Airtel Africa has announced the sale of its Tanzanian tower portfolio for $175 million. According to the company, the sale to SBA Communications Corporation and Paradigm Infrastructure Limited would allow it to prioritise its core subscription services.
Airtel Africa will receive approximately $157.5 million of the total amount in the first instalment, which is expected to take place in the second half of the group’s financial year.
A portion of the proceeds would be distributed to the Tanzanian government as part of the terms of the company’s public listing in 2019. The rest is to be used for debt reduction at the group level and investment in network and sales infrastructure in Tanzania.
In 2020, Airtel Africa CEO, Raghunath Mandava, outlined plans to sell approximately 4,500 towers in five countries: Chad, Gabon, Madagascar, Malawi, and Tanzania.
The move aimed to reduce the company’s $3.5 billion debt and prepare for upcoming bond repayments.
The telecommunications giant has recorded significant losses in India because of low data prices and high competition among telcos. There is also the considerable cost of the infrastructure associated with running a telecoms business.
However, there is a growing trend of asset-light telcos focused on core network and services provisions like calls and data services with third-party providers tasked with providing last-mile access. This results in a reduction in operational and maintenance overhead.
An example of a company divesting its assets is the Indonesian telco XL Axiata which has sold 6,000 radio towers since 2014.
In 2020, the Lagos State Government also moved to provide the infrastructure that telcos can latch on to provide telecommunications service to customers through its partnership with Western Telecommunications and Engineering Services Metro Limited.
It appears that Airtel is choosing to go this route as it aims to reduce its debt and increase competitiveness.