Bharti Airtel eyes Nigeria’s 9mobile

Bharti Airtel Ltd. told analysts that it is interested in acquiring Nigeria’s 9mobile, according to Goldman Sachs.

If the Sunil Mittal-led telecom firm buys 9mobile, it will become the number one operator in Nigeria, Goldman Sachs added in the report based on an analyst meet arranged by the company.

Bharti Airtel management told analysts that its margins in Africa could improve as the company gains more revenue market share. The firm’s margins from the African business have been improving over the past few quarters and currently stands at around 32 per cent.

Goldman Sachs expects Bharti Africa’s earnings before interest, tax, depreciation and amortisation margins to be 34 per cent in financial year 2020-21.

Bharti Airtel is also looking to the fix some of its problem markets. Currently, the company ranks number one or two in 11 out of their 14 African markets, while it lags in Kenya, Tanzania and Rwanda. The company will invest at a slower pace in the laggard markets, and may even sell off its Kenya business, Goldman Sachs added.

In Kenya, Bharti will soon launch 4G to improve their positioning, but mentioned that they potentially have suitors for their Kenya business.

Goldman Sachs Report

Bharti Airtel expects annual Africa capital expenditure to stay in the range of $600-700 million, with increase in spectrum deployment potentially helping the company take care of additional capacity needs.

Bharti Airtel got nearly 65 percent of its net profit from the African market in the July-September quarter.

This came as Private equity firm Helios Investment Partners has submitted a bid to acquire Nigeria’s 9mobile under a sale process aimed at finding new investors for the debt-laden telecoms firm, one person familiar with the matter told Reuters.

Nigerian banks have picked Barclays to try to find new investors for 9mobile after banks took over the telecoms firm, formerly called Etisalat Nigeria, for defaulting on its loan.

Since the debt issue, 9mobile, the country’s fourth biggest operator, has lost subscribers. In October its total number of users had fallen to 17.1 million, giving it a 12.2 per cent market share, from 20 million subscribers with a 14 per cent share earlier this year, the telecoms regulator said.

South Africa’s MTN, the market leader has 36.1 per cent.

Nigeria’s Globacom and Bharti Airtel’s local subsidiary also submitted bids, another source familiar with the matter said. Smile Telecoms and Teleology Holdings Limited have been shortlisted, according to report.

Helios declined to comment. Globacom, Airtel, Smile and Teleology could not be reached for comment.

Bidders are required to submit a firm financial bid and conduct due diligence by Dec 31, the local paper reported.

Etisalat Nigeria took out a $1.2 billion (£0.8 billion) syndicated loan from a group of 13 local banks but struggled to make repayments this year due to a currency crisis and recession in Nigeria.

The Nigerian central bank intervened to save the company from collapse and prevent creditors from putting it into receivership, leading to a change in its board and management, as well as the new name 9mobile.

The crisis forced the telecoms company’s one-time parent Etisalat to terminate its management agreement with its Nigerian business and surrender its 45 per cent stake to a trustee following the Central Bank of Nigeria (CBN) intervention.

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