Bharti makes acquisition in Seychelles

Indian telecom company Bharti buys Telecom Seychelles, marking the 16th African country in its global footprint.

India's Bharti Airtel is set to buy Telecom Seychelles for $62 million, in the same week as it posted quarterly results.

Bharti, India's biggest mobile phone company, is already an established player in Africa. Earlier this year, it paid $10.7 billion for Zain Africa and, given the size of the deal, worked with a host of banks: Standard Chartered as lead adviser; Barclays Capital as joint lead adviser; State Bank of India as lead onshore adviser; and Kuwait-based firm, Global Investment House KSCC as regional financial adviser.

The Seychelles acquisition takes Bharti’s Africa footprint to a total of 16 countries. Bharti did not have an adviser on the Telecom Seychelles deal.

Telecom Seychelles began operations in 1998 by launching mobile services. Today, it offers 3G mobile and integrated wireline services across the Seychelles under the Airtel brand and has a 57% share of the mobile market. 

“Telecom Seychelles has world-class operations that include state-of-the-art 3G services,” said Manoj Kohli, chief executive officer and joint managing director, who is in charge of international operations at Bharti Airtel, in a written statement. “These operations will benefit further by leveraging the efficiencies of scale of our African operations.”     

Bharti moved Kohli to Nairobi after it closed the Zain deal as it sought to put one of its most experienced managers to work to create value out of the Zain acquisition. At a recent media briefing, Kohli said Bharti has a plan to invest $150 million in Kenya with a view to growing its rural footprint. Bharti has a low cost/high volume business model in India and hopes to replicate the model in Kenya by increasing both tele-density and talk time.

Meanwhile, Bharti declared results for the first quarter of the current financial year earlier this week. The domestic business performed better than most analysts had predicted leading one analyst to comment: “Bharti’s wireless business is back on the growth path as evident in robust volume growth,” however analysts remained cautious on the telecommunications sector as a whole. This is in part because mobile number portability is due to be launched in India shortly, which will affect established and large players the most.

Bharti included 23 days of earnings for Zain along with its results, prompting Citi to comment: “Zain still the swing factor”. Citi went on to say that Zain had lost ground due to funding constraints, which creates an opportunity for Bharti to recapture share, however “physical limitations of rolling-out network in Africa may pose challenges to expand network capacity and enter rural areas”. Citi has a hold recommendation on Bharti.

¬ Haymarket Media Limited. All rights reserved.
Share our publication on social media
Share our publication on social media