The big selloff

Airtel Africa Is Gradually Offloading Its Telecom Tower Assets

By  |  March 29, 2022

One of the largest telecommunications services providers in the continent, Airtel Africa is often in the news for its streaks of revenue turnovers. Recently, though, the operator has exhibited a load-shedding appetite, one that sees it letting go of its tower assets in select African markets.

Airtel, which operates in up to 14 markets in the region, is in the process of unloading its telecom tower infrastructure. The process kicked off in early November last year, when the company announced that it had sold its tower business in Madagascar, an island nation off Southeast Africa’s coast. Airtel sold its Malagasy towers [to Helios Towers] for a confirmed USD 51.7 M. 

Early into January, Airtel was in the news again, when the company sold its tower assets in Tanzania to a shared venture established by a wholly-owned subsidiary of SBA Communications Corporation [as majority owner] and Paradigm Infrastructure Limited. These assets were handed over to the buyer(s) for USD 176.1 M, of which USD 159 M was immediately paid. 

This week, Airtel’s tower-selling spree has transited to Malawi, a Southern African market where the telco has sold assets for USD 54.7 M [to Helios Towers]. 

Under the transaction’s terms, Airtel Africa said its Malawian operations [Airtel Malawi] would continue developing, maintaining, and operating its equipment on the towers under separate lease arrangements, largely made in local currencies, with the buyer. The deal, which will be valid for the next 12 years, grants Helios 723 more sites across Malawi, with the towerco expecting USD 23 M in revenue after a year’s worth of control. 

The deal will grant Helios Towers a further 723 sites across Malawi, with the firm anticipating US$23 million in revenue after it has controlled these for a full year. Under the agreement, Airtel Malawi will lease the infrastructure for 12 years.

Meanwhile, in Kenya, the telco has reportedly stopped investing in its tower infrastructure, intending to sell off those assets eventually. 

Fundamentally, Airtel Africa is transitioning from being a major owner of telecommunications infrastructure to a [mere] leaser. The International Finance Corporation (IFC), a major shareholder in Airtel, says the telco is also in talks with independent telecom tower firms as it looks to secure leasing space for existing and new infrastructure. 

IFC also reports that Airtel Africa is currently in talks with independent telecom tower companies to secure the leasing of space on the existing infrastructure of these companies and for the construction of new towers specific to Airtel’s business requirements, which in the long run make the telco an “anchor tenant.”

“Airtel Africa currently maintains a limited number of strategic tower sites (approximately 2,500) across its business and presently has no foreseeable plans to materially expand its owned towers portfolio. It is focusing on an asset-light business model and has divested most of its telecommunications tower portfolio and is in the final stages of divesting the majority of its remaining tower portfolio to tower companies,” the IFC said

In Chad [north-central] and Gabon [central], the mobile operator entered an exclusive memorandum of understanding arrangement subject to passive infrastructure licensing in each market. 

The close of the tower selloffs in Chad and Gabon is expected by the end of Q1 2022. These assets, when sold, will expectedly generate aggregated annual revenues of USD 89 M and adjusted EBITDA of USD 27 M within the first year of new ownership. 

At the end of last year, Airtel Africa’s half-year financial report showed a 25.2 percent revenue growth and double-digit growth across all its regions of operation. For the second quarter of last year, the telecoms operator posted revenue growth of 20.3 percent. Its customer base grew by 5.4 percent to 122.7 million, while the telco’s data and mobile money segments increased 10.9 percent and 19 percent, respectively. 

Airtel Africa, the African telecoms business of India’s Bharti Airtel, is the second-biggest telecom operator in Africa, coming only after South Africa’s MTN Group. 

Featured Image: Rajant.com

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