The flurry of infrastructure outsourcing deals in Africa continues, as the Tanzanian operation of Millicom International Cellular, Tigo, agrees to sell approximately 1,020 towers to tower management firm Helios Towers.
As a result of the transaction, Tigo will receive at least $80m in cash up front and will retain a “significant minority interest” in Helios. The pair will also enter into a long term leasing agreement with Helios providing Tigo with access to wireless towers and a build-to-suit agreement to support the company’s network expansion.
Helios will seek similar agreements with other operators in Tanzania.
Commenting on the deal, Mikael Grahne, president and CEO of Millicom, said: “Millicom created the first tower joint-venture in Africa with Helios in January 2010. The initial results proved very satisfactory, with an improved service level and a reduction in both capex and operating expenses. Millicom is now happy to enter into a similar agreement with Helios in Tanzania.
“This agreement confirms our commitment to outsourcing passive infrastructure, and is entirely consistent with our strategy of improving both our capital and operating efficiency by focusing on our core activities. We believe that owning and operating our entire network infrastructure no longer confer a competitive advantage, and we consider that such outsourcing ventures will allow Millicom to focus on areas of genuine differentiation: sales, marketing, branding, distribution, service innovation and customer care.”
Charles Green, CEO of Helios, said: “[This deal] enables Tanzanian wireless operators to outsource non-core tower-related activities and focus capital and management resources on providing higher quality services more cost-effectively.”
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