Chennai: In a bid to cut the debt load that has grown over $16 billion, Bharti Airtel is planning a share sale for its Africa unit in London, reports state.
The initial public offering by Airtel Africa Ltd would comprise new shares and the sale would seek a free float of at least 25 per cent, the company said in a filing Tuesday.
WHAT’S WITH AFRICA?
Airtel is Africa’s second-largest mobile operator behind Johannesburg-based MTN Group Ltd with almost 100 million subscribers across 14 countries including Nigeria, Kenya and Tanzania.
Bharti Airtel, controlled by Sunil Mittal, is fighting a cost war in India with Asia’s richest man Mukesh Ambani’s Reliance Jio Infocomm Ltd. With average revenue per user (ARPU) plummeting within a short period of time, Airtel’s earnings shrunk and debt soared.
In February, Airtel unveiled plans to raise as much as Rs 32,000 crore to take on Jio as well as to prepare for an impending 5G airwaves auction. The firm raised about Rs 25,000 crore this month from a rights issue.
The New Delhi-based company is counting on some asset sales, a rights issue and lately the Africa unit’s London IPO to bolster its finances, Bloomberg reported.
“The main motivation is the debt level at the parent. (The) rights issue, talk of selling towers plus this IPO are all consequences of that,” said John Davies, an analyst at Bloomberg Intelligence.
NEXT STOP
Shares of Airtel Africa could start trading on the London Stock Exchange in June in a deal that could raise about $1 billion, reports state. Airtel Africa already raised $1.25 billion last year from investors including Temasek Holdings Pte and SoftBank Group Corp, giving it an equity value of about $4.4 billion.
A successful IPO will help the company kickstart a stronger growth phase in Africa, CEO of Bharti Airtel, Raghunath Mandava, said, adding that the continent’s youthful population and potential for more high-speed 4G capacity make it a big opportunity for expansion.
Africa Airtel will also seek to lure investors with the potential of its mobile-money offering, which has 14.2 million customers. Wireless operators on the continent are investing heavily in mobile-payment services to meet high demand from customers where formal banking infrastructure is scarce, such as in Nigeria, Kenya and Ghana.
JP Morgan Securities Plc is sole sponsor for the planned sale by Airtel Africa, according to the statement from the firm. BofA Merrill Lynch, Citigroup and JP Morgan are joint global coordinators and bookrunners.
FOLLOWING
The company will also consider a local listing in Nigeria, according to the IPO filing, following in the footsteps of market-leader MTN, which listed stock in Lagos earlier this month to meet demand from regulators and local investors.
Airtel is the second-biggest carrier in Nigeria, Africa’s most populous country, and the market makes up more than a third of overall revenue.
FALLING DOWN
Stake of Airtel promoter group firm Bharti Telecom has come down to 41.24 per cent following renouncement of 11.34 crore shares by the entity valued at around Rs 3,920 crore and Rs 25,000-crore rights issue, according to the updated shareholding of the company.
Sunil Bharti Mittal family and Singapore telecom firm Singtel-owned firm Bharti Telecom held 50.1 per cent stake with 211.62 shares in Bharti Airtel at the end of March. Bharti Telecom shareholding dropped to Rs 200.28 crore in May, said a disclosure by Bharti Airtel.
According to reports, Bharti Telecom renounced shares for the Singapore government and the Monetary Authority of Singapore and foreign-based promoter group firm Indian Continent Investment Limited.