Airtel sells 3,500 towers to Eaton in Africa

Bharti Airtel said on Monday it had sold about 3,500 telecom towers to Eaton Towers across six countries in Africa.

The two companies have signed a 10-year contract, and the deal will help Eaton to expand operations in these countries. The agreement will allow Airtel to focus on its core business and customers, and to cut its debt. It will also significantly reduce its ongoing capital expenditure on passive infrastructure, the company stated.

The announcement comes within two months of Bharti announcing a plan to sell about 3,100 towers to Helios Towers across four countries in Africa.

HOW IT WORKS

• Bharti Airtel and Eaton Towers  have signed a 10-year contract
• The deal will help Eaton to expand operations in seven countries
• The pact will allow Airtel to focus on its core business and customers, enable it to deleverage through debt reduction
• The announcement comes within two months after Bharti announced plans to sell about 3,100 towers to Helios Towers across four countries in Africa

Bharti Airtel did not disclose the Eaton deal value. Tower companies operatig in Africa indicated the valuation of a tower is between Rs 40 lakh and Rs 50 lakh. Of 17 countries in Africa where Bharti has operations, the valuation is higher at Rs 1 crore each in Nigeria. The valuation of the deal could be between Rs 1,400 crore and Rs 3,500 crore. Bharti Airtel has not given the details on the location of the 3,500 towers. It has about 15,000 towers in Africa.

During earlier deals in the tower infrastructure space in Africa, such as Tanzania’s Millicom’s deal for 1,000 towers and MTN’s deals in Ivory Coast, Uganda and Cameroon, one tower was valued between Rs 73 lakh and Rs 1 crore.

“The agreement will lead to far superior utilisation of passive infrastructure and help drive the proliferation of affordable mobile services across Africa,” stated Manoj Kohli, chairman of Bharti Airtel International Netherlands BV.

The agreements are subject to statutory and regulatory approvals in the respective countries, the statement added.

Eaton was advised by Moelis & Co for the deal.

Bharti Airtel has been exploring options to sell more infrastructure assets in Africa as part of a debt reduction exercise. Since its Africa entry in 2010, it has been taking the pressure of under-performance in operations across the 17 countries where it is present. In the recent April-June quarter, its net loss for the African business was $137 million, compared to $52 mn in the corresponding period last year.

Consolidated net debt was Rs 57,744 crore ($9.6 billion) at the end of June, down from Rs 60,541 crore ($10.07 billion) till end-March. Most of Bharti’s debt is because of its $10.7-billion acquisition of Zain Telecom’s Africa business in 2010.