Peter Reinartz, managing director, Eaton Towers. PHOTO | FILE | NATION MEDIA GROUP
What you need to know:
In the agreement, Airtel will sell the towers to Eaton at $700 million (Sh61.6 billion) and lease them back under a 10-year contract in a bid to reduce its operating expenses.
Airtel Kenya is set to earn Sh19.5 billion from the sale of its 1,100 mobile telephone masts to UK infrastructure firm, Eaton. The sale agreement signed on September 8 is part of Airtel Kenya parent company Bharti Airtel’s plan to sell a total of 3,500 mobile telephone masts across six African countries including Kenya, Uganda and Ghana.
In the agreement, Airtel will sell the towers to Eaton at $700 million (Sh61.6 billion) and lease them back under a 10-year contract in a bid to reduce its operating expenses.
The tower sale agreement comes at a time when Airtel Kenya has signed to buy out yuMobile’s 2.5 million subscribers and frequency spectrum at Sh4 billion.
The new cash injection could help the Kenyan operation to settle the amount, reduce its costs and have some excess amount to finance operations. It also comes when regional mobile firms are turning to independent tower sharing firms to manage the facilities on their behalf to reduce capital and operational expenses in the competitive sector that has seen voice revenues shrink.
Peter Reinartz, managing director, Eaton Towers Kenya Ltd said the sale agreement will be concluded in the coming months and will now give it full ownership of the telephone masts.
“The agreement gives us the ownership of 1,100 towers that Airtel owns in Kenya, and which are the biggest chunk in the entire deal,” said Mr Reinartz.
“We will offer space to other telecommunication and broadcasting firms and even the government and with these we expect to drive down Airtel’s operating costs,” he added.
Eaton Towers is expected to focus on leasing tower space to anyone wishing to install wireless communication equipment. It will also be involved in management of energy costs. Airtel on the other hand is expected to reap maximum cost management benefits from the new deal not only in operational expenses, but also significant savings in capital expenditure.
“The agreements will allow Airtel to focus on its core business and customers, enable it to deleverage through debt reduction, and will significantly reduce its ongoing capital expenditure on passive infrastructure,” Bharti Airtel said in a media statement last week.
Manoj Kohli, chairman, Bharti Airtel International added that the agreement represents the next phase of Airtel’s growth journey in Africa.
“We are the pioneers and strong proponents of telecoms infrastructure sharing, which results in industry-wide cost efficiencies. The agreement with Eaton Towers is an extension of this philosophy and will lead to far superior utilisation of passive infrastructure and help drive the proliferation of affordable mobile services across Africa,” Mr Kholi said.
3,100 towers
This is not the first time Bharti Airtel that has operations in 20 African and Asian countries is selling off it towers. In July Bharti Airtel divested approximately 3,100 towers to Eaton’s rival Helios Tower in four countries across its African operations.
The industry regulator’s latest statistics indicates that Airtel has 17 per cent market share. With the acquisition of the 2.5 yumobile subscribers however, this is expected to go up to 25 per cent if there won’t be any customer flight.
Safaricom controls 68 per cent of the market while Telkom Kenya’s Orange trails with a seven per cent.
