Bharti Airtel is selling a chunk of its telecom tower assets in Africa spread across six countries in the continent to Eaton Towers, an independent telecom tower company in Africa, as part of its move to deleverage the balance sheet, the company said in a release. The firm has simultaneously also entered into a 10-year lease-back agreement to use the towers.
Although the firm did not disclose the deal amount, media reports had previously suggested it could be worth around $1 billion.
It has signed an agreement for the divestment of over 3,500 telecom towers spread across six African countries. This allows the company to focus on its core business and customers and reduce ongoing capital expenditure. The agreements are subject to statutory and regulatory approvals in the respective countries.
This comes two months after Airtel sold 3,100 telecom towers to Helios Towers Africa (HTA), a firm owned by a consortium of investors including Africa-focused PE firm Helios Investment Partners and International Finance Corporation (IFC), for an undisclosed amount.
This is part of the overall strategy of the company to sell off its 15,000 towers to independent tower companies in the continent.
With the two transactions, Bharti Airtel's tower assets will come down to around 8,400.
Bharti Airtel has operations in 20 countries in Africa after snapping the assets of Kuwait’s Zain in the continent for $9 billion in 2010. It is yet to make profit from the African business and reported a 1.7 per cent sequential decline in revenues from the region with higher net loss in the quarter ended March 31, 2014.
Airtel Africa witnessed 10 per cent growth in total revenues to $1.16 billion for the first quarter ended June 30, 2014.
“We are delighted to announce this agreement, which represents the next phase of Airtel’s growth journey in Africa. We are the pioneers and strong proponents of telecoms infrastructure sharing, which results in industry-wide cost efficiencies. The agreement with Eaton Towers is an extension of this philosophy and will lead to far superior utilisation of passive infrastructure and help drive the proliferation of affordable mobile services across Africa," said Manoj Kohli, chairman, Bharti Airtel International Netherlands BV.
For Eaton, the acquisition is a major step towards the scale needed to provide shared telecoms infrastructure solutions, with its customers benefiting from lower operating costs, expanded network coverage and capacity and improved quality of service. This will expand its coverage in Africa to seven countries and more than triples its asset base to over 5,000 towers.
Eaton Tower is an independent telecom tower company in Africa which currently offers tower sharing on more than 1,500 units in Ghana, Uganda and South Africa. Founded in 2008 by Sanjiv Ahuja (ex CEO Orange), Alan Harper (ex Vodafone UK MD) and Terry Rhodes (ex Celtel co-founder), the firm acquires, builds and manages shared telecom infrastructure, leasing it to mobile operators.
Moelis & Co advised Eaton Towers on this deal.
(Edited by Joby Puthuparampil Johnson)