Airtel Africa Secures $1.2 Billion Tower Lease Deals Despite Comesa Investigation

Airtel Africa Plc has finalized a 12-year extension of its telecommunications tower lease agreements with American Tower Corporation (ATC) across subsidiaries in Uganda, Kenya, Nigeria, and Niger. This development occurs amid an ongoing investigation by the COMESA competition authority into alleged anticompetitive practices; however, Airtel Africa officials state the new agreements are independent of this probe.

In its latest unaudited financial statements for the six months ending September 30, 2024, Airtel Africa announced the renewal of its tower leases with ATC, covering 7,100 sites in Nigeria, Uganda, Kenya, and Niger. These leases, originally set to expire within the next 12 to 24 months, are now secured for an extended period. “The renewals allow us to maintain advantageous contract structures, with some components tied to foreign currency,” the company stated.

The agreements prioritize renewable energy initiatives, particularly in Nigeria, which are expected to lower operating costs by reducing reliance on diesel and align with Airtel Africa’s sustainability goals to minimize greenhouse gas emissions. This lease extension will also support Airtel Africa in reducing network failure risks, boosting data transmission capacity, and enabling a smoother 5G rollout.

Despite these developments, Dr. Willard Mwemba, CEO of the COMESA Competition Commission, confirmed that the investigation into Airtel Africa and ATC’s partnership is ongoing. “We are actively consulting stakeholders in Kenya and Uganda to evaluate market impact and implementation,” he said. Should the Commission find anticompetitive clauses, it may require the parties to modify or even terminate the agreements and impose fines if necessary.

Airtel Africa affirmed in an emailed statement that it is fully cooperating with the investigation, noting that the lease extension reflects a commercially negotiated renewal, distinct from the investigation. Emeka Oparah, Airtel Africa’s VP for Corporate Communications and CSR, reiterated that the recent agreement stems from commercial negotiations over existing lease agreements nearing expiration.

The investigation follows a complaint lodged earlier this year after Airtel and ATC entered a strategic partnership in October 2022. This partnership includes developing green-standard telecom sites to lower Airtel’s carbon footprint, alongside a clause for Airtel to annually adopt a certain number of ATC sites in exchange for a financial rebate, which some allege is anticompetitive.

Airtel Africa operates in 14 African countries, and the lease extensions are expected to increase the company’s lease liabilities by approximately $1.2 billion, elevating its leverage ratio as of September 30, 2024. Although the renewal will strengthen Airtel’s network capacity and reliability, it is projected to impact profit, with an estimated increase in costs of $120 million to $130 million in 2025 and a 0.6-point rise in the leverage ratio.

Initially, Airtel Africa’s tower leases with ATC were structured as sale-and-leaseback agreements in 2015/2016 for a 10-year term, with expirations originally due in the upcoming 12 to 24 months. ATC specializes in developing and leasing telecom towers to mobile network operators across the region.