Africa: Bharti Airtel to list African unit, sell tower business in bid to slash debt – report

Bharti Airtel is planning strong measures to reduce its USD 14.6 billion debt by USD 4.6 billion over the next three years in a bid to keep its investment grade ratings, Bloomberg reported, citing sources close to the matter. To achieve this goal, the company will try and raise up to USD 1.5 billion by listing a quarter of the equity in its African unit. It hopes to list the assets by the start of next year, either in London or South Africa. The company will also look to sell some or part of its tower operations. Bharti Airtel declined to comment on the report.

The company borrowed money to buy spectrum and to defend its position against Reliance Jio Infocomm. Combined with an eight-quarter-long stretch of earnings declines, the ballooning debt has put Bharti Airtel at risk of a downgrade to junk at both Moody’s Investors Service and S&P Global Ratings. The sale of part of all of the tower business will likely take place in a year, to meet the timeline target imposed by Moody’s to keep the credit at Baa3, which is the lowest investment grade rating.

Bankers for the listing of Bharti Airtel’s Africa unit will be appointed by September, one source said. The unit will house about USD 2.3 billion of debt, putting its enterprise value to USD 8.3 billion.

Another source said the company will have to spend USD 3.6 billion (INR 240 billion) in the year to March to provide 4G services across India and expand broadband, as it continues to compete with Jio. The company invested INR 250 billion in the previous fiscal year.

According to a filing from 25 April, Bharti Airtel will engage with investors to evaluate a strategic stake sale once the mergerof Bharti Infratel and Indus is complete. It will own up to 37.2 percent in the new entity that will control more than 163,000 towers across India.

Bharti Airtel acquired the African assets of Kuwait’s Mobile Telecommunications, or Zain, in 2010, for an enterprise valuation of USD 10.7 billion.