![Lars Reichelt](https://techcentral.co.za/wp-content/uploads/2011/12/Lars-Reichelt.jpg)
It’s a deal that’s been a long time coming. After many months of careful planning and negotiation, Cell C will sell 3 200 of its cellular base stations to US-based American Tower Corp (ATC) for US$430m (R2,9bn). The company will use the money to restructure its balance sheet.
The cellular operator will sell 1 400 of its existing towers and, over the next two years, another 1 800 that are currently under construction.
TechCentral first broke the news of Cell C’s plans back in March.
Cell C CEO Lars Reichelt says the company will plough the funds that flow from the deal into reducing its interest-bearing debt.
“We will use it to relook at our bonds and really shore up the balance sheet a bit more,” he says.
The sale could also pave the way to a more competitive telecommunications market as smaller players will be able to lease access to a national tower network once the deal is concluded. ECN Telecoms CEO John Holdsworth, for one, has already expressed an interest in installing communications equipment on Cell C’s towers.
This is the second move in the past year by Cell C to shore up its balance sheet and get it fighting fit to take on bigger rivals MTN and Vodacom.
Earlier this year, it restructured its long-term debt through a debt-for-equity swap agreed to by shareholders, reducing the amount it owed by about half, to roughly R6,6bn.
The tower sale deal represents the latest steps by Cell C CEO Lars Reichelt to turn the company around. The operator, which entered the market as SA’s third mobile provider a decade ago, is building an advanced mobile broadband network, which it is expected to launch in Gauteng by mid-November.
The network, offering theoretical speeds of up to 21Mbit/s, is already available commercially in Cape Town and Durban and several smaller towns and cities.
The company is investing more than R5bn this year on its new network and recently unveiled refreshed corporate branding in an effort to start punching above its weight in a market dominated by MTN and Vodacom.
Analysts have broadly welcomed Cell C’s tower sale, saying infrastructure sharing is a worldwide trend. As pressure mounts on operators’ revenues and profit margins, and particularly as business models shift from voice services to data, they need to find ways of reducing their operational costs.
ATC, which is listed on the New York Stock Exchange, operates about 20 000 wireless towers across the US. According to the company’s website, it offers “co-location” facilities, allowing wireless operators to get sites on air “quickly and easily”. It also operates infrastructure in Mexico, Brazil and India.
Cell C will be the anchor tenant on all of the base stations ATC has bought, and Reichelt says he expects the deal to be finalised by early next year.
ATC was one of three businesses that were pitching for the deal. Another was Eaton Telecom, which was established recently to focus on tower-sharing opportunities in Africa. TechCentral does not know the name of the third bidder. — Candice Jones, TechCentral
- Subscribe to our free daily newsletter
- Follow us on Twitter or on Facebook