Airtel holding firm for Africa biz may go public
NEWDELHI: India’s largest telecom operator Bharti Airtel Ltd Wednesday said its unit managing its Africa operations is considering a potential initial public offering.
In a stock exchange filing, Bharti Airtel said the board of Bharti Airtel International (Netherlands) BV has authorized the management to begin non-binding exploratory discussions with banks and intermediaries to evaluate the possibility of a public listing.
“The above discussions are at an exploratory/preliminary stage and at this juncture, there is no certainty of any final decision or outcome,” the company added. Analysts believe an IPO will monetise Bharti Airtel’s Africa operations, at a time when it is engaged in a bruising battle with Reliance Jio Infocomm Ltd in India.
The company, which is locked in a price war since the launch of Reliance Jio in September 2016, was hit hard when the telecom regulator in September decided to slash interconnection usage charges levied by mobile networks handling incoming calls from rival networks. As a result, Bharti Airtel’s quarterly profit plunged 39% to ₹306 crore in the December quarter.
While revenues from India operations fell 11.3% year on year to ₹15,294 crore, the performance of its Africa unit saved some blushes. In constant currency terms, Africa revenues grew by 5.3% year on year to $783 million during the quarter compared with $744 million a year ago. This was largely led by strong growth in data and Airtel money transaction value.
“They have made Africa business profitable; so, the (company’s) plan is to get value out of it. In most markets in Africa, they are either number one or number two, so the valuation of Africa business will be attractive,” a Mumbai-based analyst said on the condition of anonymity.
The company’s aggregate customer base in Africa too increased from 84.1 million as of December end from 76.9 million in the corresponding quarter last year, an increase of 9.4%. It offers 3G services and Airtel Money across 14 countries in Africa and 4G services in four countries in the continent.
“With sustained competitive pressure from Jio, Bharti Airtel’s EBITDA is expected to see further decline for the next few quarters. If their net debt to EBITDA ratio goes beyond three times, it could risk the chance of a rating downgrade. The valuation of Africa business may insulate the company from a potential rating downgrade,” the analyst cited above said.