Airtel shedding off major assets

Airtel Africa, one of Africa’s largest telecommunications companies, has declared openly that it will sell off its cellular tower infrastructure in all 14 regions where it provides internet and telecommunication services.

Airtel, which has undertakings in the Democratic Republic of the Congo, Gabon, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Uganda, Tanzania, Zambia, Chad, and Congo Brazzaville, is peeping to ameliorate its license of tower infrastructure, choosing to lease it rather at better striking prices.

Helios Towers to purchase Airtel towers in Malawi

Helios Towers notified its stakeholders in February 2022 about ongoing arrangements to purchase Airtel Towers, as well as schemes in the works to obtain extra tower properties in Gabon.

Airtel Malawi asserted on March 25, 2022, disclosing a contract sale of tower assets to Helios Towers for $54,7 million.

Tanzania towers sale

Airtel Africa published the selling of its tower infrastructure to SBA Communications Corporation and UK-based Paradigm Infrastructure Limited, through a joint venture (JV) of two global telecommunication tower operators.

The transaction's total consideration is $176,1 million, according to Airtel Africa. Out of an aggregate of $176.1 million, the JV has already disbursed Airtel Africa about $159 million. And this enters after the first segment of the agreement has been completed.

Record sale to  Towers in Madagascar

Airtel Africa sold its tower assets in Madagascar to Helios Towers for a record $51,7 million.

Airtel Africa asserted, "That the transaction will be worth $51.7 million in sum. Under the terms of the agreement, the Group's Airtel Africa business will continue to build, maintain, and operate its paraphernalia on the towers under distinct leasing treaties with the purchaser, which will be earned in local currencies "

The 12-year service agreement is totalled to yield $5 million in varied earnings before interest, taxes, devaluation, and amortization in the first full year of ownership, according to Helios Towers, with further growth predicted.

“Airtel Africa presently conserves a restricted number of strategic tower sites (approximately 2,500) across its business, and presently has no foreseeable plans to materially augment its owned towers portfolio,” wrote the IFC.

Airtel Africa's tower portfolio includes 1,229 towers in Madagascar and Malawi, as well as another 1,000 towers in Chad and Gabon.

The recent tower deals, according to Airtel Africa CEO Raghunath Mandava, "underline the company's successful enactment of its asset monetization agenda."

"Through long-term leases, which are predominantly paid in local currency by our operational businesses, these transactions will assist to enhance the mix of our debt and increase its tenor while decreasing the Group's foreign currency debt," Mandava added.

Its largest financier, the International Finance Corporation (IFC) asserted in an investment statement that Airtel is trying to concentrate on a cost-saving "asset-light business strategy" and has "divested most of its telecoms tower assets."

The Why?

The telecommunications colossus is doing this to curtail its license of tower infrastructure, opting to rent them to redeem expenses. The leases will be predominantly paid in local currency.

This move by Airtel Africa is popular amongst telcos that are moving towards asset-light models through sale and leaseback agreements of mobile towers with tower companies.

Airtel has operations in the Democratic Republic of the Congo, Gabon, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Uganda, Tanzania, Zambia, Chad, and Congo Brazzaville.

Malawi, Madagascar, Gabon: On March 25, Airtel Malawi announced a record sale of its tower assets to Helios Towers, a market-leading telecom tower infrastructure company, for $54.7 million. Airtel Africa earlier sold its tower assets in Madagascar to Helios Towers for a record $51.7 million. Helios Towers has announced plans to acquire further properties in Gabon.

Note that

This news by Airtel Africa shows up 3 weeks after the corporation settled a $505 million guaranteed senior notes (debt) a year ahe@ad from its due date. Since its IPO in June 2019, Airtel Africa has reduced its US dollar debt by $1.7 billion. The company is successfully pursuing a strategy of reducing its debt, especially its US dollar debt.