Tower deals transform business models in Tanzania and Latin America

Tower deals transform business models in Tanzania and Latin America

More tower deals have been announced in what has become an increasingly busy market for both buyers and sellers. The latest two deals involve American Tower Corporation (ATC) buying in Latin America and Airtel Africa selling in Tanzania.

According to Reuters, ATC – a major player in the tower market – has now finalised a purchase of 6.2 billion euros (about $7.57 billion) worth of European mobile masts from Telxius, a division of Telefonica. Relevant to the markets covered in these pages, however, is the fact that this is part of a wider deal to acquire over 30,000 towers that will include Latin American towers.

As has been the norm in many such deals, ATC plans to lease the towers back to Telefonica, which will be able to use the proceeds of the sale to slash its debt. The deal will also generate significant levels of recurring revenue for ATC.

Meanwhile, pan-African operator Airtel Africa has agreed the sale – for around $175 million – of its Tanzanian tower portfolio to a joint venture owned by a subsidiary of SBA Communications Corp, a leading independent owner and operator of wireless communications infrastructure, and Paradigm Infrastructure, which was established in 2019 to pursue opportunities to develop shared wireless infrastructure in selected emerging and growth markets.

The tower portfolio of Airtel Africa subsidiary Airtel Tanzania comprises approximately 1,400 towers. Under the terms of the transaction, Airtel Tanzania will continue to develop, maintain and operate its equipment on the towers under a separate lease arrangement with the purchaser.

The transaction is described as the latest strategic divestment of Airtel Africa’s tower portfolio as it focuses on an asset-light business model and on its core subscriber-facing operations.

Around $60 million from the proceeds will be used to invest in network and sales infrastructure in Tanzania and for distribution to the government of Tanzania. The balance of the proceeds will be used to reduce debt at group level.