Airtel Africa PLC has on Wednesday, June 2, said that it has agreed to sell Airtel Tanzania’s tower portfolio to a joint venture owned by a subsidiary of SBA Communications Corp. and Paradigm Infrastructure Ltd. for $175 million.
SBA Communications is an independent owner and operator of wireless communications infrastructure, while the UK-based Paradigm Infrastructure is focused on developing, owning and operating shared wireless infrastructure in selected growth markets.
The UK listed, Africa-focused telecommunications operator said this is the latest strategic divestment of its tower portfolio as part of its shift to an asset-light business model focused on its core subscriber-facing operations.
Airtel Tanzania’s tower portfolio comprises around 1,400 towers, which form part of the group’s wireless telecommunications infrastructure network.
As per the agreement, the group’s subsidiary Airtel Tanzania Plc will continue to develop, maintain and operate its equipment on the towers under a separate lease arrangement with the buyer companies.
The transaction is the latest strategic divestment of Airtel’s tower portfolio as it focuses on an asset-light business model and on its core subscriber-facing operations.
Of the entire deal amount, $157.5 million will be payable on the first closing date, which will be in the second half of the group’s current financial year.
The balance amount is payable in instalments upon the completion of the transfer of any remaining towers to the buyer companies. As per Airtel, it’ll invest around $60 million from the proceeds on network and sales infrastructure in Tanzania and for distribution to the Tanzania government. The rest of the amount will be used to reduce debt at the group level.
Airtel’s Africa deals in telecommunications and mobile money services across 14 countries in Africa including Kenya, Uganda, Nigeria Zambia among others.
Though there was no immediate reaction from Airtel Tanzania, the fact could be that the firm might have decided to go it with a separate supplier in an attempt to remain competitive in the market.
Airtel Tanzania’s two main competitors sold their towers to Helios Towers.
Airtel Africa is a provider of telecommunications and mobile money services with a presence in 14 countries across Africa. The tower portfolio in Airtel Tanzania comprises about 1,400 towers that form part of the group’s wireless telecommunications infrastructure network.
In 2010, Millicom International Cellular, which trades as Tigo agreed to sell approximately 1,020 towers to tower management firm Helios Towers.
In the transaction, Tigo got $80 million (about Sh184 billion on the prevailing exchange rate) in cash up front and that it also retained a “significant minority interest” in Helios.
The pair also announced it would get into a long term leasing agreement with Helios providing Tigo with access to wireless towers and a build-to-suit agreement to support the company’s network expansion.
Helios announced it 2010 that it was out to look for similar agreements with other operators in Tanzania.
In October 2017 Vodacom Tanzania Plc sold its stake in the Tanzania unit of Helios Towers Africa for $58.5 million (about Sh135 billion on the prevailing exchange rate).
It sold its 24.06 percent stake in Helios Towers Tanzania Ltd to that company’s parent company, HTA Holdings.
Tanzania Communications Regulatory Authority figures show that there were a total of 51 million subscriber identification module (Sim) cards in the market as of December 2020.
Airtel Tanzania had a total of 13.8 million to hold a 27 percent market share.