NEW DELHI: Bharti Airtel Ltd plans to raise its stake in Airtel Africa Plc to as much as 90% over the coming years, chairman Sunil Bharti Mittal said on Thursday, outlining a long-term capital allocation and ownership roadmap as he prepares for a generational transition within the group.
The comments came a day after Bharti Airtel announced a ₹28,200 crore share-swap deal to acquire promoter-group entity Indian Continent Investment Ltd’s (ICIL) 16.3% stake in Airtel Africa. In exchange, Airtel will issue about 146.7 million shares, representing a 2.4% stake in Bharti Airtel. The transaction will increase Airtel’s holding in the Africa business to 79%.
“We will probably in the next several years get to that point of owning more of Africa so that we can get more income flowing back to the mothership Bharti Airtel and reward our shareholders even more,” Mittal said during the company’s earnings call.
Succession planning
Mittal, who turns 70 soon, also spoke about preparing for leadership transition and handing over the reins to the next generation over the next 10 years.
On 26 February, he had said the next generation of the Mittal family was “building muscle in different forms and shapes” by running independent businesses outside the group structure. Calling it a “unique experiment” unlike other Indian promoter entities, he said family members were learning to manage businesses independently while experiencing “their failures and successes” and “pain points of businesses”.
Mittal reiterated that promoter entity Bharti Telecom should remain the single controlling shareholder of the company. “My own wish is that in the next…decade as I kind of come to a point where I hand over the reins to the next generation as shareholders, Bharti Telecom should get back to controlling shareholding of 51% or just over 50%. So that's 10% more to go".
On Wednesday, Mittal was re-appointed chairman of Bharti Airtel for five years. Bharti Telecom currently holds a 40.5% stake in Airtel. Singapore telecom operator Singtel owns 20% in Bharti Telecom, and the Bharti Group holds another 20.46%.
Singtel, through Pastel Ltd, also owns a 7.5% direct stake in Bharti Airtel, while Mittal-led promoter entity Indian Continent Investment owns 0.9%, according to BSE shareholding data for March.
“So, the principal direction or vision that I carry in my mind is all shares that we can (acquire) from both Indian Continent Investment, our Bharti family entities, and Singtel should go into Bharti telecom as much as possible," he said.
He said the “belief remains that you must have everything through one company that should be the controlling promoting shareholder”.
He said dividends and future buybacks over the years would give Bharti Telecom the financial capacity to raise its stake in the company over time.
“Singtel had a difference of about 7% or rather has 7% direct stake in Airtel and it had about 6% to equalize. Now with this (share swap) transaction, once this is done and share that issued, this gap comes down to 3.6," he said. The transaction would increase promoter-entity ICIL’s stake in Airtel to 3.32%.
Mittal said Airtel Africa’s ongoing buyback programme and any future block deals would help Bharti Airtel steadily raise its stake over the coming years. He added that there are no plans to allocate capital towards acquiring other global telecom assets.
The interest in Africa has been driven by demographic growth, rising digital adoption and artificial intelligence-led demand.
“Airtel and India the combination offers a once in a lifetime opportunity to any corporation anywhere in the world you know with a billion and a half people, hungry for more services and products, a growing country, it's an opportunity which is very rare,” Mittal said, adding that India and Africa create a “very strong two-play market” opportunity.
“After giving allocation to all this, if we are still left with more money, we'll do more dividends, we will do buyback programs. But we will never become like IT companies who have done nothing but just taken money out as dividends and buybacks, and they become a shadow of themselves,” Mittal said.
Pricing pressure
In the March quarter, Airtel Africa reported a 33% year-on-year increase in revenue to $1.75 billion, while net profit more than tripled to $199 million.
In FY25, Bharti Airtel’s operating free cash flow rose 18% to ₹73,746 crore.
On Wednesday, Bharti Airtel reported a 33.5% year-on-year rise in net profit to ₹7,325 crore in the March quarter due to one-time items and a high base effect. Consolidated revenue rose 15.7% year-on-year to ₹55,383 crore, driven by growth in mobile services, enterprise business, premium offerings, upgrades from 2G to 4G/5G, postpaid subscribers and the Africa business.
Average revenue per user (Arpu) slipped for the first time in five years to ₹257 per month from ₹259 in the preceding quarter, reflecting slowing monetization momentum amid the absence of tariff hikes. Airtel attributed the decline partly to weaker international roaming because of the West Asia war.
When asked about the need for tariff hikes, executive vice chairman Gopal Vittal said, “the price architecture in this country is broken.” Indian users consuming large amounts of data are effectively capped at monthly spends of ₹340-350 because of unlimited plans, making high-end users pay less while entry-level users pay more, he said.
Vittal said structured small, medium, large and extra-large plans would create a natural upgrade cycle and support higher Arpu growth over time.
The company also flagged concerns over rising smartphone prices and slowing handset shipments, particularly the pace of migration from feature phones to smartphones. It added that the impact of the West Asia conflict has so far largely been limited to rising prices and constrained availability of servers, memory and chipsets. Rising memory and chipset costs over the past three to four months have made fixed wireless access broadband rollout significantly more expensive than fibre, Airtel said.
