Airtel Africa raises $1.25b from SoftBank, Temasek, others to pare debt

Bharti Airtel
A girl checks her mobile phone as she walks past the Bharti Airtel office building in Gurugram, previously known as Gurgaon, on the outskirts of New Delhi, India April 21, 2016. REUTERS/Adnan Abidi/File Photo

Six global investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group International, haf agreed to invest $1.25 billion through a primary equity issuance in Airtel Africa Ltd, the telecom company said in a statement today.

The telecom operator, facing brutal competition from Reliance Jio Infocomm Ltd, would use these proceeds to reduce Airtel Africa’s existing debt of $5 billion and for growth of its African operations, it said.

Bharti Airtel’s UK incorporated subsidiary Airtel Africa subsequently intends an initial public offering and plans to use the proceeds primarily for further reduction of debt.

Bharti Airtel had on 14 February announced its plan to list its African arm.

Reeling from a fierce price war that started with the entry of Reliance Jio in September 2016, the company has embarked on a debt reduction spree as well as monetisation of non-core assets.

Bharti Airtel’s Africa venture started in 2010 when it bought Zain’s Africa operations for $10.7 billion. Over the past few years, it has been trying to capture the African market through local deals. It has made three small acquisitions in the continent in Uganda, Congo Brazzaville and Kenya.

In October 2017, Airtel inked a deal with Millicom, which operates the brand Tigo, to combine their operations in Ghana. After this deal, in December 2017, Airtel’s subsidiary in Rwanda announced the acquisition of Tigo Rwanda Ltd, making Airtel the second largest telecom firm in the African nation.

Back home in India, too, the company is taking steps to reduce debt. On 5 February, the company announced that Singapore Telecommunications Ltd (Singtel) would indirectly raise its stake in Bharti Airtel by investing Rs 2,649 crore in Bharti Telecom Ltd, the promoter company of Airtel, through a preferential allotment of shares and the funds will be used to reduce debt.

It had also announced in December 2017 that it, along with another group entity, would sell a combined 20% in its DTH arm, Bharti Telemedia Ltd, to private equity firm Warburg Pincus for $350 million.

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