Bharti Airtel will not be selling a controlling stake in its tower asset firm Bharti Infratel as announced earlier in October last year, the company said in a filing to the stock exchanges. Airtel’s board has instead approved the sale of up to 400 million equity shares owned by Bharti Airtel in Infratel to potential investors. The potential sale will, however, be subject to mandatory approvals from SEBI and other authorities.
As a result of the proposed restructuring plan in Infratel, Airtel will now own 50.33% in Infratel, as opposed to the 71.7% stake that it held before the company started looking for potential investors. In December 2016, a Mint report said that asset management company Brookfield submitted the highest bid for 51% stake in Airtel, although Airtel didn’t comment on the potential talks. The company added that potential investors are now open to acquire up to 21.63% share, while public shareholders and other small investors are open to buy up to 28.04% stake in Infratel.
The company, however, did not mention whether the proceeds from tower sale would be used to cut debt or for generic investment in operations. But it is important to note that in its foreign market like Africa, Airtel had completed a number of deals with multiple buyers, primarily to cut debt and bring down operating costs.
Tower Sale in Africa to cut debt
Last year in March, Airtel entered into an agreement with American Tower Corporation (ATC) to sell around 1,350 towers of its towers to ATC in Tanzania through its subsidiary Airtel Tanzania. Airtel added that it would use the proceeds from the tower sale for cutting debt and bring down capital expenditure in its African operations. Apart from this Airtel has multiple tower sale deals in the past few years to cut debt:
-In September 2015, IHS Holding said that it had completed sale and lease-back of 949 towers from Airtel Zambia in Zambia. While signing the deal in 2014, Airtel had mentioned that te deal was primarily put in place to cut debt.
-In November 2014, Airtel said that it was planning to sell 4,800 towers to American Tower Corporation in Nigeria in an effort to cut its debt.
-In September 2014, a Money Control report stated that Airtel had signed a 10-year contract to sell and lease back over 3500 towers to Eaton Towers in 6 countries across Africa.
-In July 2014, Airtel had signed an agreement to sell and lease back over 3,100 towers in four countries across Africa to the telecom tower operator Helios Towers Africa