KOLKATA: Bharti Airtel and Millicom International Cellular have entered into an agreement to merge their respective units in Ghana to create the second-largest mobile carrier in the African country.
Under the terms of the agreement, “Airtel and Millicom will have equal ownership and governance rights in the combined entity,” both companies said in a joint statement on Friday.
The transaction, they said, is “subject to obtaining approvals from the relevant Ghana authorities and satisfaction of customary closing conditions”.
The Airtel-Millicom combined entity will replace Vodafone to become a strong No 2 operator with nearly 10 million customers (including 5.6 million data users) in the fiercely competitive Ghana mobile turf, behind South Africa’s MTN, the market leader. The combined revenue of the merged entity will be at nearly $300 million.
Ghana, with a population of around 30 million, is a relatively big market in Africa and among Airtel’s top markets after Nigeria. Airtel Ghana contributes 6-7% to Bharti’s overall Africa revenue, which stood at $919 million in the fiscal third quarter to December.
the Airtel-Millicom merger deal talks in its edition dated January 23.
Bharti Airtel, however, declined to reveal the deal contours. The company’s scrip was marginally down 0.22%, closing at Rs 355.6 on the BSE on Friday.
The combination of Airtel Ghana and Millicom-owned Tigo Ghana, will deliver high-speed data services to over 80% of Ghana’s population, providing the widest 3G coverage in the country, the companies said.
“The coming together of the two entities will benefit customers and strengthen the combined entity’s position in the Ghana market, and also offer huge benefits arising out of synergies in operations,” Raghunath Mandava, managing director of Airtel Africa, said in an official statement.
Millicom Africa’s Executive Vice-President Mohamed Dabbour, in turn, said the Tigo-Airtel combination would create an operator that will “offer Ghanaian consumers and businesses a state-of-the-art network with high-speed
mobile data coverage”. At present, Millicom operates under the brand of Tigo in five African markets, including Ghana.
Bharti Airtel Chairman Sunil Bharti Mittal had previously said that the telco is considering mergers or stake sales of some its African assets, especially where it’s not in the top two positions, in an attempt to cut its $12 billion debt pile and turn the operations profitable.
Turning around Africa is all the more critical as Airtel is faced with severe financial pressures in its largest market of India where it is in the midst of a brutal price war unleashed by the entry of Reliance Jo Infocomm, owned by the country’s richest man, Mukesh Ambani.
Besides exploring consolidation possibilities in Africa where it has already sold most of its towers and operations in Burkina Faso and Sierra Leone to France’s Orange Telecom, Airtel is also looking to raise funds by selling stake in its tower unit, Bharti Infratel, and via a bond issue.
Airtel operates in 15 African markets, and has over 78 million of its overall 347 million subscribers in the continent. The company’s Africa net loss widened to $93 million in the December quarter from $74 million a year ago, dragged down by a mix of finance costs, taxes, depreciation & amortisation (D&A) charges and devaluation of the Nigerian currency, although underlying revenue was the highest in the last nine quarters