Airtel Africa secures financial stability with repayment of $550m bond

Joy Agwunobi

Despite the adverse impact of foreign exchange fluctuations that led to an after-tax loss of $89 million in the fiscal year ending March 31, 2024, Airtel Africa has taken a significant step towards fortifying its financial stability. This is as the company’s subsidiary, Bharti Airtel International (Netherlands) B.V., repaid in full a $550 million bond which was due to mature on May 20, 2024. The bond was a 5.35 percent Guaranteed Senior Notes, and the timely repayment showcases Airtel Africa’s commitment to maintaining a healthy balance sheet and fulfilling its financial obligations.

As disclosed by Simon O’Hara, the group company secretary, through a corporate filing submitted to the Nigerian Exchange Limited (NGX), Airtel Africa achieved a critical milestone by clearing a significant bond obligation at the subsidiary level, securing the company’s overall financial standing. Airtel Africa stated that the $550 million bond repayment was made from the holding company’s cash reserves and is a continuation of its strategy to decrease its external foreign.

Beyond the successful repayment of the bond, Airtel Africa disclosed that during the Initial Public Offering (IPO) in June 2019, the group had an accumulated external debt of $2,719 million at the holding company level. This sizable debt, paired with the volatility of foreign currency exchange, had put a significant strain on the company’s resources, necessitating the upstreaming of funds to satisfy both interest and principal payments.

As stated by Airtel Africa, the adherence to its growth strategy has not only generated strong free cash flow but also enabled the group to gradually mitigate the burden of the initial $2,719 million HoldCo debt, culminating in the significant milestone of a zero-debt position at the HoldCo level.

The current capital structure of Airtel Africa, with reduced foreign currency debt obligations across its operating companies (OpCos), has been considered a testament to the company’s prudent capital allocation strategy, which has been in effect since its IPO and will continue to be a core focus of its financial management going forward.