MTN SA concludes R6bn tower sale, leaseback deal with IHS
MTN SA today announced a multibillion-rand sale and leaseback tower infrastructure transaction with IHS Towers, with the telco saying this brings to fruition one of the key assets within its asset realisation programme (ARP).
The operator says the transaction offer value amounts to approximately R6.4 billion and entails the sale and leaseback of 5 709 of MTN SA’s towers – comprising approximately 4 000 greenfield and 1 700 rooftop sites.
The MTN and IHS agreement comes on the back of an announcement earlier this year by MTN SA CEO Godfrey Motsa that the telco was reviewing the strategic and financial merits of a sale and leaseback deal for its portfolio of telecom towers.
Citigroup Global Markets and Standard Bank were then engaged by MTN to act as financial advisors for the proposed transaction and Webber Wentzel as legal advisors.
Former CEO Rob Shuter unveiled MTN’s asset realisation programme in March 2019, in which assets that were not of long-term strategic value would be sold when market conditions were conducive.
With the concluded agreement, IHS, which has in recent months been on the tower acquisition trail in Latin America, will now own 70% of the South African towers business, with the remaining 30% owned by a B-BBEE consortium.
The company says it is in advanced discussions with a consortium of B-BBEE investors, which will be completed in due course.
Sam Darwish, IHS Towers chairman and CEO, comments: “I am exceptionally proud to announce IHS’s creation of the largest independent tower operator in South Africa, which represents the start of a new chapter in South Africa’s telecommunications infrastructure sector.
“The country has a growing population of almost 60 million people and we are committed to utilising our operational expertise to invest in the towers acquired and provide cutting-edge power services where necessary.
“Our long-standing relationship with MTN Group, coupled with our two decades of operation on the African continent and track record of delivering consistently strong network uptime, will enable us to deliver an infrastructure capable of meeting South Africa’s increasingly sophisticated data demands.”
MTN says the transaction 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 – thus incorporating an additional 7 100 third-party sites.
Further, it says, one of the key goals of the transaction has been to achieve an “operating company-friendly” outcome, to ensure: “a limited financial impact on MTN SA’s current running cost versus leaseback costs; improved network performance, including improved power management; and flexibility to maximise the benefit of MTN SA’s active network-sharing (including current agreements in place with Cell C and Telkom)”.
Additionally, the telco says, cooperation between MTN and IHS will lead the two to work towards the group’s emissions targets, aligned to net-zero by 2040 for scope three emissions.
According to MTN Group, the transaction will enable its subsidiary 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.”
Additionally, MTN has barter arrangements on approximately 2 000 sites, which are not being monetised as part of this current transaction.
Completion of the deal is subject to certain conditions precedent, including regulatory approvals, and is expected to close in the second quarter next year.
MTN first announced its ARP in March 2019, aimed at simplifying its portfolio, reduce debt and risk, improve returns and realise proceeds of at least R15 billion over three years.
Since then, MTN Group has raised billions of rands from the disposals of its stakes in investment fund Amadeus and travel platform Travelstart. The group also sold its shareholder loan in American Tower Company.