Airtel Africa Plc recalled $505m in bonds and sold telecom towers in Malawi, Madagascar and Tanzania for a total of $284m in moves to repay nearly $3bn of debts on its balance sheet that weigh on its continental operations.
By calling a bond, a company repays the principal amount and interest of a debt security before the due or due date. This occurs when the issuer (borrower) intends to wipe the debt off their books and save on regular interest payments.
The telecommunications company, a subsidiary of India’s Bharti Airtel Ltd, which operates in 14 African countries, redeemed the bonds due to mature in March 2023, saving $26 million in interest payments from the redemption anticipated.
“Consistent with our strategy to continue to reduce the holding company’s foreign currency debt, we also redeemed $505 million of bonds in March 2022, one year ahead of their March 2023 redemption date,” the statement said. company in its financial statements for the year ended March. 31, 2022.
“Our balance sheet has also been further reduced by the continued localization of our debt in the operating companies (OpCos) and the significant reduction of debt in the holding company (HoldCo).”
Following the early redemption of the bonds at the price of 5.125%, the Group has only $1 billion of remaining bonds at the holding company level which mature in May 2024.
In 2019, the telecommunications company raised $750 million through an initial public offering (IPO) and used the net proceeds from the issuance of new shares to pay off part of the $4 billion debt. . “During this period, the Group reduced its debt by $1.7 billion and improved its leverage ratio to 1.3x net debt to operating income before interest, tax, depreciation and amortization (EBITDA) at March 31, 2022.”
The Group completed the sale of over 2,600 telecom towers in Tanzania, Madagascar and Malawi, generating total proceeds of $284 million which was used to partially reduce its debt to $2.9 billion against $3.5 billion.
The proceeds from the sale of the tower were: Tanzania ($177 million), Malawi ($55 million) and Madagascar ($52 million).
The Group recorded a gain of $111 million on tower sales, but the loss of tower sharing revenue as a result of the sale of these towers amounted to $29 million per year.
The group, which has 128.4 million customers, is seeking to sell more shares to the public via an IPO in three years and to sell more telecom towers in Chad and Gabon. In March 2021, the Group announced memorandum of understanding agreements with Helios Towers for the potential sale of its tower assets in Chad and Gabon.
In February 2022, Airtel Africa announced that it had agreed to an extension of its MoU with Helios Towers in Gabon, with completion still subject to Helios Towers obtaining a passive infrastructure license.
The Memorandum of Understanding for the tower assets in Chad expired in February 2022, and Airtel Africa and Helios Towers have mutually agreed that it will not be renewed.
Group net profit for the year rose 82% to $755 million from $415 million last year.
Total group revenue increased 21% from $3.88 billion to $4.71 billion, with voice, data and mobile money contributing 50%, 32.3% respectively and 11.7% of overall turnover.
Its operating cash flow increased 40% to $1.65 billion from $1.17 billion, while finance costs fell 5% to $403 million from $423 million during the same period.
Nigeria operations contributed 39.8% ($1.87 billion) to the group’s overall revenue, followed by East Africa which has 57.2 million customers at 36.4% ($1.71 billion) while Francophone Africa contributed 24% ($1.13 billion).
On March 7, Airtel Africa announced that its Kenyan subsidiary, Airtel Kenya Networks Ltd, had reached agreements with the Communications Authority of Kenya regarding its operating and spectrum licenses, and had received approval for the replacement of its temporary license with a 10-year frequency license. for 2×10 MHz of spectrum in the 2100 MHz band.
With regard to the 2015-2025 operating and spectrum license agreements, Airtel Kenya will pay a total of $20 million in four installments over the next three years, while with regard to the 2×10 MHz license (2022-32), Airtel Kenya agreed and paid for a 10-year license for $10 million.
“This $30 million investment reflects our continued belief in the huge opportunity inherent in the Kenyan market,” the telecom operator said.