Any time from June, Airtel Africa is going to the London Stock Exchange to list its shares for subscription. A total of $1bn worth of shares would be open for subscription. The IPO would be one of London’s biggest this year.
A Breakdown Of Facts
- Airtel Africa is made up of Airtel Chad;Airtel DRC; Airtel Gabon; AirtelTigo Ghana; Airtel Kenya; Airtel Madagascar; Airtel Malawi; Airtel Niger; Airtel Nigeria; Airtel Congo; Airtel Rwanda; Airtel Seychelles; Airtel Tanzania; Airtel Uganda; Airtel Zambia);
- The company had a net profit of $83mn in the fourth quarter of the 2018–19 year to March, driven by its Airtel Money platform, after a loss of $49mn in the year-earlier quarter.
- Investors including Warburg Pincus, Temasek, Singtel, SoftBank and the Qatar Investment Authority (QIA) have invested $1.45b in Airtel Africa through primary equity issuance, with the proceeds being used to reduce debt.
- Indian broker Motilal Oswal, in research on May 7, forecast that the Airtel Africa’s mobile subscriptions will increase by 10.7% for the full year 2019–20, while wireless traffic minutes will show growth of 18%.
- India’s Bharti Airtel established its presence in Africa by buying Kuwait-based Zain’s Africa operations for $10.7 billion in 2010. The company has grown to become Africa’s second-largest telecoms company, with over 94 million customers, and is in the top two carriers in most of the countries where it operates.
- According to Ovum’s Africa Digital Outlook 2019, mobile revenue in Africa will increase from $54.9b in 2017 to $68b in 2022. Non-SMS mobile data revenue — from mobile broadband access and mobile digital services — is expected to more than double to $32.1bn over that period.
Going On IPO Despite Citron’s Claims Against Jumia
- Although market appetite shown for Africa e-commerce company Jumia in its New York IPO in April may mean that the time is right, a report from Citron Research has, however, put a big stain on Jumia’s IPO filing. This is not however expected to affect Airtel’s credibility. Unlike Jumia, Airtel Africa is a profit-making company.
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‘‘In theory, the Jumia IPO should not affect demand for Airtel Africa shares because they have different business models,’’ argues Andrew Sekandi, an investment adviser at Alpha Sierra in London.
‘‘Airtel Africa, deserves to be judged on its own merits. But capital markets being what they are, Jumia’s success may draw in some retail investors and maybe even some institutions that would not previously have considered betting on an Africa-focused stock. Some investors will see the Jumia and Airtel IPOs as essentially a bet on the growth of African consumer markets and the middle class, so this could help Airtel,” Sekandi says.
‘‘Airtel Was Saved by Exapansion Into The African Market.’’
Airtel was “Saved by Africa” in the face of falling profit margins in India, according to October 2018 research from Bond Critic published on Smart Karma. Bond Critic argued that Airtel’s expansion into Africa has been credit positive. Motilal Oswal, which rates Bharti Airtel, says the Africa business has been playing a key part in overall growth for the Indian company.
Strong momentum in Africa should continue on the back of potential to increase revenue share in some markets and growth in the use of Airtel Money, Motilal Oswal says.
Charles Rapulu Udoh
Charles Rapulu Udoh, a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organisations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution and data analytics both in Nigeria and across the world.