SoftBank, SingTel, Temasek, others to invest $1.25 bn in Airtel Africa; co to use funds to reduce debt, upgrade network

New Delhi: Telecom operator Bharti Airtel said on Wednesday it had received a booster shot with six global investors, including SoftBank Group, Singtel, Warburg Pincus and Temasek, agreeing to pump in USD 1.25 billion into its Africa unit. This is the first direct investment by the six investors in Airtel Africa against issuance of equity which the company will use to reduce debt and upgrade its network. The transaction will not involve any sale of shares by existing shareholders, according to a statement by the company. “…Six leading global investors comprising Warburg Pincus, Temasek, Singtel, SoftBank Group International and others have agreed to invest USD 1.25 billion through a primary equity issuance in the company at a post money equity value of approximately $4.4 billion,” Airtel Africa said in a statement. The valuation of $4.4 billion also sets the floor for the initial public offer of the company. “Airtel Africa subsequently intends an Initial Public Offering and use the proceeds primarily for further reduction of debt,” the statement said. [caption id=“attachment_4723981” align=“alignleft” width=“380”]  Representational image. News18 Hindi[/caption] Airtel Africa, incorporated in the UK, has existing debt of approximately USD 5 billion, while Bharti Airtel had consolidated debt of around $15 billion at the end of the first quarter ended 30 June 30, 2018. The India business accounts for over 80 percent of total business which is facing the double whammy of a turbulent tariff war and rising finance cost. “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,” said Raghunath Mandava, MD and CEO, Africa, Bharti Airtel. The Africa business helped Bharti Airtel post positive income at the end of first quarter of 2018-19. Bharti Airtel’s Africa operations recorded net income of Rs 393.9 crore before exceptional item, while India and South Asia business pulled it down by a loss of Rs 982.5 crore in the quarter ended 30 June 2018. “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,” Mandava said. According to Deutsche Bank Research, the deal is positive for both Bharti Airtel and a significant shareholder in the company – Singtel – as it would help the company reduce its debt ratio. Bharti Airtel was down 3.2 percent in early trade on Thursday with its share closing at Rs 306.60.