Telecom

Reasons behind Airtel exit from Ghana for good

Despite the fact that Ghana’s telecom industry is the third vibrant and successful industry in Sub Saharan Africa, Airtel Ghana’s exit from Ghana, reports say is due to a decision by the India Company to focus on particular markets on the continent.

Joy Business also learnt that the issue about financial performance is also another area of concern as expenses keep rising, creating high cost-to-income ratio.

Airtel Africa posted an 8.8% year-on-year drop in net profit to $88 million in the quarter ended September 2020 due to higher expenses.  The company had earlier reported a net profit of $57 million in the first half of the year.

Chunk of the company’s income came from Nigeria where it is the second largest mobile service provider.

Bharti Airtel today announced in a statement that it will sell 100% shares of its Ghana business for $25 million to the Ghana government, which will acquire customers, assets and agreed liabilities.

The transfer of shares was approved by Bharti Airtel’s board on Tuesday, which also cleared consolidated financial results for July-September.

A letter sent to the National Stock Exchange of India and signed by Deputy Company Secretary and Compliance Officerm Rohit Krishan Puri, said the Government of Ghana and AirtelTigo are in advance stages of conclusion of the agreement for transfer of the latter as a going concern.

So, the question many analysts, market watchers and consumers will be asking is, what will be the business strategy going forward with the exit of Airtel Ghana, or will the Ghana government resell its stake after acquiring the 100% shares of Airtel Ghana.

Also with the imminent exit of Airtel, what will be the new brand name for the company when the Government of Ghana takes over the assets and liabilities of the telecom firm.

Airtel Ghana merged with Tigo to become AirtelTigo in Ghana in 2017.

Meanwhile, Airtel is voluntarily taking an impairment charge of ₹1,841 million( ₹184 crore).

Quarter 3 financial results

Airtel Africa posted an 8.8% year-on-year drop in net profit to $88 million in the quarter ended September due to higher expenses.

The company had reported a net profit of $57 million in the quarter ended June.

The telco’s revenue grew 14.3% on a reported basis and 19.6% in constant currency, at $965 million, driven by customer base growth of 12%, both in Quarter 2 FY21 and half-year ended September, and average revenue per user (Arpu) growth of 6.8% in constant currency in July-September.

In August, Airtel Networks Kenya Ltd, a subsidiary of Bharti Airtel’s Africa unit, called off the merger with Telkom Kenya Ltd citing challenges to secure regulatory approvals for the deal.

Airtel in February 2019 had said its Kenya unit agreed to acquire Telkom Kenya, the East African nation’s smallest telecom operator, in which the state still has a 40% shareholding, after a majority stake was sold in 2007.

Airtel Africa is the holding firm for Bharti Airtel’s operations in 14 countries, with Nigeria alone accounting for almost half of its earnings before interest, tax, depreciation and amortisation.