Airtel close to finalising towers deal with Eaton

Bharti Airtel is set to close a Ksh19.5 billion ($186 million) deal reached last year with Eaton for the sale of its 1,100 towers in Kenya.

The firm is expected to invest the money in its operations in Kenya, where it has struggled to make money in the face of intense competition and regulatory gaps.  

Sources close to the transaction told The EastAfrican the deal was at an advanced stage and that the closure could be announced “in the next few weeks” and indeed could come as early as the end of this month.

“The deal is close to the final stage and I do not see any hitches coming up,” said the source.

The sale agreement was signed in September 2014 for 3,500 towers in Kenya, Rwanda, Ghana, Uganda, Zambia and Tanzania. The proceeds were to be used to settle debts and raise money to turn around its loss-making business in the continent.

Bharti Airtel has already sold its towers in Nigeria, Uganda, Ghana, Rwanda and Congo Brazzaville for $1.3 billion. The sale is expected to help the firm focus on products and customer service.

“We are selling assets to reposition ourselves, although we are being affected by huge currency depreciation in Southern, West and East Africa,” said Christophe Soulet, Airtel Africa executive director. He declined to comment on when the deal will be sealed.

The firm’s other towers were bought by IHS, Helios, Eaton and American Towers as competition for telecommunications infrastructure in Africa hots up, buoyed by a changing legal regime in favour of network sharing.

In November 2014, American Tower acquired 4,700 communications sites in Nigeria from Bharti Airtel.

In December 2014, Bharti Airtel sealed a deal to divest 1,100 telecoms towers in Rwanda and Zambia to IHS Holdings. Airtel will sell and lease back towers in both countries under a 10-year renewable contract. Meanwhile, agreements to sell towers in Tanzania and Chad to Helios Towers Africa were terminated in June, but discussions are back on.

“We have started discussions with prospective investors for the Tanzania and Chad towers,” said Mr Soulet.

Bharti Airtel’s Africa business is yet to make a profit since entering the continent in 2010 by acquiring Kuwait-based Zain at $10.7 billion.

For the fourth quarter ended June 30, its revenues for Africa declined to $977 million compared with $1.1 billion in the same period last year. Losses almost doubled from $73.3 million to $139 million, which was attributed to currency fluctuations.

Analysts said Bharti Airtel’s pricing strategy has failed in Africa and that it needs more innovative strategies if it is to become profitable and remain in the market.

“Low pricing has failed to work for Airtel due to the need to sustain capital demands,” said Ronald Lugalia, an equity trader at AIB Capital.

As of June 30, the company had 78.3 million subscribers across Africa, up from 69.1 million in the corresponding quarter last year, registering an increase of 13.4 per cent but falling short of the 100 million target set for 2013.

Despite Bharti Airtel’s exit from Congo, Burkina Faso, Niger and Sierra Leone, there are no immediate plans to exit from the 17 countries of its operations, officials said, while the doors are open for any lucrative partnerships, according to Mr Soulet.

Last week, the company signed an agreement with Liquid Telecom to provide the latter with a terrestrial fibre network and to connect the company’s mobile base stations and enterprises.

Liquid Telecom’s fibre network is present in nine African countries including Kenya, Rwanda, Burundi, Democratic Republic of Congo, Tanzania and Uganda.

The deal will give Bharti Airtel access to Liquid Telecom’s speedy 3G and 4G networks.