Airtel Africa plans public offer, London listing; may mop up over $1 billion

Airtel Africa — which offers telecom services in 14 countries in Africa — plans to use the proceeds from issue of new shares, to reduce debt.

Telecom czar Sunil Mittal-led Bharti Airtel’s Africa unit plans to launch over $1 billion (around ₹6,970 crore) IPO in London to help reduce debt.

The firm plans to sell 25% of new shares of Airtel Africa in the proposed initial public offering (IPO) and is looking to trade on the main market of the London Stock Exchange using its premium listing segment, Bharti Airtel said in a regulatory filing.

It is also considering a listing in Nigeria, the firm added.

Airtel Africa last year raised $1.25 billion from six investors including Temasek Holdings Pte., SoftBank Group Corp. and Warburg Pincus, giving it an equity value of about $4.4 billion.

While the company did not divulge the amount it intends to raise from the proposed public offer, banking sources said it expects to raise over $1 billion.

“In furtherance to our previous intimations in this regard, we wish to inform you that Airtel Africa, a subsidiary of the company, has announced its potential intention to undertake an initial public offering for listing its equity shares on London Stock Exchange…,” Bharti Airtel said.

It added that related documents have been submitted for approval to the U.K. Financial Conduct Authority.

Airtel Africa — which offers telecom services in 14 countries in Africa — plans to use the proceeds from issue of new shares, to reduce debt. It has about 98.9 million subscribers and 14.2 million mobile money customers, with Nigeria accounting for the largest single country subscriber base.

As on December 31, 2018, Airtel Africa was the second largest mobile operator in Africa by number of active subscribers.

Airtel Africa recently reported its first full-year profit at $412 million for 2018-19, helped by higher data consumption and Airtel Money penetration.

Its revenue increased 5.73% to $3,077 million in 2018-19 from $2,910 million a year ago.

Commenting on the planned offer, Sunil Bharti Mittal, Chairman of Airtel Africa, exuded confidence that the company is in a “strong position” to build its own capital market profile.

“Since first investing in Africa almost nine years ago, we have well leveraged our expertise in emerging markets to deliver on a clearly-defined strategy to build Airtel Africa into a market leading mobile service provider, increasingly expanding beyond voice into data services and Airtel Money,” Mr. Mittal said.

He further added, “With the recent equity investments into the business by globally recognised long-term investors, we believe that Airtel Africa is in a strong position to build its own capital market profile, allowing others to join us in a real business success story.”

The new Board of Directors is committed to carry forward the strong legacy of corporate governance of the parent company, Mr. Mittal pointed out.

Raghunath Mandava, CEO of Airtel Africa said the 14 countries that the company operates in offer strong economic growth potential with young and fast-growing populations, low customer and data penetration and inadequate banking infrastructure.

These fast-growing markets provide the company a “great opportunity” to grow both telecom and payments businesses, he added.

“Immediately following admission, the company intends to have a free float of at least 25% of the company’s issued share capital and expects that it would be eligible for inclusion in the FTSE U.K. indices.

“In addition, it is expected that up to a further 15% of the offer will be made available pursuant to the over-allotment option,” the company said in its registration document.

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