Airtel Africa plc has made an official announcement regarding the renewal of existing service agreements with Bharti Airtel Limited (BAL) and its subsidiary Bharti Airtel International (Netherlands) B.V, (BAIN). This renewal signifies a strategic move by Airtel Africa to uphold and strengthen its operational framework and financial functions.
The services encompass financial, operational, and corporate head office functions provided by BAL or its affiliates to Airtel Africa and its subsidiaries. The details of these agreements were initially disclosed in Airtel Africa’s prospectus during its listing in June 2019.
Transparent and Fair Transactions
In compliance with Chapter 11 of the Listing Rules, BAL is considered a related party due to its shareholding in Airtel Africa through its subsidiary Airtel Africa Mauritius Limited. The transaction, defined as a ‘smaller related party transaction,’ adheres to Listing Rule 11.1.10R, with confirmation from a sponsor that the terms are fair and reasonable for Airtel Africa shareholders.
Financial Implications and Considerations
Airtel Africa outlined the financial aspects of the transaction, revealing that the consideration paid to BAL under the existing services agreements for the financial year ending March 31, 2023, amounted to $9.9 million. Projections for the current and next financial year suggest total payments to BAL will range between $19.8 million and $24 million over the two years.
Financial Performance Overview
Airtel Africa recently reported a foreign exchange loss of $471 million in the first quarter ending June 30. The unification of the exchange rate by the Central Bank contributed to this loss. Despite the challenging macroeconomic environment, Airtel Group witnessed an 8.8% increase in its customer base to 143.1 million users.
Strategic Moves in the Face of Economic Challenges
While navigating economic uncertainties and foreign exchange fluctuations, Airtel Africa remains committed to transparency and efficiency in its transactions. The renewal of service agreements reflects the company’s dedication to maintaining robust operational support from BAL and BAIN.
As Airtel Africa continues its operational journey, shareholders can monitor the company’s adherence to fair and reasonable practices in its related party transactions.
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