Bharti Airtel is mulling over closing shop in three East African countries, Kenya included.
India’s Economic Times (ET) reported that Sunil Mittal, Founder and Chairman of Bharti Enterprises – that owns Bharti Airtel, said Airtel needs to exit Kenya, Rwanda and Tanzania markets in a bid to boost its margins in Africa.
ET divulged that Bharti Airtel is in active discussions exploring either an intra-country sale, a purchase or a merger.
“The prospect of Bharti Airtel exiting Kenya, Rwanda and Tanzania and also monetising more tower assets in five non-profitable markets would help the Sunil Mittal-led telco reduce leverage and boost margins in Africa,” analysts told ET.
Goldman Sachs, an investment banking company, said that Kenya, Rwanda and Tanzania have margins that are significantly lower than the current average of Airtel’s Africa business.
At the beginning of this year, rumors of Airtel’s exit from Africa surfaced and Bharti Airtel was quick to dispel these rumors citing that the company’s positive Q3 2016 results and 4G rollout plan across different African countries were a sign of the company’s commitment to the African market.
In Kenya, Airtel has had a bumpy ride with reports pointing to the company has an outstanding Ksh.45 billion debt. The Telco has an 18.1% market share in Kenya (6.3 million subscribers), 26% market share in Tanzania that translates to about 1.7 million subscribers and 1.596 million users in Rwanda which is 15% of the market.
Aside from an exit in these three East African countries, Mr. Mittal also said that Bharti Airtel is interested in Nigeria’s 9Mobile, formerly Etisalat. Better though, if Airtel was to go through with this plan and acquire 9Mobile, it would become Nigeria’s largest telco by subscribers with 37% market share ahead of the current leader, MTN, who has 36%.
Bharti Airtel’s mull over these exits could be as a result of the hard times that have hit the company. According to the company’s Q1FY18 results, the New Delhi-based telco has suffered a 75% drop in profits in India alone.
In 2015, Airtel threatened to end its operations in Kenya over what it termed as un-competitive business environment.
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Adapted from Techweez