Moneycontrol Bureau
Bharti Airtel on Monday said it has sold its African telecom tower assets to Eaton Towers. The Indian telecom major has signed a 10-year contract to sell and lease back over 3500 towers to Eaton in six countries.
Under the sell and lease back, Bharti will rent back these towers from Eaton for its own operations. The company will get a lumpsum amount for the outright sell of towers, but every quarter it will have to pay some rental amount, which could eat into its EBITDA.
The company said the pact will enable Airtel to focus on its core business and customers, enable it to deleverage through debt reduction, and will significantly reduce its on-going capital expenditure on passive infrastructure.
While the management has not made comments indicating the valuations of the deal, as per media speculation, it could be in the range of USD 800 million to USD 1 billion. Eaton Towers was advised by Moelis & Co.
Overall the news is positive for Bharti Airtel, with the stock gaining around 1.5 percent in the morning trade.
“The agreement with Eaton Towers is an extension of this philosophy and will lead to far superior utilisation of passive infrastructure and help drive the proliferation of affordable mobile services across Africa,” Bharti Airtel International Netherlands BV Chairman Manoj Kohli said in a statement.
For Eaton Towers, it is a transformational deal, which gives it the most diversified tower portfolio across Africa. “We are proud to be chosen by Airtel as their key partner in these 6 countries,” said Eaton Towers CEO Alan Harper.
The agreements are subject to statutory and regulatory approvals in the respective countries, the statement added.
Airtel had in July sold 3,100 telecom towers in four African countries to Helios Towers Africa for an undisclosed sum. The net debt of the company at the end of June 2014 stood at Rs 57,744.3 crore.
Airtel had entered the African market in 2010 after acquiring Zain Telecom for about USD 10.7 billion. The company now offers services in 17 African countries but is yet to turn profitable. The net loss before exceptional items for Africa during the first quarter of current fiscal stood at USD 137 million.
Airtel Africa witnessed 10 percent growth in total revenues to USD 1,164 million for the reported quarter.
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