Debate rages on Airtel IPO

Post was last updated: January 10, 2020
HARAWA—It is unprofitable

Dust is refusing to settle on divided opinion that has emerged in the public domain following the issuing of an Initial Public Offer (IPO) by Airtel Malawi plc, last week.

Recent to comment on the matter is General Secretary of the minority shareholders association of listed companies, Frank Harawa, who feels the company has been allowed to cheat by only listing the communications business by the name Airtel Malawi and preserve its mobile money business (Airtel Money or Airtel Mobile Commerce Limited).

In an interview on Times Television’s Breakfast Live programme, Harawa said the company that is being listed is not something that Malawians are going to benefit from when they choose to invest in, as is in a K42 billion debt.

“It one of our members that was pushing for Airtel to list on the local bourse according to regulations, and we wondered why they had to take out Airtel Money. TNM is listed but their mobile money business Mpamba is there also.

“The company they are listing has a K42 billion debt but its assets are only K50 billion and they are only listing because we gave them pressure, why should they be allowed to do that?” Harawa wondered.

In an email response to our questionnaire, Airtel Malawi Managing Director, Charles Kamoto, said the problem is stemming from people failing to digest that the two companies are different owned by one foreign company.

“Airtel did not opt to leave out any business. It is important to understand that Airtel Money, or Airtel Mobile Commerce Limited has always been a separate business and was incorporated on June 11, 2009. The holding company for the two separate businesses is incorporated outside of Malawi.

“It is also important to note that Malawi regulations require that mobile money business must be separate from the GSM business. If we were to look at the combined revenues of Airtel Malawi Limited plc and Airtel Money of 2018, the mobile money business contributed approximately 11 percent of total revenue,” Kamoto said.

On the debt position, Kamoto reiterated that there is a misunderstanding around Airtel’s debt position, due to current assets of K53 billion and current liabilities at K95 billion driven from an external loan of K31 billion from Bank of America (BoA) which is due in May 2020.

“This is not a concern as we have Undrawn Committed facilities in hand to cover K22 billion as well as free cash flows and funds received from the sale of the 90 towers at K5.9 billion which will be utilized to repay external loans falling due within a period of 12 months. Excluding the BoA loan, the net current liability as at June 2019 stands at K11 billion which is normal in telecom business,” Kamoto explained.

In a separate interview, Nico Asset Managers Chief Investment Officer, Daniel Dunga, maintained that Stock Market is for long-term investments and those expecting to benefit for investing in the company should focus on the long-term.

Officials from the Reserve Bank of Malawi and the Malawi Stock Exchange declined to comment on the matter stressing that the company is still under compliance stage.

On December 31 2019 Airtel Malawi issued an IPO to raise about K27.92 billion through the sale of 2.2 billion shares at K12.69 per share.

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