Airtel Plans Sale of Subsidiaries’ to Boost Nigerian Operations

Bharti Airtel has commenced final talks to sell four of its African subsidiaries to France’s Orange SA for $1bn (N197bn) in order to consolidate its stake in Nigeria.

After the sale, which should be completed before the end of this year, the company plans to plough about $700m (N138bn) – more than one-third of the funds – back into its investments in Nigeria.

The decision to sell the four subsidiaries in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone, our correspondent learnt on Wednesday, had to do with the company’s inability to become the dominant operator since its entry into Nigeria in 2010.

It was gathered that this had been dragging the carrier’s consolidated financials, which had kept it at a distant third behind MTN and Globacom.

“Bharti Airtel is looking to sell its operations in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone,” an employee in the Corporate Communications Department of Airtel Nigeria confided in our correspondent.

The Airtel employee, who said he was not officially authorised to speak to journalists, said the four countries in question roughly contributed between $650m (N128.02bn) and $660m (N130bn) to Airtel Africa’s top line of $4.71bn (N927.63bn) as of the end of March this year.

“Earnings before interest, taxes, depreciation and amortisation for the four countries were close to $180m (N35bn) in the period under review,” he said.

Bharti Airtel confirmed the deal in a statement, “Orange and Airtel have entered into an exclusive agreement to explore the acquisition by Orange of Airtel’s subsidiaries in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone.

“Africa has long been a drag on Bharti’s overall performance, often offsetting the healthy growth numbers the company registered in its Indian operations.”

Bharti Airtel is the world’s third-largest telecoms firm and has operations in 17 African countries.

With operations in 29 countries, it reported a total customer base of 247 million worldwide as of 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.

ETTelecom.com stated that Airtel’s net loss in Africa for the fiscal fourth quarter of the year ended March 2015 widened to $183m (N36.04bn) from $105m (N20.68bn) a year back, hurt by foreign exchange losses.

It stated that the company’s Africa revenue had dropped by 12.6 per cent in the quarter ended March 2015 to $1bn over the previous year’s $1.14bn.

According to ETTelecom.com, 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 by 9.8 per cent year-on-year.

Bharti Airtel had purchased Kuwait-based Zain Telecom’s African operations across 17 countries for $10.7bn; a sum industry players said was hefty for the loss-making operations.

The company has been unable to turn around operations in Africa despite appointing a new head, Christian De Faria, last year.

Bharti Airtel in February had denied talks with Orange over any potential sale. Orange, formerly known as France Telecom, recorded revenue of €39bn in 2014.

With operations 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, with sources saying that Orange would be more interested in the Francophone operations of Bharti, and not the East African subsidiaries.