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Bharti Airtel plans London IPO for Africa unit to cut debt

Airtel Africa is likely to be listed on London Stock Exchange in June. Last year, Airtel Africa raised Rs 8,714 crore ($1.25 billion ) last year from investors including Temasek Holdings Pte and SoftBank Group Corp, assigning it an equity value of about $4.4 billion.

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Bharti Airtel plans London IPO of Africa unit to cut debt

Bharti Airtel plans to list its Africa unit in London to raise Rs 6,976 crore ( $1 billion) which will be used to pare the telco's debt. Currently, Bharti Airtel has nearly Rs 1.11 lakh crore debt on its books.

The initial public offering (IPO) will comprise issue of new shares and the sale would seek a free float of at least 25%, the company said.

Airtel Africa is likely to be listed on London Stock Exchange in June, according to a report by Bloomberg. Last year, Airtel Africa raised Rs 8,714 crore ($1.25 billion ) last year from investors including Temasek Holdings Pte and SoftBank Group Corp, assigning it an equity value of about $4.4 billion.

"The main motivation is the debt level at the parent," said John Davies, an analyst at Bloomberg Intelligence. The "rights issue, talk of selling towers plus this IPO are all consequences of that." Airtel is ranked second in the Africa market behind Johannesburg-based MTN Group with nearly 100 million subscribers across 14 countries including Nigeria, Kenya and Tanzania.

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Commenting on the planned offer, Sunil Bharti Mittal Chairman of Airtel Africa, exuded confidence that the company is in a "strong position" to build its own capital market profile. "Since first investing in Africa almost nine years ago, we have well leveraged our expertise in emerging markets to deliver on a clearly-defined strategy to build Airtel Africa into a market leading mobile service provider, increasingly expanding beyond voice into data services and Airtel Money. Today, Airtel Africa is the second largest mobile operator in Africa," Mittal noted.

A successful IPO will help the company kickstart a "stronger growth phase" in Africa, Bharti Airtel Chief Executive Officer Raghunath Mandava said.

The company is also considering a local listing in Nigeria, according to the IPO filing. Sunil Mittal-led Bharti Airtel has been affected by cheap tariffs of Reliance Jio, telco owned by billionaire Mukesh Ambani.

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Airtel's earnings have fallen and debt has risen since Reliance Jio stormed the Indian market in 2016 with free calls and cheap data. Airtel is depending on some asset sales, a rights issue and lately the Africa unit's London IPO to boost its finances. The number of wireless mobile users of Vodafone Idea and Bharti Airtel shrunk by nearly 14.5 million and 15.1 million as of March this year over the previous month. On the other hand, Reliance Jio added around 9.4 million users in March, according to data by Telecom Regulatory Authority of India (TRAI).

Bharti Airtel's mobile subscriber base was recorded 325.1 million in February. However, rival Reliance Jio was 306.7 million as on March 2019 against 297.2 million in February. The Mukesh Ambani-led telecom witnessed a rise of 9.5 million in a month..

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