In a bid to reduce debt, Bharti Airtel said Airtel’s African unit will raise $200 million from Qatar Investment Authority (QIA) through an issue of primary shares.
The funds will strengthen Bharti Airtel’s consolidated books by helping the the UK-based holding company of Airtel’s Africa operations cut its net debt to roughly $3.5 billion.
According to Bharti Aiterl, “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”. QIA said it looks forward to “supporting Airtel’s vision in building a world class business in the African continent”.
In November 2018, 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 to $1.6 billion.
An anonymous senior analyst revealed that the follow-up fundraise is estimated to dilute Airtel’s stake in its Africa unit to 67.24 percent from roughly 71.6 percent.
Bharti Airtel, which is 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.
The company has been trying to sell stakes in its tower unit Bharti Infratel, and plans to sell another 32 percent — 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 percent 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 percent to Rs 5,647.2 crore.
Airtel Africa is the second largest telco in the continent with customer base of more than 94 million. It is one of the top two operators in most of its 14 markets. In November, Airtel Africa had also constituted a board of directors that includes representatives from Airtel and the global investors.
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.