India’s Bharti Airtel Group Chairman Sunil Mittal has mandated the Group’s director of special projects Sarvjit S Dhillon to help in efforts to turn around its Africa operations, indicating that continued losses in the continent assumed worrying proportions, according to ETTelecom, a daily newsletter of Economic Times of India.
Dhillon, till recently the Group’s finance head, will work in tandem with Christian de Faria, who was appointed Africa Chief Executive Officer earlier this year, and both would report to Mittal, said ET quoting “people familiar with the matter.”
“With India back on the growth trajectory, Mittal has now shifted his focus towards Africa and the management wants to throw its entire weight behind African operations,” one of the people said.
Bharti’s sprawling African operations across 17 countries have been a drag on its performance since it acquired the business from Kuwait’s Zain group in 2010.
Losses in Africa widened during the quarter ended 30 June on account of higher operational expenses and foreign exchange losses.
”But the top management felt that they needed to get a heavyweight in there to add muscle to Africa,” the newsletter quoted a second person said.
De Faria, who joined from South African telecom company MTN earlier this year, was picked due to his knowledge of local conditions.
“Faria has empowered the country heads to make most of the decisions and kept only strategy and governance to himself. He has been focusing at driving data growth in the African markets,” the person said, adding that nine months was too short a time to assess Faria’s performance.
In a recent note, Credit Suisse said that Bharti Airtel, which is the parent company of the Africa business, had been suffering due to the continuing weakness in the continent’s operations, but the quarter ended 30 Sept. could be slightly better.
“Africa operations have been impacted by two consecutive weak quarters. We expect Africa operations to stabilise this quarter, but margins could remain flattish sequentially as Bharti is now spending on building its franchise,” the brokerage said.
“Reported revenues in INR (Indian Rupee exchange rates) could be slightly impacted by the 0.5% strengthening in INR vs African currencies,” it said.
An analyst at a foreign brokerage said that Bharti may even be ruing its entry into Africa, adding:
“It must be thinking if it made a mistake to get into Africa which is quite different from India. Its India models of towers and outsourcing haven’t really worked. But now it has to do everything to put its house in order.”