Six banks pitch for Airtel Africa IPO

Firm backs NCC on call masking sanction

About five to six banks are believed to be pitching Indian telco Bharti Airtel on a potential listing of its Africa operations. The unit could be worth around $6.6 billion. Airtel has a presence in over 15 African countries.

Sources told TMT Finance that requests for proposals ahead of a beauty parade were yet to be sent but that a number of banks were holding informal discussions with Airtel, offering proposals on potential valuations and places of listing. These are believed to include Bank of America Merrill Lynch, Barclays and UBS.

Bharti Airtel International (BAIN), the holding company that owns its African interests, could have an enterprise value of $6.6 billion, six times its EBITDA. An equity valuation would bring it to $1.1 billion after factoring in an estimated $5.5 billion net debt.

As for the place of listing, Airtel’s management would favour London but that question still remains to be decided.Airtel acquired Zain’s Africa business for $10.7 billion in 2010. Standard Chartered and Barclays were the financial advisers for the deal. Airtel struggled to replicate its Indian model on the African continent and repaid a bumper loan of $9 billion for the acquisition. It started to deleverage its debt by selling 8,300 mobile towers in Africa for $1.7 billion to various towercos. It then went on with selected sales (Sierra Leone, Burkina Faso) and mergers (Ghana, Rwanda).

Sources reckoned the IPO process could also take the form of dual track and that should a global offer come from the Airtel portfolio in Africa, its owner Sunil Mittal would be likely to sell at the right price.

Meanwhile, Airtel Nigeria has commended the Nigerian Communications Commission (NCC) over stiff actions it has adopted in curbing the menace of call-masking and refiling in the industry.

Call masking is the act of concealing international calls coming into a country and presenting them as local in order to make profits from the difference in prices between local and international calls.

The commendation was made by the Managing Director of Airtel, Segun Ogunsanya, during an interactive session with Executive Director, Africa, Raghunath Mandava, and other top officials of the firm with the Executive Vice Chairman of NCC, Prof Umar Garba Danbatta, at GSMA World Mobile Congress in Barcelona, Spain.

Ogunsanya said: “I would like to sincerely commend the EVC and the commission for the tough action against the menace of call masking, which is no doubt inimical to telecom business in the country.”

In his response, Danbatta told the delegation that a new flexible regulation for spectrum trading and transfer of license rights and obligations, from one party to another, would soon come to effect as the framework was already conclusive.Danbatta stated that the NCC has recently suspended the operating licenses of some telecommunications operators for engaging in call masking, saying call masking is the act of concealing international calls coming into a country and presenting them as local in order to make profits from the difference in prices between local and international calls.