Airtel Africa Renews Tower Lease with ATC, Emphasizes Renewable Energy
Airtel Africa, a leading telecommunications and mobile money services provider, has announced a significant development in its operations. The company has successfully renewed its tower lease agreements with American Tower Corporation (ATC) for an extended period of 12 years, covering approximately 7,100 sites across Nigeria, Uganda, Kenya, and Niger.
This renewal comes as the current agreements are set to expire within the next 12 to 24 months.
In a strategic move towards sustainability, Airtel Africa highlighted a strong focus on renewable energy solutions as part of the new contractual terms. This initiative is particularly aimed at reducing diesel dependency and operational costs at a substantial number of sites in Nigeria.
The shift to renewable energy is essential, especially in light of the rising fuel prices, which have significantly impacted Airtel’s financial performance, with EBITDA margins falling to 45.8% from 49.6% in the previous half-year.
The telecommunications sector in Nigeria has been facing challenges, including a staggering 400% increase in petrol prices since May 2023. Despite these obstacles, Airtel Africa reported a profit after tax of $79 million for the half-year ending September 30, 2024, although group revenue in reported currency declined by 9.7%. On a positive note, the company saw mobile money revenue grow by 28.8% in constant currency, with subscriber numbers reaching 41.5 million.
The financial outlook following the lease renewal is promising, with expected impacts on profit after tax in the first year projected to be between $120 million and $130 million, with approximately half anticipated to materialize in FY 2025.
Airtel Africa operates across 14 African countries, with a focus on East, Central, and West Africa, and is poised to benefit from contract structures that include provisions linked to foreign currency fluctuations.
Despite the positive developments, Airtel Africa is under scrutiny due to an ongoing investigation by the Common Market for Eastern and Southern Africa (COMESA) Competition Commission into potential anti-competitive practices involving Airtel and ATC. However, officials have clarified that the new agreements are distinct from this investigation.
In addition to its lease agreements, Airtel Africa has been active in its share buyback program, repurchasing 61 million shares for $88 million since its commencement in March 2024, with a total budget of $100 million.
Furthermore, the company has complied with directives from the Nigerian Communications Commission (NCC) to block SIM cards not linked to a National Identification Number (NIN) and limit active SIMs to four per customer, although the NIN-SIM verification process resulted in a loss of 64.3 million subscriptions.
Source: Techpoint Africa
