Airtel Africa has stopped investing in tower infrastructure in Kenya and other markets in the continent, intending to sell most of its existing assets.
The International Finance Corporation (IFC), which is funding the telco, says the company is now reducing ownership of infrastructure in favour of leasing .
“Airtel Africa is focusing on an asset-light business model and has divested most of its tower portfolio. It is in the final stages of divesting majority of its remaining tower portfolio to tower companies,” IFC said in its investment disclosures.
Airtel Africa currently engages independent telecommunications tower companies to expand its network by either leasing space on their existing infrastructure, or contracting them to erect towers specific to Airtel’s network coverage needs. In this second case, the telco becomes the “anchor tenant.”
Last Friday, Airtel Africa closed the sale of its telecommunications tower company in Malawi to Helios Tower for $54.7 million. Helios Towers said it entered into a 12-year service agreement on the acquired assets with Airtel Africa. The agreement is expected to deliver revenue of $23 million and adjusted earnings before interest, tax, depreciation, and amortization of $8 million in its first full year of ownership of the tower company.
In January this year, Airtel Africa confirmed the first closing of the transaction to sell its telecoms tower assets in Tanzania for $176.1 million. The sale was to a joint venture company (the Purchaser) owned by subsidiary of SBA Communications Corporation,as majority owner, and by Paradigm Infrastructure Limited.
Under the transacton’s terms , Airtel Africa’s subsidiary in Tanzania will continue to develop, maintain and operate its equipment on the towers under separate lease arrangements, largely made in local currencies, with the Purchaser.
Following the first closing, approximately $159 million of the proceeds has now been paid, with the balance payable in instalments once completion of the transfer of remaining towers to the Purchaser is done.
Airtel Africa currently maintains a limited number of strategic tower sites (approximately 2,500) across its business, with no foreseeable plans to materially expand its owned towers portfolio.
The telco says further growth is anticipated through 60 committed build-to-suits over the next three years and a colocation lease-up.