Bharti Airtel Billionaire Founder Says Nigeria Tax Too High

May 09, 2014 11:49 am ET

(Updates with comments from Nigerian minister in fifth paragraph.)

May 9 (Bloomberg) -- Sunil Mittal, the billionaire chairman of India’s largest mobile-phone operator Bharti Airtel Ltd., said telecommunications companies are unfairly taxed in Nigeria because the industry supports other areas of the economy.

“The taxes are very high,” Mittal said in an interview yesterday in the Nigerian capital of Abuja, where he is attending the World Economic Forum. “That needs to come down. If telecoms are seen as a rightful infrastructure for the growth of many other sectors in the economy and the multiplier force, then I think it doesn’t deserve to be taxed so high.”

Bharti, which competes with Johannesburg-based MTN Group Ltd. and Abu-Dhabi-based Emirates Telecommunications Corp. to woo users in Africa’s most populous country, is seeing a recovery in Nigeria after a sales decline last year because of changes to interconnect charges, Mittal said. The New Delhi- based company was also among carriers that were banned from selling new SIM cards in March after failing to meet service- quality standards.

“We are seeing now growth coming back again,” Mittal said. “The last quarter versus the fourth quarter was reasonably good. I’m very hopeful that this year will be a year of real stabilization.”

Nigeria will consult with companies and local governments about reducing taxes on base stations, Omobola Johnson, Nigeria’s Information and Communications Minister, said in an interview today at the Forum.

Taxes Down

“The fact is that about 50, 60 percent or even more, 70 percent of the investment they make is going into paying tax and procuring right of way, so taxes are too high,” she said. “We will work with them to bring down these taxes.”

Bharti Airtel shares gained 0.5 percent to 309.45 rupees as of the close of trading in Mumbai. The company operates in 17 African nations and has no plans to expand into new territories, according to Mittal.

“We don’t have any designs for expanding our footprint at the moment but within the countries that we operate we are strengthening our position,” he said. Nigeria remains a long- term market for the company even as Islamist militants carry out a wave of deadly bombings and kidnappings across the country, he said.

--With assistance from Elisha Bala-Gbogbo and Chris Kay in Abuja and Yinka Ibukun in Lagos.