UPDATE 2-Helios Towers raises $630 mln to fund African tower deals

Thu Jul 10, 2014 9:17am EDT

* Helios Towers raises $1.8 bln in five years

* To increase telecoms towers to 7,800 after deal with India's Airtel

* Sees huge demand for telecoms, data in Africa in next 5 yrs (updates with CFO comments, rewrites throughout)

By Chijioke Ohuocha

LAGOS, July 10 (Reuters) - Helios Towers Africa has raised $630 million from investors to help buy 3,100 telecoms towers from Bharti Airtel as it seeks to capitalise on Africa's fast-growing mobile market, its chief finance officer told Reuters on Thursday.

The number of mobile users in Africa has increased 30-fold to 500 million over the past decade, and operators like South Africa's MTN, India's Airtel and the United Arab Emirates' Etisalat, need extra capacity to cope with demand.

However, they face higher running costs and lower revenue per user than in other regions. Operating mobile towers in Africa is typically more expensive, because of security costs and electricity shortages that often require them to be powered by generators, while new roads may need to be built to reach rural areas.

This has increasingly prompted operators to seek to sell or lease towers to specialist firms such as Helios Towers Africa, Eaton Towers, American Tower Corp and IHS.

India's top mobile phone carrier, Bharti Airtel, on Wednesday said it would sell about 3,100 telecoms towers in four African countries to Helios Towers, in keeping with its plans to sell most of its transmitter towers in Africa.

Helios Towers CFO Andres de Orleans-Borbon confirmed on Thursday that the deal had been signed. He did not disclose the purchase price but said the company had raised $630 million to help finance the deal by selling new shares to existing and new investors.

"We've signed an agreement for a set of towers, which is 3,100. Part of the money raised will be used for the Airtel transaction and then part of it will be used for other transactions," he told Reuters in a telephone interview.

Bharti Airtel was seeking to sell 15,000 African towers but Helios Towers chose to buy only 3,100, Orleans-Borbon said. Banking sources have said Airtel could raise up to $2 billion in total from African tower sales.

Helios Towers said the purchase of the Bharti Airtel towers would expand its tower count in Africa to more than 7,800. It says it has the largest number of telecoms towers held by an independent company focused exclusively on Africa.

EXPANSION

Helios Towers estimates that there are about 150,000 mobile towers in Africa, and it expects that number to double over the next five years.

The firm has operations in Ghana, Tanzania and Democratic Republic of Congo, and Orleans-Borbon said it planned to expand into other African countries and was evaluating acquisition opportunities, without being more specific.

But it faces stiff competition from the likes of IHS and Eaton Towers, which have similar business models and expansion plans across Africa.

In the $630 million share sale, Helios Towers said new investors Providence Equity Partners and the World Bank's IFC African fund had joined existing shareholders, who had all increased their stakes in the company.

With this latest fundraising, Helios Towers will have raised over $1.8 billion in financing over the past five years to fund acquisitions and organic growth, it said.

The Airtel towers deal is still subject to regulatory approval and is expected to close before the end of the year, Orleans-Borbon said. (Editing by Pravin Char)

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