Independent telecom infrastructure company Helios Towers has signed an agreement with Senegal’s second largest operator Free Senegal to acquire the mobile operator’s passive infrastructure assets.

The deal, which will be fully financed by Helios Towers’ existing cash and debt facilities, is expected to close by Q1 2021 and is subject to customary completion conditions and regulatory approval.

In a statement, Helios Towers said the acquisition is for an upfront cash consideration of €160-million (about US$189-million) representing an enterprise value of €178-million(about US$210-million) including an estimated €18-million (US$21-million) of taxes and capitalised ground leases.

The agreement makes Helios Towers the largest independent tower infrastructure provider in Senegal with 1,220 sites.

“These assets are expected to initially deliver run-rate revenues of €32 million ($38 million) and run-rate adjusted EBITDA of €16 million ($19 million). The net profit before tax generated by the assets to be acquired in this transaction as at 31 December 2019 was €11 million ($12 million),” the company stated.

Kash Pandya, CEO of Helios Towers said the agreement is aligned perfectly with his company’s 2025 strategic ambitions and broadening its footprint within the African towers infrastructure market.

“We are acquiring a market-leading independent position in Senegal with long-term contracted revenues and a clear path to value creation through additional organic tower development, uplifts in the tenancy ratio and improved operational effectiveness, all built on the foundation of 15-year contracts. We look forward to working with Free Senegal and the other MNOs over the coming years to further develop mobile infrastructure in Senegal," Pandya said.

Helios Towers also disclosed that the agreement is backed by a consortium of investors including NJJ, the founder of the Iliad S.A. group Xavier Niel’s private holding company, Teyliom Group and Axian Group.

“Deferred consideration and growth capex of €40m ($47m) and €30m ($35m) respectively are expected to be invested over the next 5 years in relation to the rollout of 400 committed new build-to-suit sites,” Helios Towers stated.

Both parties also signed a 15-year service agreement for the provision of hosting and energy services on the acquired sites and the sites to be built in the future.

Helios Towers described Senegal as “a compelling market for telecoms with its combination of a young, growing and increasingly urbanised population plus high GDP growth”, it added that the region benefits from a hard currency Euro-pegged environment.

“These dynamics will continue to drive increasing demand for mobile communications and consequently the infrastructure supporting it,” the telecom infrastructure company said.

Helios Towers said it is aiming to materially increase the tenancy ratio of the tower portfolio over time and bring to bear the benefits of its operating processes and disciplines.

Mamadou Mbengue, CEO of Free Senegal said the transaction will allow Free Senegal to further expand its network mobile coverage within the West African country.

“We look forward to working closely with them in the future as a service partner of choice as we both look to further improve mobile connectivity and infrastructure for the Senegalese people and aligned with the digital plan for the Country ‘Senegal 2025’,” Mbengue said.