Bharti Airtel, the parent company of Airtel Africa has finally announced its in the process of exiting three African countries over sustained losses.
The telecom giant says it is exiting Kenya, Rwanda and Tanzania markets over sustained losses over the years hence depressing its income from the continent.
In an interview with Indian Publication Economic Times, the telco’s chairman said the three East African markets have been dragging down its Africa operations.
Chairman Sunil Mittal says Bharti Airtel needs to exit these three African markets, and is in active discussions to explore a mix of an intra-country sale, a purchase or a merger.
“Such asset sales could help Bharti reduce leverage further and potentially help expand margins,” said brokerage Goldman Sachs, adding that “the three countries where Bharti is looking for exits/M&A options have margins significantly lower vs the current Africa average”. Goldman Sach’s was quoted by the Economic Times of India.
Particularly in Kenya, things have not been good for Airtel given that the telco business is largely dominated by Safaricom.
In its Full Year report, Bharti Airtel revealed that its Kenyan business posted a loss of Ksh 8.1 billion as of December 2016 with current liabilities standing at Ksh 55.3 billion against assets worth Ksh 9.7 billion. Ideally, the business is deeply in a negative position. Its total debt load during the period grew to Ksh 44.3 billion ($429.62M).
In the same period, Airtel’s East Africa business that includes Kenya, Tanzania & Rwanda posted a combined loss of Ksh19 billion ($181.2 million). The Ugandan [ Airtel Uganda ]subsidiary is the only one that posted a profit of Sh4.5 billion ($44.9 million) over the period.
In the quarter ended September 2017, Bharti Airtel announced a profit of $48 million in Africa from a loss of $91 million in a similar period in 2016.
According to analysts, although the Africa operation has historically been a drag on Bharti Airtel, over the past 3-4 years, the Sunil Mittal-led telco has divested $3.3 billion worth of assets, “which has helped reduce Africa debt levels by as much as 40%”
In fact, a combination of debt reduction and improving Ebitda margins, they said, helped Airtel’s Africa business turn net profit positive in the first quarter of FY18. In September quarter, the telco reported a profit of $48 million in Africa compared with a loss of $91 million a year ago, helped by growth in data customers and consumption, and stringent cost controls.