Airtel Africa – London prospectus peek

By the end of the week Airtel Africa will have a dual listing at the London Stock Exchange with a secondary one in Lagos after raising $750 million, by offering new shares to investors at 80 pence per share in June 2019, and valuing the company at £3.1 billion (~$3.9 billion).

The goal of the listing was to reduce the debt of the company further after it had earlier raised $1.25 billion from six global investors including Softbank, Warburg Pincus and Temasek in October 2018.

A peek at the 380-page prospectus and other listing documents:

About Airtel Africa: As at 31 December 2018, the Group was the second largest mobile operator in Africa, by the number of active subscribers(according to Ovum); they had 99 million mobile voice customer and 30 million mobile data one and 14.2 million mobile money customers.

Performance: For the financial year 2019 they had $3.01 billion revenue with 1.1 billion from Eastern Africa, $1.1 billion from Nigeria and $900 million from the rest of Africa. Of the total revenue, $2.9 billion was from mobile services with $167m from mobile money. Eastern Africa is Kenya, Uganda, Rwanda, Tanzania, Malawi and Zambia, and the rest of Africa comprises operations in Niger, Gabon, Chad, Congo, DRC, Madagascar and Seychelles. The company had a pre-tax profit of $272 million compared to a loss before tax of $9 million in 2018.

Managers & Employees: The Company has ten non-executive directors (including the Chairman). Also, Raghunath Mandava and Jaideep Paul will serve as chief executive officer and chief financial officer of the Group from their operational head office for Africa based in Nairobi. They will be enrolled in a company long-term incentive (share option) plan along with other executives of the Group.

Shareholders: Prior to the listing, top shareholders were AAML – a subsidiary of Bharti Airtel (68.31%), Warburg Pincus (7.65%) Singapore Telecom (Singtel 5.46%), ICIL – a Bharti Mittal family group (5.46%),  Hero (owned by Sunil Kant Munjal – 4.37%) and the Qatar Investment Authority (QIA) with 4.37%.

After the listing, in which the company will have sold between 14% and 18.9%%, the top shareholders will be AAML (56.12%), Warburg Pincus (6.28%) Singtel (4.49%), ICIL (4.49%),  Hero (3.59%) and QIA with 3.59%).  Also, subject to completion of a merger deal in Kenya, Telkom Kenya may acquire up to 4.99% if they exercise a flip-up right.

Other: 

  • Results for the (London) global and Nigeria uptake were announced on 28 June, and share accounts of new investors will be credited from July 3 and listed in London that day, and in Nigeria on July 4. 
  • Like other telco’s in Africa, 96% of their customers are prepaid. ARPU was $2.72 per user in 2019, down from $3 in 2018 and $3.24 in 2017.
  • Airtel has two distinct strategies; where they are market leaders (e.g in Chad), they price closely to market rates and where they are seeking market leadership (e.g in Kenya), they prioritize affordability.
  • Other Financing: In May 2019, the Company arranged for a “New Airtel Africa Facility” bank facility with Standard Chartered.
  • Other Deals: Ongoing settlement discussions in Tanzania, one over a tax claim, will see all cases withdrawn and boost the Government’s shareholding to 49% at no cost. In Kenya, they are merging with Telkom Kenya and in Rwanda, they are acquiring Tigo.
  • Listing Fees: The company will pay the fees and expenses for the listing totalling $35 million for the UK admission – and these include FCA fees, bank’ commissions, professional fees, costs of printing and distribution of documents.  The joint global co-ordinators and joint bookrunners were  J.P. Morgan Cazenove and Citigroup, joint bookrunners were Absa, Barclays, BNP Paribas, Goldman Sachs, HSBC, Standard Bank, the Nigerian joint issuing houses were Barclays Securities Nigeria and  Quantum Zenith Capital, while the public relations advisor was Kekst CNC.

About Airtel in Kenya:

  • Airtel is the second-largest telco in Kenya with 13.1 million subscribers and market share of 28%.
  • Telkom Kenya is expected to acquire a shareholding of 32% in Airtel Kenya in an ongoing business transfer deal. 
  • The company is working with Kenya’s Central Bank to reverse a negative (Kshs -2.7 billion) capital position as a requirement to be part of the national payment system. They expected to lose another Kshs 1.2 billion this year.
  • Airtel has proposed to separate the mobile money business from the telecommunication one and fund the new one with shareholder loans. They had committed to recapitalize the company by Kshs 3.85 billion ($38 million) by August 2019.