IHS Holding (IHS) has completed its sale and lease-back of 949 towers from Airtel Zambia in Zambia, under the long term renewable contracts which were announced on 15 December last year. Outsourcing the tower infrastructure to IHS basically allows Airtel to deleverage and reduce its ongoing capital expenditure on passive infrastructure.
At that time, in a move to reduce debt in its Africa operations, Bharti Airtel had sold 1,100 towers in Zambia and Rwanda to IHS. The agreements were conducted through Bharti Airtel International (Netherlands) BV under a 10-year renewable contract. Although the value of the deal value wasn’t disclosed, it was pegged to be Rs 2,000 crore with each tower valued at Rs 1.5-2 crore.
In July, Airtel raised $1.3 billion from the sale of mobile towers in five countries in Africa to Helios Towers, IHS and American Tower Company. The proceeds would go towards reducing the $10 billion debt used in its African operations in 2010.
IHS will be rolling out its renewable energy solutions across the Airtel network, and diesel reduction initiatives to ‘offset the unreliability of electrical grids’ and reduce diesel consumption. The IHS-Airtel partnership will also enable upgradation of towers and roll out of other energy saving technology throughout Africa.
IHS says that since Q1 2013, it has spent $500 million across Africa on power systems to deploy advanced generators, batteries and alternative power solutions to reduce diesel consumption. It claims that by the end of 2016, up to 80% of all its towers will run on hybrid solar solutions. IHS says that its partnership has also enabled it to create local employment opportunities, claiming that over 95% of its 40,000 (direct and indirect subcontractors) are African.
Airtel’s sale and consolidation of towers
The sale and lease-back to IHS was Airtel’s fourth such deal in September- December last year, as it looked to cut its debt from the loss making continent. In November, Airtel sold 4,800 towers in Nigeria to the American Tower Corporation for $1.05 billion. In September, Airtel sold 3500 towers to Eaton Towers in six African nations, and in July it sold 3100 towers in four countries to Helios Towers Africa. The Helios Towers deal was valued at $2 billion. At the time, it was reported that Airtel was chalking out similar deals for the remaining 12,900 it has in Africa.
Interestingly, in July, Airtel entered into exclusive talks with Orange to sell its businesses in four African countries as well: Burkina Faso, Chad, Congo Brazzaville and Sierra Leone. Earlier in June, Airtel said that the agreements for sale of tower assets in Tanzania and Chad between the respective subsidiaries of Bharti Airtel Limited and Helios Towers Africa had lapsed and were terminated.
Earlier this week, we reported that Airtel may be looking to sell its assets in Bangladesh and Sri Lanka, where the company owns 2,500 and 4,000 towers respectively, to Etisalat and Orange.
Image Credit: Flickr user jbdodane