Helios and Airtel Africa: the tower sale trend continues

Helios and Airtel Africa: the tower sale trend continues

Airtel Africa, a pan-African operator with a presence in 14 countries across Africa, has announced the signing of agreements to sell its telecommunications tower companies in Madagascar and Malawi to Helios Towers plc, a leading independent telecommunications infrastructure company in Africa.

The Group's tower portfolios in Madagascar and Malawi together comprise 1,229 towers. The aggregate gross consideration for the transactions is expected to be approximately $108 million. The group's Airtel Africa subsidiaries will continue to develop, maintain and operate their equipment on the towers under separate lease arrangements, largely made in local currencies, with the purchaser.

Airtel Africa has also announced that it has entered into exclusive Memorandum of Understanding agreements for the potential sale of its tower assets in Chad and Gabon – another 1,000 or so towers.

While this is certainly news, it wasn’t unexpected. In November we reported an announcement from Airtel Africa that it planned to shed 4,500 towers across five countries to aid the company in reducing its $3.5 billion debt and prepare for upcoming repayment dates. This involved towers in Tanzania, Madagascar, Gabon, Malawi and Chad. 

These potential and actual sales are the latest strategic divestment of the group’s tower portfolio as it moves towards an asset-light business model and a focus on its core subscriber-facing operations. The proceeds will be used to reduce group external debt and to invest in network and sales infrastructure in the respective operating countries.

This continues a trend notable in many regions. Other examples include América Móvil announcing in February plans to spin off its telecommunications towers and, last year, the news of Helios Towers acquiring the passive infrastructure assets of Senegal’s number two mobile player Free Senegal, and Telefonica’s intention to sell a number of its towers and tower sites in Ecuador and Colombia. 

Speaking about the news, Helios Towers CEO Kash Pandya told Developing Telecoms’ Editor James Barton that Helios Towers has pursued a strategy of expansion into new geographical territories based on certain criteria. It typically operates in emerging markets, with populations of 10 million or more. Ideally, the firm enters markets with three or more MNOs, although it is present in some with fewer such as Congo-Brazzaville.

“We’ve signed 315 contracted build-to-suits – lease-up is the key driver for margin improvement in our business”, said Pandya. “These four markets represent 65 million people, so our total footprint is now almost 327 million people – the size of the USA. This population is set to grow, and it’s urbanizing, with people moving towards urban centres in Africa.”

“We look for low levels of penetration, as this drives subscriber growth. The four markets we’ve announced today have on average mobile penetration 42% - in fact, without Gabon - which has penetration of around 63% - the other markets are about 35%. These markets will expand, taking on subscriptions; 4G pricing is dropping, with operators such as MTN offering basic 4G for $20. As the technology takes hold, you see densification on networks; 2G needs antennas every kilometre apart, but this halves for 3G, and it’s even less with 4G – the denser data, the less distance it will travel, which is positive for a tower company like ours.”