American Tower expands in Africa with acquisition of 723 towers

Telkom Kenya has announced it has reached a definitive agreement to sell up to 723 towers to American Tower, expanding the latter’s footprint to a fifth country in Africa.

The transaction, which will be completed in the second-half of 2018, will give the telco a bit of breathing room and cash to invest in its 4G network. Kenya Telkom has been performing adequately to date, though has struggled to get anywhere near market leader Safricom. It is hoped the funds will give the telco a boost to be more competitive.

“We are excited to announce the launch of operations in Kenya through our agreement to acquire TKL’s towers,” said William Hess, American Tower’s President of EMEA and Latin America. “This represents American Tower’s 17th market globally, and our fifth in Africa, and we look forward to helping expand the reach of mobile broadband throughout the country. Kenya is a very attractive market, and we have high expectations for its long-term growth potential.”

“Telkom will now focus on its core function – the provision of quality telecommunications services to our customers,” said Aldo Mareuse, CEO of Telkom Kenya. “In addition, the sale will release capital for further investment in our 4G network and a number of state of the art IT platforms, all of which will further enhance services for our customers as they demand higher quality and speed from our mobile data networks as well as a richer range of services.”

American Tower is one company which has been on the acquisition trail recently, seemingly capitalizing on strong financial performance. Aside from this deal, American Tower has also acquired the tower business units of both Idea and Vodafone in India, as the pair gear up to tackle the disruption caused by Reliance Jio in the market. Praying on struggling telcos’ assets seems to be a successful strategy here, as it spent $673 million to acquire nearly 10,600 sites over the first three months of 2018.

Looking at the financial side of the business, American Tower recently reported its figures with the first quarter demonstrating a 7.8% year-on-year increase to $1.742 billion, though it has lowered forecasts for the year, citing the troublesome Indian market and other factors.

The team will also be keeping an eye on developments with Sprint and T-Mobile, with the pair accounting for 4% and 3% (respectively) of American Tower’s consolidated property revenues. While there is still three to four years left on non-cancellable lease agreements, and the team anticipate aggressive spending to catch up to the top tier, consolidation of two major customers generally doesn’t bode well for the supplier.

Whether there is any acquisition left in American Tower remains to be seen, though the team has stated it is continuing to review and act on expansion opportunities in international markets. It does not seem to be shy about living by the ‘speculate to accumulate’ mantra.

Vodafone India completes €478mn tower sale

Vodafone has announced the completion of the sale of its Indian tower business to American Tower in a move to build the spreadsheets in preparation for the Jio battle.

The plan was initially set in motion back in January as Idea kicked off a number of initiatives to improve its financial position ahead of the merger with Vodafone. Assets are being hurled overboard as both parties streamline their organizations to ensure a healthy financial and operational position to tackle the Jio problem.

Today’s announcement will see American Tower complete the acquisition of the standalone tower business of Vodafone India for an enterprise value of €478 million, before turning its attention to finalizing the acquisition of Idea’s tower unit.

While the introduction of Jio ruined a perfectly comfortable position for Vodafone India and Idea, you can’t say the pair are not doing everything possible to meet the challenge. Aside from the merger, which is set to complete in the second half of the year, selling off assets would have been tough decisions to make. With the €478 million made of this deal, Idea will also be aiming to bring €882 million through sales of equity and assets.

Consolidation and divestment are two very common trends in the Indian telco industry right now, but these deals are nothing but the preliminaries. Jio might be in a relatively comfortable position right now, but the new Vodafone/Idea entity is working up a war chest to disrupt the space. One of the big questions which remain is whether Jio can entrench its position deep enough in the Indian consumers life to withstand the Vodafone/Idea assault.