Bharti Airtel has entered into a definitive agreement with Millicom International Cellular under which Airtel Rwanda Limited will acquire 100% equity interest in Tigo Rwanda Limited, thus consolidating the Rwandan telecom market by putting Airtel has a strong No 2 operator in Rwanda.
The consideration for the transaction is based on approximately 6x EBITDA multiple, payable over two years, the carrier said in a statement on Tuesday. The agreement is subject to regulatory and statutory approvals.
"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 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 a strong challenger in a two-player market," said Sunil Bharti Mittal, Chairman, Bharti Airtel.
The move comes within days of Mittal admitting that it’s Africa investment was ’a bit rushed’ and should have been done with a little more due diligence.
Over the years Airtel has been solidifying its market position to become a key player in the continent with in-country acquisitions. In the past, Airtel acquired assets in Uganda (Warid) and Congo B (Warid), Kenya (yu Mobile) and consolidated operations in Ghana (Millicom). In a recent interview with ET, Mittal said that the company would look at consolidation in countries like Kenya, Rwanda and Tanzania through mergers, acquisitions or both, even as the overall Africa business was turning a corner.
"We are also committed to the long term viability of our operations in two other countries i.e. 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," Mittal added.
Under the agreement, customers of a Airtel and Millicom in Rwanda, will benefit from a wider network, affordable voice and data services, and superior customer care.
The existing customers of Tigo Rwanda will join Airtel’s global network, which currently serves over 370 million customers across 17 countries.
Raghunath Mandava, MD and CEO, Airtel Africa, said, "The acquisition reinforces our commitment to the Rwanda market and is a significant step towards creating a stronger presence in the country. It will create synergies with our existing business and help boost operational efficiencies in the market."
On completion, the proposed acquisition will undergo seamless integration, both on the customer as well as the network side, and further strengthen our market position, he added.
In the quarter ended September, Airtel Africa reported a 2.8% increase in revenue to $782 million, where the operating profit margins improved by 9% on-year for the quarter. The region reported a profit of $48 million as opposed to a loss of $91 million in the same quarter a year before. At the end of September, it had total debt of Rs 91,480 crore.