New Delhi: Qatar Investment Authority, the sovereign wealth fund of the state of Qatar, would invest $200 million through a primary equity issuance in Bharti Airtel’s arm Airtel Africa Ltd and the proceeds would be used to reduce the subsidiary’s debt, the telecom operator said in a statement on Wednesday.
This transaction would not involve any sale of shares by existing shareholders, Bharti Airtel said.
The announcement comes at a time when the telecom operator is preparing an initial public offering for its Africa unit in June or July after having raised $1.25 billion in a pre-IPO fund-raising round from large investors.
With the influx of funds from Qatar Investment Authority, Airtel Africa’s debt will come down to $3.5 billion.
Airtel Africa, the holding company for Bharti Airtel’s operations in 14 countries in the continent, offers 4G services in 10 of these nations.
Bullish on the growth opportunities that the continent offers, Bharti Airtel would spend about $700-800 million a year over the next two or three years to expand 4G services and this money would come from the Africa operations itself, Mint had reported on 28 January.
Over the past few years, Bharti Airtel has been trying to expand in African through local deals. It has so far made three small acquisitions in Uganda, Congo Brazzaville and Kenya.
In October 2017, Airtel inked a deal with Millicom, which operates the Tigo brand, to combine their operations in Ghana. In December that year, Airtel’s Rwanda unit announced the acquisition of Tigo Rwanda Ltd, making Airtel the second largest telecom operator in the African nation.
In February 2018, it said it would consider an IPO for the Africa business. In October, the company said six investors, including Warburg Pincus, Temasek, Singtel and SoftBank Group International, would invest $1.25 billion through a primary equity issuance in Airtel Africa. The funds will be used to pare Airtel Africa’s debt, which then stood at $5 billion, and for growth of its operations, which have seen a turnaround in recent quarters.
In the September quarter, Airtel Africa’s revenue rose 11% to $824 million from $743 million in the same period a year earlier. Data customers increased by 6.6 million during the quarter from 20.5 million in the corresponding period of the previous year to 27.1 million. Bharti Airtel will announce earnings for the December quarter on 31 January.
In the September quarter, Airtel’s capital expenditure for its Africa operations was $106 million, mostly on investment in data capacities and network modernization. The operating free cash flow from the region was $200 million, against $196 million in the same period a year earlier.