Bharti Air­tel forced to cut back on debt

The Star Early Edition - - BUSINESS REPORT - Sid­dharth Philip

BHARTI Air­tel, In­dia’s largest cell­phone op­er­a­tor, 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 on the con­ti­nent and could be com­pleted within a year, chair­per­son Su­nil Bharti Mit­tal 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 its net-debt equiv­a­lent to about $12 bil­lion (R163bn) as of Septem­ber.

The com­pany has sold its Sierra Leone and Burk­ina Faso op­er­a­tions, as well as some of its tower busi­nesses, as it re­or­gan­ises as­sets it bought in 2010 in a $9bn deal with Kuwait’s largest cell­phone op­er­a­tor. Bharti’s African unit lost $91mil­lion in the quar­ter ended Septem­ber, com­pared with a $170m loss the pre­vi­ous year.

Op­tions

As part of the debt re­duc­tion, Bharti is also con­sid­er­ing sell­ing a stake in Bharti In­fratel, its tower unit. A com­mit­tee was study­ing whether the sale would be a mi­nor­ity stake or con­trol of the tower unit and a de­ci­sion could be taken in a month, Mit­tal said. In Oc­to­ber Bharti said, in a stock ex­change fil­ing, that it had formed a com­mit­tee to eval­u­ate op­tions for its 73.5 per­cent stake in Bharti In­fratel. Mit­tal’s moves come partly in re­sponse to the en­try of In­dia’s rich­est man Mukesh Am­bani into In­dia’s wire­less telecom­mu­ni­ca­tions mar­ket last year.

Am­bani stormed into what was al­ready one of the most bru­tally com­pet­i­tive tele­com mar­kets with an of­fer of free voice ser­vices for­ever, and free data ser­vices for a lim­ited time. This will prob­a­bly force the exit of the smaller play­ers. – Bloomberg

FILE PHOTO: REUTERS

The Bharti Air­tel of­fice build­ing in Gur­gaon, on the out­skirts of New Delhi. A price war in its home mar­ket is com­pelling it to trim debt in its Africa op­er­a­tions.

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