Bharti Airtel has secured shareholder approval for a share-swap transaction that will increase its effective stake in Airtel Africa to about 79%, deepening its exposure in its fastest-growing overseas market while simplifying the group’s ownership structure.
The transaction involves Airtel issuing equity shares to promoter-group entity Indian Continent Investment (ICIL) in exchange for its 16.31% stake in Airtel Africa. The deal, which remains subject to regulatory approvals, allows Airtel to raise its ownership in the African business without any cash outflow or additional debt.
The company said nearly all shareholders, including public and institutional investors, approved the proposal. In May, the telco’s board had approved the decision to increase Airtel’s stake in Airtel Africa.
“Airtel Africa is central to our growth strategy and is well positioned to deliver robust performance with an increasing contribution to our consolidated revenues,” Sunil Bharti Mittal, founder and chairman, Bharti Enterprises, said.
“The company has always operated at the highest standards of corporate governance and financial discipline, and this overwhelming support reinforces the confidence that the investors have in the organisation.
Structured as a share swap, India’s largest ever transaction preserves capital strength for Airtel’s core operations and future growth ambitions. As we look ahead, we see significant potential in Africa for long-term shareholder value creation,” he added.
During the telco’s fiscal fourth quarter earnings call, Airtel said it expected a larger Africa holding to strengthen future cash generation through dividends and buybacks from the African unit. Mittal had indicated that these flows could eventually provide Bharti Telecom the financial firepower needed to acquire more Airtel shares over time.
Mittal had also said his “cherished desire” was for Bharti Telecom, an Airtel promoter entity, to once again own over 50% of Airtel over the next decade, and that the share swap in Airtel Africa would help towards the same.
Airtel said the cashless transaction would enable it to acquire a large block of shares in Airtel Africa while preserving capital and avoiding incremental leverage. The company also said the transaction would streamline the group’s shareholding structure.
The deal marks the latest step in Airtel’s strategy of gradually increasing its ownership in Airtel Africa, which has emerged as a key growth platform for the group and an increasingly important contributor to consolidated revenues.