Airtel Africa to raise $200m from QIA

Airtel Africa will raise $200 million( Rs 1,420 crore) from Qatar Investment Authority (QIA) through an issue of primary shares, Bharti Airtel said in a statement.

The funds will be used to reduce the Africa unit’s debt, thereby also strengthening Bharti Airtel’s consolidated books. It will help the UK-based holding company of Airtel’s Africa operations cut its net debt to roughly $3.5 billion, the mobile phone operator counted among the world’s top three by subscribers said.

“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. QIA said it looks forward to “supporting Airtel’s vision in building a world class business in the African continent,” it 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.

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.

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.

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.

The combined strength of the board is expected to bring a wealth of industry and governance experience to further drive Airtel’s Africa operations.

Airtel Africa has essentially seen a turnaround of its business in recent years, completing its first full year of profitability in March, after continuously losing money in previous years marking a turnaround from previous years when losses mounted every quarter, dragging down consolidated numbers and casting doubt on Bharti’s strategy of expanding into the continent back in 2010.

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