Airtel Africa sells its Tanzanian towers for $175m in a play to reduce its debts
Airtel Africa sells its Tanzanian towers for $175m in a play to reduce its debts
The sale generated approximately $175 million for Airtel, of which approximately $157.5 million is payable on the first closing date, which is expected to occur in the group's current financial year's second half.
The remaining balance will be paid in instalments, with approximately $60 million of the proceeds reinvested in Tanzania's network and sales infrastructure, as well as distribution to the country's government.
Under a separate lease agreement with the purchaser, the Airtel Tanzania subsidiary will continue to develop, maintain, and operate its equipment on the towers.
Additionally, Airtel is selling tower properties in Chad, Gabon, Madagascar, and Malawi.
Airtel Africa announced the tower monetisation strategy in November, with the intention of selling 4,500 towers in total to reduce corporate debt – estimated at the time to be $3.5 billion – while also preparing for upcoming bond repayments.
Airtel Africa agreed in April to a new $500 million loan facility with a group of relationship banks to partially refinance the group's €750 million ($879 million) euro-denominated bond due 20 May 2021. This new loan facility established a separate credit score for the group, removing the need for Bharti Airtel to provide parent guarantees.
Annual Reports
According to Airtel's annual report, a $505 million instalment is due in March 2023.
Airtel reported 14.2 percent revenue growth to $3,908 million in its most recent full year financial results, published on 12 May, and 15.4 percent revenue growth in the fourth quarter.
Underlying revenue growth in constant currency was 19.4 percent, with a 21.7 percent increase in Q4. Growth was seen across all regions: Nigeria increased by 21.9 percent, East Africa increased by 23.5 percent, and Francophone Africa increased by 10%; and across key services, with voice revenues increasing by 11.0 percent, data revenues increasing by 31.2 percent, and mobile money revenues increasing by 35.5 percent.
While net debt increased, leverage improved to 2.0x from 2.1x in March 2020. This was despite an intangible capex investment of $247 million to renew licenses in two of the largest markets, Nigeria and Uganda, as well as the acquisition of additional spectrum in other markets.
Airtel stated that the increase in underlying EBITDA'significantly outweighed the increase in net debt.'
In Conclusion
In terms of financials, outgoing CEO Raghunath Mandava stated: 'The combination of expanding connectivity to underserved mobile markets and increasing financial inclusion by banking the unbanked across our operating territories provides us with a sizable runway of sustainable profitable growth potential, which we remain confident of delivering.'
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