Bharti Airtel considers sale of 25% stake in Africa unit

Bharti Airtel, facing increased competitive pressures in its home market of India, is considering selling off a 25 percent stake in its African unit to raise as much as $1.5 billion.

Airtel, the largest operator in India with a 25 percent market share, stepped up plans to list Bharti Airtel International (BAIN), the holding company of its African operations, on the London Stock Exchange by early 2019, according to report by sources told The Economic Times.

Netherlands-based BAIN, which runs wireless and mobile money services in 14 countries across Africa, confirmed in February it was investigating a potential IPO of the business.

Last month Airtel reported net income of INR830 million ($12.5 million), a sharp fall from INR3.73 billion in the same quarter year prior. Revenue dropped 10.5 percent to INR196.34 billion from INR219.35 billion, which was attributed to the effect of termination rate cuts.

Airtel’s overall performance has been severely impacted since Reliance Jio entered the Indian market in September 2016. Gopal Vittal, MD, and CEO of India and South Asia suggested in the latest earnings report that “below cost, artificially suppressed pricing” was behind the poor performance.

In India, Airtel reported quarterly revenue of INR147.6 billion, a 13 percent drop year-on-year, with mobile turnover dropping 20 percent to INR103.5 billion.

In Africa, Airtel reported a small drop in revenue from INR50.5 billion in fiscal Q4 2016 to INR49.7 billion in the recent period, but on a constant currency basis, the figure grew 11 percent to $791 million, up from $715 million. Its African customer base also grew 11.5 million to 89 million in total.

For its fiscal year ending 31 March, its Africa unit reported a net income of INR18.3 billion – its first full-year profit.

The IPO confirmation followed reports in recent months questioning the future of Airtel’s operation in Africa. In December 2017, reports stated Airtel was set to exit three markets deemed unprofitable: Kenya, Rwanda, and Tanzania. While he swiftly denied the rumours, Airtel chairman Sunil Bharti Mittal admitted the company’s rushed entry into Africa in 2010 was one of the biggest regrets of his professional life.