Bharti Airtel in talks to sell four African subsidiaries to Orange

Airtel Kenya parent company Bharti Airtel is in talks to sell four of its African subsidiaries to France-based telecom operator Orange.

The Indian biggest cellphone carrier that operates in 17 countries in Africa is looking to sell its operations in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone, all Francophone countries, or non-English speaking markets in Africa, a continent where it has been making losses since its entry in 2010, dragging its consolidated financials. Sources say Airtel is looking for a valuation between $900 million (Sh91.8 billion) and $1 billion (Sh102 billion) for the sale.

The four countries in question roughly contributed about $650 to 660 million to Airtel Africa’s top line of $4.71 billion as of end of March. Earnings before interest, taxes, depreciation & amortisation (EBITDA) for the four countries was close to $180 million in the period.

“Orange and Airtel have entered into an exclusive agreement to explore the possible acquisition by Orange of Airtel’s subsidiaries in Burkina Faso, Chad, Congo Brazzaville and Sierra Leone,” a statement issued by Bharti said late on Monday.

However, the statement added these were only negotiations and there was ‘no certainty’ of any binding agreement as a result of these discussions. It didn’t provide any further details.

The firm also said it has no plans to exit Africa despite announcing exclusive talks with France’s Orange to sell the four units in the continent.

Orange said on Monday it was in discussions to buy Bharti subsidiaries, triggering market speculation that this might be a first step towards a complete Bharti exit.

Sharper focus

But the Indian group said yesterday that the operations put on the block represented a relatively small percentage of its overall Africa business. A sale, it said, would help it ‘establish a sharper focus’ on the remaining countries.

“We remain fully committed to our Africa operations and will continue to invest in its growth and building a profitable business and accordingly have no plan to exit,” the company said in a statement, in response to a query from Reuters.

Africa has long been a drag on Bharti’s overall performance, often offsetting the healthy growth numbers the company registered in its Indian operations. Airtel’s net loss in Africa for the fiscal fourth quarter of the year ended March 2015 widened to $183 million from $105 million a year back, hurt by forex losses.

The company’s Africa revenue had dropped by 12.6 per cent in the quarter ended March 2015 over last year to $1 billion, from $1.14 billion in the same quarter last year.

The growth of the carrier was limited by currency depreciation of 18.4 per cent, in reported currency terms.