Shareholders have cheered Bharti Airtel's talks with Paris-based Orange SA to sell four of its telecom operations in Africa. The stock surged to a six-year high Tuesday — climbing 5 percent in morning trading — before settling to 3.62 percent at 4 pm. Bharti Airtel stock has risen 28 percent in 2015, beating the BSE Sensex that advanced 3.5 percent in the same period.
Airtel, which operates in 17 African countries, had paid $9 billion to buy these operations — located in Burkina Faso, Chad, Republic of Congo and Sierra Leone — from Kuwait-based Zain in 2010. Five years down, they continue to be a drag on Airtel's profits and on Monday, the company said that it was exploring selling them.
Orange might pay between $680 million to $1.4 billion, according to a note by Bank of America Merrill Lynch. Earlier this month, Airtel, controlled by billionaire Sunil Mittal, sold its phone-tower operating business in five African countries for more than $1.3 billion.
Such deals will help the company pare its massive debt that stands at $10.5 billion this fiscal that includes the huge amount it paid in the spectrum auctions earlier this year.
The company's Africa operations were also hit by adverse macro conditions and it has struggled to turn a profit in the region, since it acquired Zain's loss-making assets five years ago. If the sale to Orange goes through, Airtel's stock might be up for a better rating. For Orange, it would be an opportunity to expand in Africa, where it currently operates in 19 markets.
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