SBA Communications today announced that it is acquiring, through a joint venture, 1.4k towers in Tanzania from Airtel Tanzania, a subsidiary of Airtel Africa, for a purchase price of $175m, equating to a valuation of $125k per tower.

The $175m consideration for Airtel’s 1.4k towers in Tanzania will be payable in two stages. Firstly, $157.5m is payable on the first closing date, which will be in Q4 2021. Secondly, SBA will pay the remaining $17.5m in installments upon the transfer of any remaining towers to SBA Communications.

For Airtel Africa, this transaction with SBA Communications closely follows the company’s agreement with Helios Towers in March 2021. Specifically, Helios Towers through multiple transactions with Airtel Africa, is acquiring and rolling-out over 2.5k tower sites in the African markets of Madagascar, Malawi, Chad, and Gabon.

Anchor Tenant for SBA Communications – Airtel Tanzania

As part of the agreement, Airtel Tanzania will lease back space on each of its towers for an undisclosed term. Also, Airtel will provide a fixed minimum commitment for build-to-suit (BTS) towers during the 5 years following the acquisition.

Airtel Africa’s 1.4k tower sites in Tanzania have a tenancy ratio of just under 1.5x, which includes Airtel. Indeed, this equates to ~2.1k tenants with equipment on the company’s towers.

Transaction Valuation – Airtel Tanzania Towers

During their first full-year of operations, Airtel Tanzania’s 1.4k towers will produce ~$18m of Adjusted EBITDA. Therefore, SBA Communications is valuing the Airtel Tanzania tower portfolio at 9.7x EBITDA.

Joint Venture – SBA Communications and Paradigm Infrastructure

SBA Communications is acquiring Airtel’s 1.4k towers in Tanzania as the majority partner in a joint venture with Paradigm Infrastructure.

Paradigm Infrastructure, the minority partner, is a UK company that focuses on developing, owning, and operating shared passive wireless infrastructure in select growth markets. Notably, Paradigm’s CEO is Steve Harris, who was previously CEO for American Tower’s EMEA region through to 2018.

Additionally, Paradigm’s Chairman is Steven Marshall who was formerly President of American Tower’s U.S. Tower Division until August 2018. Furthermore, Marshall is currently Chairman of Digital Infrastructure at Cordiant Capital, the investment manager of Cordiant Digital Infrastructure.

American Tower – Closing the Loop

Today’s announcement with SBA Communications appears to be the second attempt that Airtel Tanzania has sought to offload its towers.

Previously, in March 2016, American Tower agreed with Bharti Airtel, via its subsidiary Airtel Tanzania, to acquire 1.35k of Airtel’s communications towers in Tanzania. At the time, total consideration for the towers was $179m and the transaction was set to close in Q2 2016.

However, American Tower disclosed in October 2016, that recent legislation in Tanzania had prompted it to negotiate potential adjustments to its agreement, in the event a waiver for such legislation was not obtained. Ultimately, these circumstances or others caused American Tower to not close the Tanzania tower transaction with Airtel. As a result, in March 2017, American Tower notes the expiration of the agreement and that it was no longer in effect.

Adam Simmons is the Founder & CEO of Dgtl Infra. He started his career with an S&P 500-listed big box retailer, in an operations management role. Adam's entrepreneurial "itch" led him to start a 5G-driven company, focused on innovative retail solutions using augmented reality and shoppable videos, which was eventually sold to an advertising and consulting group. After, realizing the potential of 5G, Adam shifted his efforts towards investing in the "building blocks" of 5G - known as digital infrastructure, completing a number of strategic investments, buying cellular towers, data centers and fiber networks.

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