16 October, 2014

Bharti Group Chairman Sunil Mittal ask Sarvjit S Dhillon to turn around Africa operations

Bharti Group Chairman Sunil Mittal has mandated Sarvjit S Dhillon, till recently the Group's finance head and currently director of special projects, to help in efforts to turn around its Africa operations, indicating that continued losses in the continent is assuming worrying proportions.

Dhillon will work in tandem with Christian de Faria, who was appointed Africa CEO earlier this year, and both would report to Mittal, people familiar with the matter told ET.

The company didn't comment on Dhillon's new assignment. "With India back on the growth trajectory, Sunil 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 June 30 to Rs 820 crore from Rs 298 crore a year earlier on account of higher operational expenses and forex losses. Revenue rose toRs 6,698.5 crore for the first three month period this financial year, compared to Rs 5,930.9 crore in the same quarter last year. Bharti Airtel's consolidated net profit jumped 61% to Rs 1,108 crore, largely on account of surging data revenue and improving voice business in India.

"There's no parallel structure at play here (referring to Dhillon's switch to Africa). And it's not a comment on the performance of Christian who is doing a good job.

But the top management felt that they needed to get a heavyweight in there to add muscle to Africa," a second person said. Christian 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 September 30 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 could be slightly impacted by the 0.5% strengthening in INR vs African currencies." An analyst at a foreign brokerage said that Bharti may even be ruing its entry into Africa. "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".

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