Whether or not Airtel’s decision to sell four of its African operations (Burkino Faso, Chad, Congo Brazzaville and Sierra Leone) to Orange leads to more divestment, and even an eventual exit from the continent, remains to be seen.

But, after five years of toil in the region, the Indian player is still yet to register a profit, and its performance is a far cry from what it set out to achieve when it made its multi-billion dollar entrance back in 2010.

Dobek Pater, director at research firm Africa Analysis, puts the company’s African struggles down to some of its operations which “do not make sense, with many of them so small they have little prospect of growing”.

Indeed, the company has certainly found it much more difficult to compete in Africa than it first anticipated.

“In current markets, it probably takes a mobile operator five years to realise ROI,” Pater told Mobile World Live. “Airtel has been in Africa for five years now and it’s yet to turn a profit. The intended sale is being done partly to realise a profit sooner rather than later.”

Pater says the company should look to grow its business in Nigeria, the largest market in Sub-Saharan Africa, should the sale to Orange – worth a reported $1 billion – go through.

“Airtel is in a good position there, but the market is very competitive and continued significant investments are needed to remain competitive and progress into the data era.”

International emerging markets empire
In 2010, its foray into the region seemed like a no brainer.

The company, which has been established as India’s leading operator for years, was looking to invest somewhere at the time and finally realise the ambitions of its owner Sunil Mittal, who wanted to create an “international emerging markets empire”.

Before taking on the majority of (Kuwait-based) Zain’s African assets for $10.7 billion, it twice tried and failed to acquire South Africa’s MTN.

Indeed, Airtel went into the region with high hopes, with Mittal claiming “the agreement is a landmark for the global telecoms industry and a game changer for Bharti”.

It also set itself some ambitious targets. The company wanted to increase its subscribers from 42 million to 100 million, and achieve $5 billion in revenue, up from $3.6 billion, both after three years of acquisition.

Not only did it miss these targets then, it still hasn’t got there today.

Subscribers, which stood at 78 million at the end of June, “should be higher” according to Pater, while a reported net loss of $585 million on revenues of $4.4 billion for FY14 continued to weigh down on group performance.

Airtel’s decision to sell off some of its tower infrastructure in the region is somewhat helping the situation, with the company raising $1.3 billion from sales in five markets. The move is also unlikely to lessen the company’s presence given that just about every other African operator is doing the same thing.

Over the past five years, the company has forked out an additional $5 billion investment to improve its African network, which it will need to increase to see a sustainable return, says Pater.

“African markets in particular require a lot more investment to achieve subscriber and revenue growth,” he said. “Airtel, among other MNOs, are therefore finding it more difficult to improve its financial position.”

Are Orange and Airtel working together?
Airtel moved quickly to squash any rumours that it was primed to exit Africa altogether shortly after news of its talks with Orange broke, stating: “We remain fully committed to our African operations and will continue to invest in its growth.”

The company added it wanted to “establish a sharper focus” on its remaining assets in the region as a result of the deal and, arguably, Orange is actually much better suited to take control of the four Francophone operations.

So where does this leave Airtel? Pater suggests Airtel and Orange may indeed be working on a wider agreement that could benefit both parties in the long run.

“One could theorise that Orange will divest from some of its East African markets, while Airtel divests from some of its Francophone markets, thus lessening the competition respectively.”

The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.