Bharti Airtel raises stake in Nigerian telecom arm to 79%

Bharti Airtel Nigeria B.V., a wholly owned subsidiary of India’s largest telecom operator Bharti Airtel Ltd, has acquired an additional 13.36 per cent equity stake in Airtel Networks Ltd, Nigeria, from certain existing shareholders, for an undisclosed amount, according to a BSE filing. Post transaction, Bharti Airtel Nigeria B.V. holds 79.06 per cent stake in Airtel Networks.

Airtel Networks Ltd (formerly known as Celtel Nigeria Ltd) is the single largest African telecom asset of Bharti Airtel. It clocked revenues of Rs 6,706 crore (over a quarter of Bharti’s Africa revenues) with net loss of Rs 604 crore in FY12. This means the stake buy would be significant in value.

It became an indirect subsidiary of Bharti Airtel (with 65.7 per cent holding) as part of a multi-billion-dollar deal in which Bharti Airtel acquired the pan-African telecom assets of Zain. In 2010-11, the company took over operations in 16 countries across Africa and a year later, expanded its footprint through a greenfield launch in Rwanda. With operations in 17 countries and a subscriber base of 53.1 million as of March 2012, Airtel is the second largest among all telecom operators in Africa.

Bharti Airtel has been involved in a legal case (related to the Nigerian operations) with a minority shareholder Econet Wireless Ltd (EWL) where EWL had claimed, among others issues, a breach of its alleged pre-emption rights against Zain and Bharti Airtel.

As per the transaction to acquire 65 per cent controlling stake in Airtel Networks in 2006, Zain and EWL had a right of first refusal for further stake sale or purchase. Zain offered the shares to EWL but EWL allegedly did not meet its payment obligations as per the deadline and the deal was consummated with Celtel Nigeria B.V. (now, Bharti Airtel Nigeria B.V.) in 2006.

According to media reports from Nigeria, EWL asked for compensation of over $3 billion from Bharti Airtel.

Bharti Airtel has not disclosed who the sellers are or whether it has reached a settlement with EWL, a UK-domiciled firm which held 5 per cent stake in the Nigerian arm.

Bharti Airtel's scrip rose 0.71 per cent on the BSE and was trading at Rs 317.60 a share at 2.26 pm in a weak Mumbai market on Wednesday.

(Edited by Sanghamitra Mandal)

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