Bharti Airtel to sell 3,500 mobile towers in Africa

KOLKATA: Sunil Mittal-led Bharti Airtel will sell more than 3,500 of its mobile towers in six African countries to tower operator Eaton Towers in its bid to reduce costs, exit non-core businesses and raise cash in the run-up to the upcoming spectrum auctions.

India's No. 1 mobile carrier will lease back the towers from Eaton under a 10-year pact, both companies said in a joint statement on Monday, although they did not disclose the size of the 3,500-plus towers sale deal. Two people familiar with the transaction, however, told ET that the deal size would be close to $900 million (about Rs 5,400 crore).

In a note to clients, analysts at Phillip Capital said "the sale and leaseback model implies Bharti Airtel will get cash, equivalent to replacement cost of the towers, which works out in the $700-900 million (range)," adding that money was being raised by India's leading mobile operator to "prepare for the upcoming auctions".
Malawi, Niger, Ghana, Burkina Faso, Uganda and Kenya are the countries where Airtel's towers, which are part of the agreement with Eaton, are located. The agreements are subject to statutory and regulatory approvals in these African countries. "We are strong proponents of telecoms infrastructure sharing, which results in industry-wide cost efficiencies, and this agreement (with Eaton) represents the next phase of Airtel's growth journey in Africa," Manoj Kohli, chairman, Bharti Airtel International Netherlands BV (BAIN), said in a statement.

Kohli added the tower deal would “allow Airtel to focus on core business and customers, enable it to deleverage through debt reduction and would also significantly reduce its ongoing capex on passive infrastructure”. Eaton Towers CEO Alan Harper said this "transformational deal" would give the company the most diversified tower portfolio across Africa.

It would expand Eaton's Africa footprint to seven countries with over 5.000 towers. Airtel's latest tower deal is part of its plans to divest most of its 15,000-plus towers in Africa, in a process that could reportedly raise up to $2 billion.

The Airtel-Eaton tower deal is also in the run-up to a potential sale of Airtel's Nigerian tower assets in under three weeks that is tipped to rake in over $1 billion. American Tower Co (ATC) is reportedly the front runner to buy Airtel's 4,000-odd towers in Nigeria, followed by IHS Towers.

In July, Bharti Airtel had agreed to sell some 3,100 towers in four African markets to Helios Towers. That deal was in line with Bharti Airtel's earlier position to "hive off non-core assets", especially since the proceeds from that transaction were expected to help the telco cut debt at its loss-making African operations, which have been a drag on its finances after it entered Africa four years ago.