Bharti Airtel Africa: Two done, more to follow?

Post was last updated: January 13, 2016

In line with its strategy to focus on key Africa businesses, Bharti Airtel’s sold its Burkina Faso and Sierra Leone businesses which have a combined revenues of euro 275 million, to Orange of France.

The sale is part of the ongoing negotiations initiated in July last year and does not include two other countries which were part of the earlier talks–Chad and Congo Brazzaville–as agreements regarding the potential sale of the two countries have lapsed.

While the deal value was not disclosed, given that it is done at 7.9 times expected operating profit for the two countries in FY16, Bharti would get about $700-750 million.

Analysts estimate the total sale proceeds of the four countries to be around $1.2 billion. The four countries fetch revenue of about 15-16 per cent of the consolidated African business with Bharti being the largest player in Burkina Faso and number two in the other three.

The deleveraging exercise should help it to pay down part of the $10.8 billion debt.

Analysts at Phillip Capital in a recent report have said that the intention of selling some of its most profitable African assets is a signal that it is ready to exit its Africa business. The company denies the move to exit Africa operations which account for about 26 per cent of the consolidated revenues.

The performance of Bharti’s African operations have been below par due to a slowdown brought on by falling commodity prices and weak currencies.

While the company has been looking at reducing its leverage by selling tower assets in Africa earlier, analysts at Edelweiss Securities say that a substantial deleveraging in the Africa business will be key for a rerating of the stock. So far, the company has concluded the sale of 9,000 towers worth $1.8 billion, with sale of another 3,500 towers pending which could fetch about $600 million. – Business Standard (India)

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