Bharti Airtel, the parent company of Airtel Africa says the African unit plans to raise more investment through an issue of primary shares to strengthen Bharti Airtel’s consolidated books.
Airtel Africa will raise $200 million( Rs 1,420 crore) through an issue of primary shares from Qatar Investment Authority (QIA), which will serve as a long-term strategic equity partner.
“We are excited to welcome Qatar Investment Authority as a longterm strategic equity partner … This transaction will not involve any sale of shares by existing shareholders,” said Airtel Africa, which operates in 15 countries on the continent.
While QIA said it looks forward to “supporting Airtel’s vision in building a world class business in the African continent.”
Reason for fundraising
The fund will strengthen Bharti Airtel’s consolidated books, and be used to reduce the Africa unit’s debt, helping the UK-based holding company of Airtel’s Africa operations cut its net debt to roughly $3.5 billion, the mobile phone operator said.
In November, Airtel Africa had raised $1.25 billion ( about Rs 9,200 crore) through a placement of shares to six global investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group International, in the runup to an Airtel Africa IPO likely around June this year, through which the telco plans to garner an additional $1.5-1.6 billion.
According to a report by The Nation, the follow-up fundraise is estimated to dilute Airtel’s stake in its Africa unit to 67.24 per cent from roughly 71.6 per cent, said a senior sector analyst who did not wish to be named.
Bharti Airtel — facing severe pressure on revenue and profitability at home in India owing to intense competition triggered by the entry of Reliance Jio Infocomm — is trying to build a war chest to fund its 4G network expansion across the country.
Airtel investment drive
It has been selling stakes in tower unit Bharti Infratel, and plans to sell another 32 per cent — valued at close to Rs 15,500 crore —in that firm. Airtel is also planning a Rs 15,000-crore rights issue. Bharti Airtel’s net debt was at Rs 113,204 crore at September-end. Its shares closed 1.22 per cent lower on BSE at Rs 303.35.
The latest developments come at a time when the Sunil Mittalled telco’s Africa business has continued to put on a robust show in the September quarter, with Africa net income (before exceptional items) rising to Rs 232.3 crore from a net loss of Rs 207.9 crore a year back. Total revenue of Airtel Africa rose nearly 13 per cent to Rs 5,647.2 crore.
After years of posting losses every quarter, Airtel Africa has been experiencing better financial performance of late, completing its first full year of profitability in March since making inroads into Africa. There are plans by Airtel Africa to expand its Nigeria and other African operations.
With 94 million customer base in Africa, Airtel Africa is the second largest telco in the continent, appearing among the top two operators in most of its 14 markets. Airtel currently has 29,757,791 million subscribers in Nigeria, coming second behind MTN Nigeria with 43,899,957 million subscribers, and before Globalcom which accounts for 28,054,948 million subscribers.