Airtel recently refuted claims of leaving three East African markets which included Kenya, Tanzania and Rwanda. It instead emphasised looking at possibilities of a merger or an acquisition in order to position itself as the number one or two brand in the respective countries where it has operations. It has since delivered on this and as of this writing, Bharti Airtel has announced its acquisition of a 100% equity stake in Millicom International Cellular SA’s Tigo brand in Rwanda.
The consideration for the transaction is based on approximately 6x EBITDA multiple, payable over two years, said Airtel.This acquisition positions Airtel has the number two brand in Rwanda but is subjected to both regulatory and statutory approval.
“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 Bharti Airtel’s Chairman, Sunil Mittal.
Airtel has had previous acquisitions not far from Rwanda where it took over Warid operations in both Uganda and Congo Brazzaville, It also acquired Yu Mobile in Kenya. It recently consolidated its operations in Ghana after merging with Tigo. This reinstates its earlier claim where it brought to attention the above acquisitions as proof that it wasn’t leaving Rwanda and neither was it leaving Kenya or Tanzania.
“We are also committed to the long term viability of our operations in two other countries that is 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,” added Mittal.
The transaction which is expected to be closed in two years will see both the customer and network side of the two telecoms integrated under one Airtel brand as was the case here in Uganda.
In Uganda, the gains Airtel made with the Warid acquisition have somewhat brought it to the same levelling field with MTN, with Airtel becoming the undisputed number two fast charging towards MTN as competition steers on. A similar scenario should be expected in Rwanda where MTN is the current market leader.
