Airtel looking to raise up to $1 billion with LSE listing of African unit

31 May 2019

Mergers, Acquisitions and Financial Results

Bharti Airtel Ltd has sought approval of the UK financial regulator for an initial public offering of its African unit in London as it seeks to cut debt and expand its network.

Airtel Africa Ltd, the continent’s second-largest mobile operator, is aiming to raise around $1 billion in a June equity offering, a person familiar with the development told Reuters.

In a filing made to the London Stock Exchange (LSE), Airtel Africa said it is also considering a listing on the Nigerian Stock Exchange. In London, Airtel Africa is looking to trade on the main market of LSE, using its premium listing segment.

The African unit has already raised $1.25 billion in October from six investors, including Temasek Holdings Pte and SoftBank Group Corp., Warburg Pincus and Singtel. In January, Qatar Investment Authority invested $200 million in the Africa arm.

As a result of these fundraises, the company’s net debt fell to $4 billion in the March quarter from $7.7 billion a year ago.

Airtel Africa is the holding firm for Bharti Airtel’s operations in 14 countries, including Nigeria, Kenya, Uganda, Rwanda, Tanzania, Zambia, Niger, Democratic Republic of the Congo and Seychelles. It has 100 million customers across the continent but Nigeria alone accounts for 36% of its total revenue.

Bharti Airtel established its presence in Africa in 2010 when it bought Kuwait-based Zain’s Africa operations for $10.7 billion. Over the past few years, it has been trying to expand in the continent through local acquisitions.

Africa has proved to be a beacon of hope for the company, which is faced with a struggling India business as it battles Reliance Jio Infocomm Ltd on its home turf. Bharti Airtel’s Africa operations posted a net profit of $83 million in the March quarter from a loss of $49 million a year earlier.

Airtel Africa’s total revenue grew 6% to $781 million in the March quarter from $736 million in the year earlier, while its earnings before interest, taxes, depreciation and amortization improved 12% to $344 million.

The company offers prepaid and postpaid wireless services in the continent, with an increasing focus on data and non-voice services through the expansion of its 3G and 4G networks, fixed-line telephone services, as well as mobile money services under its Airtel Money brand both nationally and internationally.

Mobile voice business is the largest component of Airtel Africa’s revenue, bringing 62.2% in the year ended 31 March. The mobile data business segment accounted for 22.2% and Airtel Money accounted for 7.6% of the consolidated revenue.

Airtel Africa’s network includes 30,000km of fibre, over 16,400 3G sites and over 9,200 4G sites.

“The 14 countries where we operate offer strong GDP growth potential and have young and fast-growing populations, low customer and data penetration and inadequate banking infrastructure. These fast-growing markets provide us a great opportunity to grow both our telecom and payments businesses," Raghunath Mandava, chief executive of Airtel Africa, said in the LSE filing.

Airtel Africa has hired JPMorgan Securities as sole sponsor; BofA Merrill Lynch, Citigroup and JPMorgan Cazenove as joint global coordinators and joint bookrunners; and Absa Group Ltd, Barclays Bank Plc, BNP Paribas, Goldman Sachs International, HSBC Bank Plc and Standard Bank of South Africa Ltd as joint bookrunners.

Source: LiveMint