Airtel Africa Apr-Sept profit drops 37% to $145 mn, revenue up 10.7%

 

Bharti Airtel's Africa operations, Airtel Africa, on Friday posted 36.6 per cent decline in profit after tax on reported currency basis at USD 145 million (Rs 1,066 crore) for September quarter 2020.

The company had posted a profit after tax of USD 228 million in the same period a year ago.

Airtel Africa, however, recorded a growth of 19.5 per cent to USD 472 million in operating profit on constant currency basis, the company said in a statement.

The revenue of the company increased 10.7 per cent to USD 1,815 million during the quarter under review from USD 1,640 million in the corresponding quarter of 2019-20.

Airtel Africa CEO Raghunath Mandava said the first half of current fiscal year included the peak impact of the COVID-19 pandemic in the countries.

"Importantly, the fundamentals of our business remain strong and revenue growth further benefited from the execution of our strategy with a specific focus on expanding distribution in the rural areas, investing in our network and increasing 4G coverage, as well as benefiting from the fact we provide an essential service to consumer," he said.

Mandava said that as the lockdown restrictions eased during the second quarter, Airtel Africa's performance continued to improve with constant currency revenue growth of 19.6 per cent, up 6.6 per cent from the previous quarter.

"In Q2, performance in our mobile money business also significantly improved with constant currency revenue growth of 33.9 per cent, up 8 per cent from prior quarter, as lockdown restrictions were eased and fees on certain transactions, which had been previously waived, were largely reintroduced," Mandava said.

Bharti Airtel's Rs 24,939-crore rights issue fully subscribed

Bharti Airtel's Rs 24,939-crore rights issue, the largest fundraising exercise by the company, garnered good response, with the offering seeing more demand than the number of shares on offer.

"Based on preliminary information received, the rights issue has been oversubscribed," the company said in a statement to the BSE. An investment banker handling the issue said the rights issue had garnered 105 per cent subscription.

The data provided by the National Stock Exchange (NSE) and the BSE, however, showed the offering had garnered bids for only 690 million shares-61 per cent of the issue size of 1.13 billion shares. Bankers said additional demand came from renunciations that did not reflect in exchange bids. Renunciation is done by a shareholder with rights entitlement in favour of another investor.

The bulk of the proceeds from the share issue will be used to repay debt and lower borrowing costs. However, experts believe a large part of the proceeds could be deployed to take on Reliance Jio. It could also be used for the proposed 5G spectrum auctions this year.

Shares of Bharti Airtel closed at Rs 328 on Friday on the BSE. The latest fundraising will increase Bharti Airtel's equity base to 5.13 billion equity shares.

The rights issue was handled by Axis Capital, JP Morgan, Goldman Sachs, HSBC Securities and ICICI Securities. In February, the firm's board had cleared plans to raise Rs 32,000 crore through a Rs 25,000-crore rights issue at Rs 220 a share, and bond sales of Rs 7,000 crore.

Equity shareholders of Bharti Airtel as of April 24 were eligible to apply for 19 rights equity shares for every 67 equity shares held.

The Bharti Airtel promoter group, including Singtel and Bharti Telecom, are said to have subscribed to shares worth Rs 11,786 crore, with rest of the bids coming from the public.

GIC Private, the Singapore government's investment arm, had planned to invest Rs 5,000 crore ($700 million) to pick up around 4.4% stake in Bharti Airtel by subscribing to the telco's mega rights issue. Singtel in its annual report for the financial year ended March 2018 had said that it would continue to take a long-term strategic view of the India business landscape.

During that financial year Singtel increased its stake in Bharti Telecom --Airtel's key holding company.

Bharti Airtel's rights offering comes less than a month after rival Vodafone Idea raised a similar amount also through rights issuance. Vodafone Idea's rights issue was oversubscribed 1.08 times. The promoters, Aditya Birla Group and UK's Vodafone Group, were allotted Rs 17,920 crore increasing their shareholding to 71.57 per cent over 71.33 per cent earlier.

These companies are gearing up for the proposed 5G spectrum auctions during the year.