MTN has announced a multimillion-dollar sale and leaseback tower infrastructure transaction with IHS Towers. The telco states that this completes one of its critical assets within its asset realisation programme (ARP).
The transaction offer is valued at approximately US$413.6 million, according to the operator, and involves the sale and leaseback of 5 709 MTN SA towers, including roughly 4 000 greenfield and 1 700 rooftop sites.
The MTN and IHS agreement follows MTN SA CEO Godfrey Motsa’s announcement earlier this year that the telco was assessing the strategic and financial benefits of a sale and leaseback transaction for its telecom tower portfolio.
MTN then engaged Citigroup Global Markets and Standard Bank as financial advisors and Webber Wentzel as legal counsel for the proposed transaction. In March 2019, former CEO Rob Shuter announced MTN’s asset realisation programme, under which assets with no long-term strategic value will be sold when market conditions are favourable. With the agreement in place, IHS, which has been on the hunt for towers in Latin America in recent months, will now hold 70 per cent of the South African towers business, with the other 30 per cent held by a B-BBEE consortium.
The company is in advanced talks with a consortium of B-BBEE investors, to be completed in due course.
“I am very proud to announce IHS’s development of South Africa’s largest independent tower operator, which marks the beginning of a new chapter in the country’s telecommunications infrastructure industry,” says Sam Darwish, chairman and CEO of IHS Towers.
The transaction, according to MTN, will also include the outsourcing of power and related services (power-as-a-service, or PaaS) across the entire MTN SA site footprint of approximately 12 800, encompassing an additional 7 100 third-party sites.
Furthermore, MTN SA states that one of the transaction’s main goals was to achieve an “operating company-friendly” outcome, with “limited financial impact on current running costs versus leaseback costs; improved network performance, including improved power management; and flexibility to maximise the benefit of the operator’s active network-sharing (including current agreements in place with Cell C and Telkom).”
