Millicom announced a deal to sell its Rwanda business to Bharti Airtel, as the latter reiterated its commitment to a number of African markets following speculation about its plans.
“Airtel has taken proactive steps in Africa to consolidate and realign the market structure in the last few remaining countries where its operations are lagging on account of lower market share and presence of too many operators. Airtel and Tigo [Millicom’s African brand] have already merged their operations to create a strong viable entity in Ghana. Today it has taken yet another important step to acquire Tigo Rwanda to become a profitable and strong challenger in a two-player market,” Sunil Bharti Mittal, chairman of Bharti Airtel, said.
He continued: “We are also committed to the long term viability of our operations in two other countries, Kenya and Tanzania, to ensure that in 2018 all our 15 operations in Africa start contributing positive margins and cash flows towards a healthy and profitable Airtel Africa.”
The commitment to Africa comes shortly after Mittal said Airtel’s “rushed” entry into the continent was one of the biggest regrets of his career. Having acquired assets from Zain, Airtel has been unable to move them to profitability.
There had been recent speculation Airtel was looking to exit some markets, namely Rwanda, where it strengthened its hand, plus Kenya and Tanzania where it since publically iterated its backing. With Airtel looking to improve its position in Tanzania, and Tigo in a selling mood, a deal for that country must also be a possibility.
Airtel said customers in Rwanda will benefit from lower roaming rates across Africa and South Asia, and an “exciting bouquet of innovative services including Airtel Money”.
Mauricio Ramos, CEO of Millicom, said the deal is in-line with its strategy of focusing on advanced fixed and mobile data services in Latin America.
“We are very grateful to the government of Rwanda for their support throughout the last eight years, which allowed us to extend digital inclusion to thousands of Rwandans. We are also very grateful to all our employees, whose drive and commitment enabled Tigo Rwanda to become a leading provider of digital services in the country,” he said.
The payment will be based on an “approximately 6x EBITDA multiple”, payable over two years. It is subject to regulatory and statutory approvals.