Is Airtel leaving Africa?

In the coming months, French telecommunications giant Orange may become the new owner of Bharti Airtel’s subsidiaries in four African countries as the two companies are in talks over a possible deal which may signal the beginning of an end to Airtel’s presence in Africa.

“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,” said a joint statement by the two companies released on Monday.

The announcement keeps investors and stakeholders in the African telecom market wondering whether Airtel plans to leave Africa and how big the deal will be for Orange considering its losses in East Africa.

Just last year, Orange was repeatedly reported to be considering whether to continue its operations in East Africa. In a statement by Orange’s press officer Tom Wright, “one option would be to find new partners in these countries [Kenya and Uganda] to ensure necessary financial and operating resources are available to maintain investment and support the continued development of operations. But the French telco which owns 70 percent of Telkom Kenya has not been able to sell its stake in the company. It reported in February that it has lost control over the Kenyan operation. It explained that its long-planned exit was left in the hands of the Kenyan government with which it had disagreements. Orange sold its majority stake in Orange Uganda. After the sale, the group said it marked a new step in its “asset portfolio optimisation strategy for which Africa and the Middle-East remain a strategic priority”.

Orange has always been interested in Burkina Faso
Orange has always been interested in Burkina Faso

The continued dominance of Safaricom and Airtel in the Kenyan telecom market has for years left Telkom Kenya struggling. The exit of yuMobile whose infrastructure and prefix were taken over by the two leading telcos made the market worse for Orange which is now at a distant third in the pecking order. However, recent developments suggest Airtel may be on its way out of Africa and Orange will be in pole position to grab its space in Kenya. If ongoing talks on a possible acquisition of Airtel’s subsidiaries end well, Orange would be able to leverage on it to move for Airtel’s Kenyan operations should the Indian company decide to leave Africa.

Is Airtel leaving Africa?
There is a battle Airtel will soon need to fight back at home as India’s second-biggest firm by value, Reliance Industries prepares to launch its telecom business by the end of the year. The new company Reliance Jio is bringing five years of careful planning to disrupt the market currently controlled by Airtel and Vodafone.

Already, the company have started testing LTE Services and India’s Richest man Mukesh Ambani who owns the company confirmed the launch of its 4G services by December 2015. To counter this, Bharti Airtel has planned planning branded 4G smartphones for launching by October-November. Apart from this battle, the tower sale and the possible sale of subsidiaries to Orange show Airtel may be leaving Africa for good. The operator which has been making losses since its entry into Africa intends to use proceeds from asset sales to offset part of its debt.

Although the companies noted in their joint statement that “There is no certainty of any binding agreement as a result of these discussions,” Bharti Airtel seems certain to sell. However, it is not expected to sell its subsidiary in Kenya and other markets where it is doing well.

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