Bharti Airtel’s Airtel Africa has sold a $1.25 billion stake to six leading global investors comprising Warburg Pincus, Temasek, Singtel, SoftBank Group International and others through a primary equity issuance in the company at a post money equity value of ~ USD 4.4 billion.
The proceeds will be used to reduce Airtel Africa’s existing debt of approx. USD 5 billion and for growth of its African operations. Airtel Africa subsequently intends an Initial Public Offering and use the proceeds primarily for further reduction of debt.
According to Raghunath Mandava, MD and CEO, Africa, Bharti Airtel,“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.”
Airtel Africa is experiencing a healthy revenue growth in voice and data services and also strong performance in the Airtel Money business. Its financial performance continues to improve, having turned positive in terms of net profit and operating free cash flow. In most of the markets in which it operates, Airtel Africa ranks amongst the top two operators. With 4G services live in 9 countries and in process of rollouts in most others, Airtel Africa is well placed to capture a significant market share of the rapidly growing data demand across countries.
The present transaction will not involve any sale of shares by existing shareholders.
Singtel which holds a 39.5 per cent effective stake in Airtel invested US$250 million in the deal.
“Our investment into Airtel Africa reflects our confidence in the long-term growth potential of Africa with its young and growing population. For many of Airtel Africa’s customers, the mobile phone is the key enabler for digital and financial inclusion,” said Mr Arthur Lang, CEO of Singtel’s International Group.
“As Airtel continues to execute on its transformation strategy to become a leader in data and mobile money in Africa, we believe it is in a strong position to benefit from increasing smartphone penetration and mobile money adoption.”