Emerging data and mobile money growth eyed by Airtel Africa IPO
Mobile network Airtel Africa is hoping to raise around £595m from new investors as part of a London stock market flotation later this month in what could be an interesting emerging market opportunity for investors.
Airtel Africa is the second largest mobile operator in the continent, providing services to 98.9m subscribers in 14 nations. Owned by India’s Bharti Airtel and a handful of institutions, the company plans for a free float of at least 25%. The new shares will be priced at between 80p and 100p each, implying an upper range market valuation of £3.6bn.
Airtel Africa has spent the best part of the past decade building its mobile networks throughout Africa, having initially bought Kuwait-based Zain’s African operations in a $10.7bn deal in 2010. Since then it has embarked on a series of acquisitions from Nigeria in the west of Africa, to Kenya in the east, and as far south as Malawi and Zambia.
In the year to 31 March Airtel Africa reported revenue just shy of $3.1bn and earnings before interest, tax, depreciation and amortisation of $1.33bn, on an underlying basis. About two-thirds of that comes from voice revenues but the company hopes to ramp-up income from increasing data usage and mobile cash transactions through its Airtel Money service.
Africa has become a popular testing ground for mobile financial transaction services, including banking apps, largely because of limited fixed-line infrastructure.
‘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,’ says Raghunath Mandava, Airtel Africa’s chief executive.
New funds raised are likely to go towards paying down its $4bn or so net debt.
Final pricing of the new shares is expected on 28 June, with trading in the stock scheduled to start the same day.
This sounds like an interesting emerging markets growth opportunity, but without more detail on valuation or dividend potential, one to watch only for now.