MTN to sell SA towers to IHS
MTN has found a buyer for its passive tower infrastructure, selling over 5,700 towers in South Africa to IHS Towers for R6.4 billion (US$413 million).
Plans to sell the passive tower infrastructure have been in the works since 2020 and in May 2021 the telco said it had received over 20 expressions of interest from industry players both in South Africa and internationally.
MTN said in a statement on Wednesday that the agreement was reached following a "lengthy competitive process."
The transaction with IHS is a sale and leaseback deal comprised of about 4,000 greenfield and 1,700 rooftop sites. The transaction will also include the outsourcing of power and related services across the entire MTN SA footprint of approximately 12,800 sites – incorporating an additional 7,100 third-party sites.
MTN has barter arrangements on approximately 2,000 sites that are not being monetized as part of the IHS deal.
"The Transaction will enable MTN SA to service its retail and wholesale clients more efficiently while creating substantial value, as reflected in the proceeds realised. Proceeds will be reinvested into strategic growth initiatives, such as securing high demand spectrum frequencies, and providing MTN with additional balance sheet flexibility," the group said in an emailed statement.
The operator said the deal will have limited financial impact on MTN SA's current running cost versus leaseback costs; will improved network performance, including improved power management; and will provide flexibility to maximize the benefit of MTN SA’s active network sharing - including current roaming agreements in place with Cell C and Telkom.
The transaction, which is still subject to regulatory and other approvals, is part of MTN's ongoing asset realization program. It expects to close the transaction by the first quarter of 2022.
MTN also owns a 29% stake in IHS Towers, which listed on the New York Stock Exchange last month.
Divesting in tower infrastructure is a growing trend in the local telecoms market. Fellow mobile operator Cell C has started migrating its customers to roam on other networks, with plans to get rid of its tower infrastructure in the long term.
Telkom South Africa is making moves to spin off and list its masts and towers business, Swiftnet.
Vodacom is also considering spinning off its tower portfolio into a separate business.
- MTN SA towers sale receives major interest
- MTN stake in IHS Towers priced at $1.79B in listing
- MTN Group keeps growth going in Q3
— Paula Gilbert, Editor, Connecting Africa