Airtel announced on Tuesday that it has signed an agreement to buy out Abu Dhabi Group’s Warid Telecom Uganda LLC for an undisclosed sum.
Although it is still subject to regulatory and statutory approvals; the deal is expected to help raise Airtel’s customer base in Uganda by about 60 percent.
With Airtel acquiring Warid’s business in Uganda, the company will become the second largest telecom operator in the East African country with a combined subscriber base of 7.4 million from its present 4.6 million – close to MTN’s 7.7 million customers in December 2012.
Its market share will rise to 39 percent in Uganda, with MTN holding 49 percent of the over 16 million mobile customers’ market share.
Warid is the third largest mobile provider in Uganda. Other key operators in the land-locked East African country are Uganda telecom and Orange Plc.
In 2010, Bharti had bought a majority stake in Warid’s Bangladesh telecom operations.
Speaking on the deal, Managing Director and Chief Executive Officer (international) at Bharti Airtel, Manoj Kohli, said, “This happens to be the first in-market acquisition in Bharti Airtel’s history.”
“We believe this market consolidation offers great synergies by bringing together the best of Airtel and Warid to better serve customers in Uganda and drive forward our vision of offering affordable best in-class services in Africa. This development will translate to a healthier telecom sector in Uganda which will be ready to invest & grow in wireless broadband & m-Commerce services,” said Manoj Kohli said.
In turn, Warid Uganda board member Mohammed Nahayan said the deal with Airtel would offer the company’s consumers added benefits “like wider network coverage, access to the most extensive 3G network and world class products and services.”
However, an analyst opined, “While the move could help Bharti increase its base in the country, the impact on revenue would not be much, given Uganda fetches Bharti just about three per cent of its Africa revenues.”
Bharti Airtel’s deal with Warid comes at a point when the company is trying to turn around its loss-making African operations. Telecom companies in Uganda are also facing regulatory hurdles with the country’s Parliament on the provisions to regulate phone-call tariffs and the levy telecom companies need to pay the government for setting up networks in rural areas.
With a global network that covers over 269 million subscribers, the telecoms company has operations in India, Bangladesh and Sri Lanka and 17 African countries. The company entered the African markets in June 2010 by acquiring Zain Telecom’s assets on the continent for $9 billion.