Airtel to sell Africa Stakes to Reduce Debt
Bharti Airtel is considering selling its stakes in some African countries so as to reduce debt and stay afloat. The giant mobile operator is looking to exit some Africa operations after struggling for quite some time. Airtel Africa’s annual reports, since its entry into the African market, show that the company has not been doing well. The process would be completed in a year.
In an interview with Bloomberg, the company chairman, Sunil Bharti Mittal, confirmed operations in Africa had not been as successful as he had hoped and that more initiatives would be taken to stabilize its operations in Africa. He also ruled out any plans to exit the African market.
The company has faced stiff competition in different African markets. The stakes are being sold so as to offset debt believed to be about $12 billion. Airtel African revenue figures have not been impressive as the parent company initially anticipated. In a bid to offset its huge debt, the company has sold the tower assets which helped the firm reduce its debt to $91 million.
This company operates in 15 African countries and some of these operations will be affected by the move, not all. Airtel’s countries of operations are Kenya, Rwanda, Chad, DRC, Ghana, Gabon, Malawi, Madagascar, Niger, Republic of Congo, Nigeria, Seychelles, Tanzania, Uganda, and Zambia. Airtel Africa strategy to claim the African market has not been as rewarding and sustainable. This does not come as a shocker since in 2015; Airtel Africa sold its operations in Burkina Faso and Sierra Leone to France’s Orange after incurring losses.
It is yet to be confirmed the specific countries that will be affected by the sale. It is, therefore, unclear whether Airtel Kenya will be affected or not. Headlines reading “Airtel Exits Africa” are a bit misleading since the company will continue operations in selected African nations and its chairman has refuted complete exit claims.
Of course, such Airtel Africa news hints at job cuts. Already, the company has let go of almost half of its staff in Kenya. Adil El Youssefi, Airtel’s CEO, admitted that the Kenyan telecommunications market has been hard to crack owing to the stiff competition. Youssefi made this admission three years ago when he took office as the CEO.
In 2015, the company had threatened to leave the Kenya market due to what it termed as ‘Safaricom dominance’. Addressing this issue, Youssefi said that new regulations needed to be passed to curb Safaricom’s dominance in the market. In response to this, the Kenyan Communications Authority (CA) said that it would have to conduct a study to determine whether Safaricom had abused its dominance status. Nevertheless, the CA said that it needed at least one-and-a-half years to complete this study. The authority stated that the results would show the thresholds that determine whether there is an abuse of dominance.
The company has also taken issue with the issuance of a 4G license to Safaricom arguing that giving one company the license would restrict customers to that company. Youssefi alleges that the license was issued without a proper agreement with other players. Communications Authority has, however, stated that Safaricom will be issued with the license with the condition that it shares the spectrum with other service providers. On its part, Safaricom has stated that it is willing to share its 4G spectrum with other telecoms on commercial terms.
Airtel’s operations in Africa have not been easy due to the stiff competition it faces from other key players. Whether or not Airtel will eventually exit the African market remains unknown. In the meantime, Bharti Airtel operations in Africa are still on.