Airtel Africa targets London IPO cash for debt payment
7 June 2019
Airtel Africa plans to pay part of its debt from the funds it is set to raise from the London Stock Exchange (LSE) through an initial public offering (IPO).
The company, a subsidiary of India’s telecommunications conglomerate Bharti Airtel, did not say how much it plans to raise in the proposed transaction that will see it list on the main market of the LSE.
“The company intends to use any net proceeds from the issue of new shares to reduce net debt,” Airtel Africa said in a filing with the LSE yesterday.
Airtel Africa is expected to make further disclosures, including the size of its debt, in the coming weeks as it tries to woo investors.
The company says it also intends to distribute to its shareholders a minimum of 80 per cent of consolidated free cash flow. The payout will be subject to maintaining a ratio of net debt to earnings before interest, tax, depreciation and armotisation (EBITDA) of between 2 to 2.5 times and to all regulatory, statutory and monetary restrictions.
“At the individual operating country level, the company will recommend to the local boards a dividend payout of a minimum of 80 per cent of the free cash flow at the country level as long as a ratio of net debt to EBITDA between 2.5 to 3.5 times is maintained, subject to all regulatory, statutory and monetary restrictions,” Airtel Africa said. The company operates in 14 countries in Africa, including Kenya, Nigeria, Uganda, Malawi, Zambia, Niger, Gabon and Madagascar.
Its operations in East Africa (Kenya, Uganda, Rwanda, Tanzania, Malawi and Zambia) reported sales of $1.1 billion in the year ended March, up from $1 billion a year earlier.
The company’s capital expenditure in the region more than doubled to $257 million from $105 million.