Bharti Airtel has agreed to sell its communications tower portfolio in Nigeria to American Tower Corporation, through a new agreement that will see the telecom part with over 4,800 towers in the country.
Through the new agreement, Airtel will become the anchor tenant on the portfolio under a lease with a 10-year initial term, a move that will see the telecom focus on its core business and reduce its debt.
Subject to customary conditions and regulatory approval, Airtel and America Tower expect to close the acquisition deal in the first half of 2015.
“This agreement, which is part of our stated philosophy of promoting infrastructure sharing, will provide us with considerable cost efficiency and at the same time allows us to sharpen our focus on the customer,” said Christian De Faria, MD and CEO Bharti Airtel Africa.
The move by Airtel will also allow the telecom to reduce its on-going capital expenditures on infrastructure in Nigeria, by allowing American Tower to manage its infrastructure.
“American Tower has a proven track record in passive infrastructure management and we look forward to benefiting from the best practices from all other countries it operates in,” said De Faria.
Earlier in September, Airtel had mentioned of the sale of its Nigerian towers to the America Tower Company for more than one million dollars, with the company becoming the leading buyer.
The telecom also decided to sell about 3,500 of its mobile towers in six other African countries to tower infrastructure operator, Eaton Towers, as part of its continued efforts to reduce cost of operations.
The agreement between Airtel and Eaton Towers will also see the telecom lease back the towers from the company under a 10-year term, just like in the American Tower deal.
American Tower is banking on the Airtel Towers investment to support the company’s long term objective to generate per share growth for its stockholders in double-digit.
“With the largest population and economy in Africa and relatively underdeveloped wireless infrastructure, we view Nigeria as a tremendous growth opportunity,” said Jim Taiclet, CEO American Tower.
Tower companies continue to invest in tower purchases across African countries, with Nigerian based IHS Holding Limited announcing a capital raise of up to 2.6 Billion Dollars to complete payments of acquisitions and extension plans.
MTN agreed in September to sell over 9,000 towers in Nigeria to IHS, while Etisalat Nigeria also signed a deal to sell and lease back over 2,000 towers to the tower company.
Tower companies are realising the growing demand of broadband in Africa and want to take the advantage by providing mobile towers to service the broadband penetration expected to be high in the next 10 years.