Just when we thought competition in the Kenyan telco space would lead to the cheaper prices and better days for the consumer, things have taken a dark turn. Economic Times has reported that Sunil Mittal, Founder & Chairman of Bharti Enterprises – that owns Bharti Airtel, said that Airtel needs to exit Kenya, Rwanda and Tanzania and that Bharti Airtel is in active discussions exploring either an intra-country sale, a purchase or a merger. Apparently, such an exit would help the telco reduce leverage and boost margins in Africa.
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 dispell 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 Nigeria – a telco that has had its own share of problems. However, if Airtel was to, go through with this plan and acquire 9Mobile, Airtel 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.