authorities.

Through this deal, Orange will reinforce its presence in Africa with two additional countries, adding almost 5.5 million customers to its mobile customer base. This acquisition will bring the Group’s African footprint up to 20 countries in 2016.

Besides, exiting from Burkina Faso and Sierra Leone, the fear of exit from Africa, has also been triggered by the $170 million loss it recorded in the region last year. This subsequently resulted to job losses in Nigeria and other markets in the region

In 2015, the firm, which also cancelled a deal to sell more than 3,500 towers it owns in six African countries, said the 10.1 per cent rise in net profit it had was helped by rising data usage but continued losses in Africa, sustained competitive pressure on its voice business and fall in interconnect and roaming charges continued to drag.

The firm disclosed that Africa net loss widened to $170 million from $124 million in 2014, adding that its overall net interest costs rose to Rs 1,053 crore from Rs 687 crore a year earlier.

Mittal, while explaining further, said portfolio restructuring is common to business devlopments, stressing that the two countries acquired by Orange were actually Francophone countries.

“We are leaving the two countries because we think they may not really be profitable for use in the future. The markets are small and we feel they may not yield future prospects”, he stated.

Bharti Airtel operates in 20 countries across South Asia, Africa, and the Channel Islands. Airtel provides GSM, 3G and 4G LTE mobile services, fixed line broadband and voice services depending upon the country of operation. It is the largest mobile network operator in India and the third largest in the world with 325 million subscribers.

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