Bharti Airtel to list African unit, raises $1.25 bln pre-IPO

Bharti Airtel said it has raised $1.25 bln (Rs 9,150 cr) from institutional investors by selling shares in its Africa unit and intends to list Airtel Africa soon.

The investors who have committed to invest in the UK-based unit include Warburg Pincus, Temasek, Singtel, SoftBank Group International and others, it said.

The investment will be at a post-money valuation of $4.4 bln. At that valuation, the investors should get about 28.41% of Airtel Africa.

The company clarified that none of its existing investors are selling any shares and that the entire amount is being raised via fresh issue of equity.

“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,” Airtel Africa head Raghunath Mandava said.

The money will be used to reduce the $5 bln debt and to grow the business, the company said.

“Airtel Africa has seen a turnaround of its business in recent years. This investment demonstrates the confidence of leading global investors in the company’s ongoing robust growth and profitability,” the company said.

“The investment also reinforces the increased growth potential of the Africa telecommunications sector.”

“Airtel Africa subsequently intends an Initial Public Offering and use the proceeds primarily for further reduction of debt,” it added.

The move comes at a time of extreme competition in Airtel’s primary market, India, where new entrant Reliance Jio has caused a 90% drop in data prices and a 50% drop in voice prices.

Airtel used to rely on the cash generated by its Indian operations to keep the loss-making African operations going till some time ago. That, said the company, is changing.

“Airtel Africa’s financial performance continues to improve, having turned positive in terms of net profit and operating free cash flow,” it said.

In most of the markets in which it operates, Airtel Africa ranks amongst the top two operators.

It has 4G services live in nine countries and is in the process of rollouts in most others.