Bharti Airtel announced agreement with Eaton Towers to divest 3500 towers in Africa
Bharti Airtel on 8 September 2014 announced an agreement with Eaton Towers to divest 3500 towers in 6 African nations.
Bharti Airtel on 8 September 2014 announced an agreement with Eaton Towers to divest 3500 towers in 6 African nations. Under the agreement, Bharti Airel signed a 10-year contract to sell and lease back these towers to Eaton.
According to the sources, the agreement is worth somewhere between 600 million US dollars to 800 million US dollars.
The six nations under the agreement include Ghana, Uganda and Kenya but not Nigeria. Nigeria is Bharti Airtel's biggest African market.
The sale of 3500 towers to Eaton Towers is a part of Airtel plan to sell most of its more than 15000 mobile phone towers in 20 African countries to cut costs of maintenance. Maintenance is typically more expensive in Africa due to factors such as security costs and electricity shortages.
Earlier in July 2014, Bharti Airtel signed an agreement with Helios Towers Africa, a firm owned by a consortium of investors, to sell towers across four countries in Africa.
Bharti Airtel since buying the loss-making mobile phone operations in Africa from Kuwait's Zain in 2010 is yet to earn a profit because of high operational costs and a heavy debt load.
The deal is a win-win situation for both the Bharti Airtel and Eaton Towers. On the one hand, the sale of assets is positive for Bharti Airtel investors as it helps the company repay part of its debt load. At the end of June 2014, Bharti Airtel had a net debt of 9.6 billion US dollar most of which was related to its 9 billion US dollar purchase of the African telecoms operations.
On the other hand, the deal would enable Eaton Towers to expand its footprint to seven countries in Africa and give it more than 5000 towers. Under the terms of the deal, Eaton Towers will also lease the former Bharti towers to other carriers.