Africa business will be a star in our portfolio: Sunil Mittal

ET Now caught up with Sunil Bharti Mittal, Chairman & Group CEO, Bharti Enterprises, for his views on Bharti Infratel's IPO and regulatory overhangs for telecom and tower companies. Excerpts:

Bharti Airtel founder Sunil Mittal has conceded that the company's Africa foray turned out to be much more challenging than expected and said he would like to see a reduction in his company's operating profit (EBITDA) to debt ratio.

Also read: Full interview

"Africa is not for the weak hearted, infrastructure issues are there. The middle class is absent in most of the countries. We have to cater to the low end of the market to grow. It is a good business and we will get it to the $5 billion mark in 2013. But we are way away from the $2-billion EBITDA target. This is where the disappointment is," Mittal said in an interview to ET NOW.

While the African operations have been a drag on Bharti Airtel's overall performance, Mittal defended his decision to acquire the African business of Zain a few years ago. "If you ask me was Africa a good move? My answer would be, absolutely. Will this be a star in the overall portfolio of Bharti Airtel? Absolutely, it will be. Has it been tougher than what we thought? Absolutely," he said.

Commenting on Bharti Airtel's overall debt, which is now around $12.5 billion, Mittal said he would like the company's EBITDA to debt multiple come down to 2 from the current level of 2.6-3.7 in the not too distant future.

He said the successful closure of the above 4,000-crore Bharti Infratel IPO on Friday had created a 'liquid asset' for Airtel. "The other side is to generate more internal cash to repay some of the debt. Finally we now have a very solid asset in Africa. It is an asset which is more than the debt that we have for overseas operations," the Bharti Group chairman said.

Mittal said he was happy that the Bharti Infratel IPO, the biggest since the Coal India issue a couple of years ago, was 'done and dusted'. "We always knew that institutional investors, especially the overseas ones, are going to be very strong supporters of this particular IPO," he said and disputed the contention that the issue was expensively priced.

"Many Indian analysts have written very strongly in support of this issue. We have priced it at a level where we believe the investors should see a good upside," he said. While the retail portion of the IPO remained undersubscribed, Mittal said he wasn't unhappy with the retail participation.

The Bharti Airtel founder reiterated his company's opposition to the controversial spectrum refarming proposal. "Our belief is that we have licences which have to be extended and the spectrum that has been granted needs to be extended. We are in continuous discussion with the government, we have made our representations," he said.