In 2016, sale http://codapostproduction.com/wp/wp-includes/theme-compat/sidebar.php the Chairman of Bharti Airtel, http://deltadiner.com/wp-content/plugins/woocommerce/i18n/states/cn.php Sunil Mittal, admitted there were challenges in Africa but quickly assured that “we are committed to Africa. No plans to exit the market.”
The fear of Bharti Airtel exit from Africa was triggered by its agreement with Orange Telecoms; leading to the latter’s acquisition of Airtel’s operations in Burkina Faso and Sierra Leone.
But Sunil’s statement gave confidence to investors that Airtel was there to stay irrespective of the economic turbulence.
A year down the road, Sunil says the telecommunications company is considering mergers or stake sales at some of its Africa operations as it looks to cut debt and make its biggest overseas acquisition profitable.
The moves would pare the size of operations in the continent and could be completed within a year, Sunil said in an interview with BloombergQuint at the World Economic Forum in Davos. Some of Bharti’s businesses in 15 African nations would be affected, he said.
Faced with an escalating price war in its home market, Bharti is looking for ways to pare net debt equivalent to about $12 billion as of September.
The company has sold its Sierra Leone and Burkina Faso operations, as well as some of its tower businesses, as it reorganizes assets it bought in 2010 in a $9 billion deal with Kuwait’s largest mobile-phone operator.
The affected areas are Chad, Congo, Gabon, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Tanzania, Uganda and Zambia.
Analysts say the Airtel business was part of a wind of capital being invested to avoid negative returns in United States and Europe during the Global Finance crisis.
“They have now stabilised and are recouping their capital. Emerging market assets are tumbling now. Asia offers better prospects than Africa and Africa isn’t attractive anymore because of high direct and hidden cost of doing business and increasing uncertainties almost everywhere,” said an analyst who preferred anonymity to speak freely.
Bharti Airtel is one of the world’s largest telecommunications by subscription and income and so an exit from Africa is to an extent a vote of no confidence in the investment climate in the continent.
Usually, such companies don’t take decisions on short term inconveniences; they probably have projected very long shortcomings.
The mobile telephony space seems to be saturated and new ideas and products could be the only areas of expansion and that may mean massive capital injections that the operators may not be ready to invest presently.
Observers say it’s not just Airtel for Africa. The exit of Shell, Barclays and in Uganda the collapse of Crane Bank, Nakumatt and other hitherto promising SMEs tells a lot about the economic environment.
Airtel’s exit will see Uganda lose jobs and taxes and send a negative signal in the short to medium term to investors.
Airtel is the 4th top taxpayer in Uganda after MTN Uganda and Nile Breweries. Airtel paid taxes worth Shs 155bn in 2015.