The Qatar Foundation has announced plans to shift its 5% stake in Indian market leader Bharti Airtel for around $1.5 billion.
The foundation, which is controlled by Qatar’s royal family and operates as a non-profit, is offering shares via its affiliate Three Pillars Pte. As many as 199.9 million Airtel shares will be made available priced at INR473 to INR480 ($7.3 to $7.4).
Several Middle Eastern countries – including Bahrain, Saudi Arabia and the UAE – severed diplomatic ties with Qatar in June due to allegations that the nation was providing support and funds to terrorist organisations. The country has denied these claims, but has been reviewing its overseas assets in order to focus on its domestic economy.
The Qatar Foundation originally obtained its 5% stake in Airtel in 2013 for INR68 billion ($1.26 billion). The deal was intended to support the foundation’s capital structure and fund growth. The recent political tension has seen Qatari sovereign wealth fund The Qatar Investment Authority divest its holdings in several international firms.
While Airtel remains the Indian market leader, it recently announced that its profits had declined for a sixth consecutive quarter for the period ending 30th September. Its net profit for its fiscal Q2 2018 fell 77 per cent year-on-year to INR3.43 billion ($52.5 million).
While the fierce price war kicked off by Reliance Jio’s entry to the market last year has seen profits plummet across the board, Airtel also had to contend with a one-off payment of INR1.46 billion which related to network upgrades and spectrum refarming.
Airtel’s MD and CEO for India and South Asia Gopal Vittal said: “The financial stress in the industry continues due to double-digit revenue decline and will be further accentuated by the reduction in IUC [interconnect usage charge] rates in the next quarter. This will eventually force operator consolidation and exits as we have witnessed in the recent past.”
The operator’s consolidated Q2 revenue fell by 11.7% compared to the equivalent quarter in 2016, down to INR218 billion. However, while its Indian revenue dropped 13% to INR167 billion, Airtel fared better in Africa where its revenue jumped 2.6% to $782 million.
Airtel saw its African subscriber base increase by 4.8% year-on-year to almost 82 million, of which 21.7 million are on data tariffs – an increase of 20.1%. Data traffic in Africa grew 83.8% year-on-year, with the value of transactions made over its Airtel Money service jumping 31% to $4.9 billion.
