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Airtel Africa eyes $1bn London listing, Nigeria’s bourse

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Airtel Office

India’s telecommunications firm Bharti Airtel, is considering a stock market flotation in London, for its subsidiary, Airtel Africa Limited, and subsequent listing on the Nigerian Stock Exchange (NSE).
  
The announcement of the planned listing in Nigeria comes barely two weeks after MTN Nigeria listed by introduction its 20.4 billion units on the NSE at N90 per share.
  
According to Reuters, the Sunil Bharti Mittal firm aimed to raise about $1 billion in a June equity offering, a source close to the deal said. Airtel operates in 14 African markets including Democratic Republic of the Congo, Kenya, Nigeria, Rwanda, Seychelles, Uganda and Zambia.
  
The telecoms operator, according to sources is seeking to list on the NSE to be able to strengthen its operations in West Africa. Airtel is the third largest operator in Nigeria with 26 per cent market share and 45 million subscribers.The firm is the continent’s second-biggest mobile operator.
  
Though, Airtel Nigeria is yet to officially confirm this new development in regards to listing in Nigeria, but an insider within the telecommunications firm told The Guardian yesterday that “something of that nature is in the offing. Watch out!”
   
Also, a source privy to the information at the NSE, confirmed to The Guardian that Airtel Nigeria has declared intention to list its shares on the local bourse.
   
“However, no formal application has been filled to the Securities and Exchange Commission (SEC), the apex capital market regulator in that regard but the telecom firm is currently discussing with the regulator on the proposals,” the source stated.
  
The move comes as stakeholders in the Nigerian Capital market are demanding for the list of all brokerage firms that handle the buying and selling of MTN shares, to prove to the general public that its allegiance lies with them and not the powers that be.
  
According to one of them NSE should “release the names of all brokerage firms that were involved in buying and selling MTN Nigeria’s shares from May 16 – May 22.

According to an analyst, Jude Fajoku, “Free float worldwide is all about quantity of shares and not about market valuation. Let us go back to the basics. The NSE should remove this rule amendment immediately, ‘the value of its free float is equal to or above N40 billion on the date The Exchange receives the Issuer’s application to list.’  
 
“The price of a company’s stock should not be brought into the free float discussion. The core and only matter should be number of shares freely available to trade relative to total outstanding shares. Amend the rules so that any company with an intended or expected listing market value in excess of $500 million (N180billion), can only list by IPO. 

Listing by Introduction will not be allowed for companies with listing valuation expected to exceed $500 million. The NSE and SEC should never have approved a listing for MTN by introduction. The regulators had the leverage as this is an involuntary listing and they let it go to waste! 
 
“MTN Nigeria is dominating the Nigerian telecom industry; has a dominant stake on the NSE (20%), and is dominating the headlines in scandals ranging from disobeying regulatory directives, exporting cash to its parent market without required documentation and underpaying taxes by $2 billion to the Nigerian tax authority. MTN Nigeria has sued the Attorney-General of Nigeria for N3 billion in regards to the underpayment of taxes accusation. The cycle of serenading the bad and vilifying the good in Nigeria appears to be alive and well. 

MTN Nigeria’s listing has been added to a long list of what is wrong by action, while espousing what is right by words” he said

 
Meanwhile, recall that Airtel raised $1.25 billion from six global investors including SoftBank Group Corp, Warburg Pincus LLC and Temasek Holdings (Private) Ltd late last year.
 
A further $200 million was raised in January from the Qatar Investment Authority (QIA), valuing the company just under $5 billion.
   
Airtel Africa is looking to trade on the main market of the London Stock Exchange, using its premium listing segment, which has more stringent rules than the European Union’s minimum requirements, and sell 25 percent of new shares to reduce existing debt.
  
The cash injection from existing investors has already helped to reduce Airtel Africa’s net debt to $4 billion in March, compared to $7.7 billion in the previous year.
  
Its net income reached $83 million in the year to March, compared to a net loss of $49 million a year earlier.
   
For the London listing, the company has appointed JP Morgan, Citigroup Inc , BofA Merrill Lynch , Absa Group Limited, Barclays Bank PLC , HSBC , BNP Paribas , Goldman Sachs International (GS.N) and Standard Bank Group Ltd (SBKJ.J) as advisers.
  
In the initial public offering of the Ordinary Shares, Airtel Africa plc targets 100 per cent primary proceeds with expected free-float of 25 percent minimum.
  
The move would see mobile operator freely float at least a quarter of its shares and use the proceeds to reduce net debt, according to the Offer document.
    
The Chief Executive, Airtel Africa, Raghunath Mandava, in a statement, said: “The 14 countries where we operate offer strong GDP growth potential and have young and fast-growing populations, low customer and data penetration and inadequate banking infrastructure.
 
“These fast-growing markets provide us a great opportunity to grow both our telecom and payments businesses.”


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