Telecom firm Bharti Airtel plans annual capital expenditure of $1 billion in Africa in the next few years and will focus on deepening investments in 17 countries there rather than entering new markets, its chairman said.
"We have made massive investments in 17 countries and we spend capital expenditures every year in excess of $1 billion. $1 billion is the plan," Sunil Mittal told Reuters on Thursday.
Bharti entered Africa in 2010 with the $9-billion acquisition of Kuwaiti telecoms group Zain's operations on the continent. Mittal said Africa represents one-third of Bharti's business.
The firm is comfortable with debt levels of 2.5-2.6 times EBITDA (earnings before interest, tax, depreciation and amortisation) and is weighing options for the sale, leaseback or sharing of its African transmission towers, Mr Mittal said on the sidelines of the World Economic Forum in Abuja, Nigeria.
Bharti faces intense competition from South Africa's MTN, which has sold some of its towers, as well as from privately-held Nigerian Globalcom and from Etisalat, which is based in the United Arab Emirates.
Mobile penetration in Africa is relatively low and a prime attraction for tower companies is to build new towers to reach the significant part of the continent's populace that does not yet own a phone and meet subscriber demand.
"The interconnect regime is changing in many places and in Nigeria also, and when interconnection rates change, revenues drop because the total amount of top line goes down," said Mr Mittal, who is also the chairman and CEO of parent company Bharti Enterprises.
Interconnection rates are the charges for calling from one network to another.
Mr Mittal further said that revenue from Africa stood at $4.4 billion in 2013, below the company's $5 billion projection.
Copyright @ Thomson Reuters 2014
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
