Airtel Africa has confirmed that its subsidiary, Bharti Airtel International (Netherlands) B.V., has completed a $550 million bond repayment that was due this month.
The move is targeted at cutting foreign currency debt.
Airtel Africa in the company’s notice to the Nigerian Exchange Limited seen by Nairametrics confirmed that its subsidiary has fully repaid the 5.35% Guaranteed Senior Notes maturing on 20 May 2024.
The notice signed by the Group Company Secretary, Simon O’Hara, said the bond repayment of $550 million has been made exclusively out of cash reserves at the holding company (HoldCo) and is a continuation of its strategy to reduce external foreign currency debt.
The company noted that at the time of the initial public offer (IPO) in June 2019, the Group had $2,719 million of external debt at HoldCo which resulted in significant exposure to currency fluctuations and the reliance on upstreaming funds to cover both interest costs and the principal repayment.
According to Airtel, through consistent execution of its strategy supporting strong free cash flow generation, and continued upstreaming success, the Group has been reducing Holdco debt over the past few years and has now reached the significant milestone of a zero-debt position at HoldCo.
“The current leverage and capital structure are a reflection of the Group’s successful capital allocation strategy that has been in place since our IPO, and it will aim to continue reducing foreign currency debt obligations across its OpCo’s,” the company said.
Bharti Airtel’s Africa operations have faced significant financial challenges due to currency devaluations in several key markets, including Nigeria and Malawi. The devaluations have resulted in substantial foreign exchange losses, amounting to $1.7 billion for the fiscal year ending March 31, 2024.
Despite strong growth in service revenues when measured in constant currency showing an overall increase of 20.9%, which accelerated to 23.1% in the fourth quarter, the company’s financial performance in reported currency has been adversely affected.
The share buyback program, which commenced in March 2024, is structured in two phases with a maximum expenditure of $100 million.
As of May 20, 2024, the company had repurchased 14,447,681 ordinary shares at an average price of GBP100.46 per share.
Share buybacks can impact various aspects of a company, including EPS, cash flow, and valuation, and serve as a strategic tool to achieve key objectives.
For Airtel Africa, repurchasing its shares is a prudent use of capital, given the increase in cash reserves, current leverage, strong operating cash generation, and robust long-term growth outlook.
