With its Indian business under heavy pressure due to intense competition, Bharti Airtel is turning to its small overseas profitable arms to save itself, as it prepares to list its Africa unit on the London Stock Exchange (LSE), which is likely to raise $1 billion (around Rs 7,000 crore).
Although Airtel has not disclosed the amount it aims to raise, industry sources pegged it at $1 billion.
The firm plans to sell 25 percent of new shares of Airtel Africa in the proposed initial public offering, Bharti Airtel said in a filing. Simultaneously it is also considering a listing in Nigeria, the firm said.
Airtel is seeking to raise funds in India from a recently-concluded Rs 25,000 crore rights issue to strengthen its balance sheet and expand its 4G network to stave off competition from Reliance Jio.
At the end of the quarter ended December, Bharti Airtel had a consolidated net debt of more than Rs 1 lakh crore.
Airtel Africa last year raised $1.25 billion from six investors including Temasek HoldingsPte, SoftBank Group Corp and Warburg Pincus, valuing it at about $4.4 billion.
“Airtel Africa, a subsidiary of the company, has announced its potential intention to undertake an initial public offering for listing its equity shares on London Stock Exchange,” Bharti Airtel said.
It added that related documents have been submitted for approval to the UK Financial Conduct Authority.
Airtel Africa — which offers telecom services in 14 countries in Africa — plans to use the proceeds from the issue of new shares to reduce debt. It has about 98.9 million subscribers and 14.2 million mobile money customers, with Nigeria accounting for the largest single country subscriber base.
As on December 31, 2018, Airtel Africa was the second largest mobile operator in Africa by a number of active subscribers. IT recently reported its first full-year profit at $412 million for 2018-19, helped by higher data consumption and Airtel Money penetration.
Its revenue increased 5.73 percent to $3,077 million in 2018-19 from $2,910 million a year ago.
Commenting on the planned offer, Sunil Bharti Mittal, Chairman of Airtel Africa, exuded confidence that the company is in a “strong position” to build its own capital market profile.
“Since first investing in Africa almost nine years ago, we have well leveraged our expertise in emerging markets to deliver on a clearly-defined strategy to build Airtel Africa into a market leading mobile service provider, increasingly expanding beyond voice into data services and Airtel Money.”