Bharti's plan to delist Zambian arm hits 'procedural flaws' roadblock

NEW DELHI: Bharti Airtel’s plans to delist its Zambian arm, Celtel Zambia, have hit a roadblock with the Lusaka Stock Exchange rejecting its application to delist reportedly for "procedural flaws" . Bharti-controlled Celtel Zambia is the top mobile phone company in Zambia with 70% market share. Bharti Airtel holds 96.36% in the company, which was part of Zain’s loss-making African assets in 16 countries that Bharti acquired last June for $9 billion.

Companies in Zambia are usually delisted if a single shareholder controls more than 95% stake. Media reports quoted a statement issued by the Lusaka bourse chief that claimed Bharti’s Zambian arm did not adhere to proper deslisting procedures and its "application lacked merit" . An email sent to Bharti Airtel did not elicit any response. Sunil Mittal-promoted Bharti Airtel holds its stake in Celtel through Bharti Airtel Zambia Holdings BV, a whollyowned subsidiary of Bharti Airtel International (Netherlands) BV, while minority shareholders hold the balance.

Under Zambia’s capital market regulations , any company that has over 50 shareholders must be quoted on the local exchange . Celtel has some 2000 minority shareholders who own roughly 3%. Last December, this minority shareholder bloc rejected Bharti’s offer of 710 kwacha ($0.15) per share. Accordingly, it remains to be seen whether Bharti will make a fresh offer to buy out the minority shareholders in Celtel.

It is also not known whether the company, under the circumstances, can put in a fresh application for delisting to the Lusaka Stock Exchange before acquiring full ownership in Celtel. Africa is seen as a short-term worry for Bharti since losses relating to its African operations were pegged at around . 525 crore in the quarter to December 31, 2010. In order to shore-up customer usage levels across its African footprint, Bharti has reduced tariffs in 10 of 16 countries to achieve long-term growth.