Airtel Africa Plc has announced the sales of its telecommunication tower companies in Tanzania, in a deal worth around $175 million.
The transaction is the latest strategic divestment of the Group’s tower portfolio as it focuses on an asset-light business model and its core subscriber-facing operations. The recent deal is sequel to the success recorded in the sales of the firm’s tower companies in Madagascar and Malawi to Helios Tower Plc for a gross value of about $93.7 million.
According to a notification signed by Airtel’s Group secretary, Simon O’Hara, the Airtel Tanzania tower was sold to a wholly-owned subsidiary of SBA Communications Corporation, a leading global owner and operator of wireless communications infrastructure.
The recently sold tower portfolio comprises approximately 1, 400 towers which form part of the Group’s wireless telecommunications infrastructure network.
Recall that Airtel Africa Plc was in the news recently when it secured a credit facility worth $500 million from a consortium of banks that include; Bank of America, JP Morgan, HSBC etc. The loan was meant to assist the teleco in partially refinancing its €750 million Euro dominated bond. Explaining how it intends to offset the credit facility, the teleco explained that it will optimize its free cash flows and cash receipts anticipated over the next 12 months from its tower sales and mobile money minority investments.
Will the transaction be settled once or by instalments?
According to the notice sent by the telecommunications giant, the payment for the towers will be made in tranches. In the first tranche, the sum of $157.5 million will be paid to Airtel during the second half of its current financial year. The balance will be paid in instalments upon the completion of the transfer of any remaining towers to the purchaser.
How will the proceeds be utilized?
Detailing how the proceeds from the sale of the towers will be utilized, Airtel Africa explained that about $60 million out of the gross sales value will be invested in the network and sales infrastructure in Tanzania and for distribution to the Government of Tanzania, as provided in the Airtel Africa IPO prospectus document published in June 2019.
The remaining balance of the proceeds will be used to reduce the debt at Group level.