Telecom company, Airtel Africa has agreed to sell up to 4,500 telecommunication towers across five (5) African countries to reduce its $3.5 billion debt and aid the impending repayment of bonds.
Africa’s second largest telco will sell off towers in Tanzania and Madagascar where it has a combined subscriber base of over 13 million people. The telco will also cash out on cellular masts in Gabon, Chad and Malawi.
While speaking at an interview, Airtel Africa CEO Raghunath Mandava revealed that the telecom company was looking to cut down accumulated debts through its tower sales.
We are constantly seeking to bring down our debt, and we prefer to bring it down even faster with the tower deals.
Raghunath Mandava, Airtel Africa CEO
Recall that Airtel recently exited its Ghana operations after posting consecutive losses in the past four quarters and losing over 4 million subscribers in the country.
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Airtel perhaps sold out 100% to the Ghana government to salvage the company’s fortunes before it plunged into a full-blown debt crisis.
According to the telco’s annual report, Airtel owes a repayment of $890 million due in May and an instalment of $505 million due in March 2023.
The telecom giant seems to have done a lot of borrowing to sustain operations in Africa where it has failed to consolidate its market hold into requisite profitability levels. Airtel Africa’s net profits slumped year-on-year by 57% in Q1 2020 and dropped year-on-year by 8.3% in Q2 2020.
Mandava revealed that Airtel Africa, a subsidiary of India’s Bharti Airtel, made use of the earnings from last year’s dual Initial Public Offering (IPO) deals on the London Stock Exchange (LSE) and the Nigerian Stock Exchange (NSE) to reduce debts by $4.2 billion.
Although the telco had an asset valuation of $3.78 billion following the June 2019 IPO, since then its stock has declined by 18% to $3.1 billion.
According to the CEO, the company cut down debts from about $7.7 billion to $3.5 billion. However, the telco is still indebted to the tune of $1.8 billion worth of bonds with its largest shareholder, Bharti Airtel.
Airtel Africa recently appointed Kelly Rosmarin to replace Arthur Lang as a Non-Executive Director based on the nomination of India’s Bharti Airtel, the controlling shareholder.
Airtel is present in 14 African countries and its decision to sell off 4,500 towers across five of these countries will significantly reduce broadband penetration, internet access and network coverage on the continent.
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Airtel is not the first telco to cash out on tower holdings to provide debt relief. In January this year, telco giant MTN exited its tower businesses in Ghana and Uganda by selling its 49% shares for $523 million to American Towers.
Africa has more than half a billion internet users (530 million) and broadband penetration is estimated to be about 40%, according to internetworldstats.
While this is not welcome news for Africa’s growing internet population, Airtel has said it plans to rent back the towers from the buyers. The telecom company has yet to disclose the identity of the buyers.
