Airtel Africa — a subsidiary of India’s Bharti Airtel — said
last Wednesday it had raised $1.25 billion from six global investors to
clear its debts.
The funds were raised from Japanese
multinational holding conglomerate Group SoftBank, American private
equity firm Warburg Pincus LLC and Temasek Holdings (Private) Ltd, an
investment firm owned by the government of Singapore.
“The proceeds will be used to reduce Airtel Africa’s existing debt of $5 billion and for growth of its African operations.
“Airtel
Africa subsequently intends to make an initial public offering and use
the proceeds primarily for further reduction of debt,” the
telecommunications firm said in a statement.
“This
primary equity issuance clearly underlines the confidence of leading
global investors in Airtel Africa’s successful business strategy and its
potential to sustain growth and profitability.
“The
transaction will help us further deleverage our balance sheet and boost
our capacity to upgrade networks, expand coverage in different markets
and achieve rapid growth of Airtel Money across our operations,” said
Raghunath Mandava, chief executive officer for Africa at Bharti Airtel
said.
Reducing debt
The Indian
telecommunication giant, with a presence in nine African countries, said
the subsequent market debut will also be used to reduce debt further
but will not involve any sale of existing shares by Airtel.
The
expected will cut its debt by an estimated eight per cent. With this
deal, Bharti Airtel's stake in the African operations is expected to go
down from 100 per cent to 71 per cent, analysts said.
Airtel
Africa has seen a turnaround of its business in recent years, with this
investment now demonstrating the confidence of leading global investors
in the company’s ongoing robust growth and profitability, coming barely
two years after its chairman Sunil Mittal hinted at selling off the
African stake after a streak of losses.
Airtel Africa
is experiencing a healthy revenue growth in voice and data services and
also strong performance in the Airtel Money business is also posting a
strong. Its financial performance continues to improve, having turned
positive in terms of net profit.
In the last quarter of
its 2017 financial year, the African unit posted positive profit before
tax, the second of such results in its eight year operations in the
continent.
In the results, the continents second
largest operator saw its profit after tax for the quarter ended March
this year almost triple to $154.52 million from $57.5 million over the
same period the previous year.
“Africa revenues grew by 10.7 per cent year-on-year led by strong growth in data and Airtel Money transaction value.
“Mobile
data traffic has grown by 88 per cent to 70 billion MB in the quarter
as compared with 37 billion MBs in the corresponding quarter last year.
Data
customers increased by 48 per cent, to 24.9 million from 16.9 million
in the corresponding quarter last year,” Mr Mandava, said.
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