Bharti Airtel on Monday said its Tanzanian subsidiary Airtel Tanzania has signed a definitive pact to sell and lease back about 1,350 telecommunication towers to American Tower Corp for $179 million as the company aims to repay part of its $11.90 billion worth of loans.
“Under the agreement, American Tower may acquire up to approximately 100 additional sites currently in development for an additional consideration,” the company said in a statement.
“Airtel will be the anchor tenant on the portfolio under a lease with a 10-year initial term.”
Bharti did not disclose the value of the transaction. However, American Tower Corp, in a regulatory filing to the Securities and Exchange Commission in the US on Monday, said the total consideration for the transaction would be approximately $179 million.
“The tower sale agreements allow Airtel to focus on its core business and customers, besides helping de-leverage through debt reduction, and significantly reducing the on-going capital expenditure on passive infrastructure. The transaction is expected to close during the first half of 2016, subject to customary closing conditions and regulatory approval,” Bharti’s statement added.
The deal is among the series of similar transactions in the past few quarters by Bharti to repay $11.90 billion of loans, majority of which it had taken in 2010 to buy the African operations of mobile telecommunications operator, Zain, which marked the foray of the Indian operator into the continent. Since then, Bharti’s profits have been under pressure because of the high interest it had to pay on the loans while the African unit did not turn profitable as originally expected.
Bharti had recast most of its loans into long-term bonds thus reducing the interest payout.
Later, it began selling some of its assets including telecom towers and some African operations to repay some part of the debt. In January, Bharti sold its operations in Burkina Faso and Sierra Leone to Orange, while a similar sale agreement for its companies in Chad and Congo Brazzaville had lapsed. The company had also agreed to merge its Bangladesh operations with Robi Axiata Ltd, and reduce its exposure in the neighbouring country.
For Boston, MA-based American Tower Corp, an independent telecommunications and broadcast real-estate company that builds, owns, operates towers for telecom operators, this would mean further deepening of its foray into Africa. The company had earlier acquired Bharti’s towers in Nigeria, after entering into other countries such as South Africa, Ghana, and Uganda.