MTN has announced that its South African division has finalised a transaction to sell and leaseback 5,709 of its towers—comprising around 4,000 greenfield and 1,700 rooftop sites—to IHS Towers for about R6.4 billion.
Proceeds will be reinvested into strategic growth initiatives, such as securing high demand spectrum frequencies, and providing MTN with additional balance sheet flexibility, the company said in a statement published to the JSE SENS service.
The deal is only for its passive infrastructure — the physical towers themselves.
MTN also stated that the agreement was reached following a lengthy competitive process.
“The transaction will also include the outsourcing of power and related services across the entire MTN SA site footprint of approximately 12,800 — thus incorporating an additional 7,100 third-party sites,” the company said.
MTN said the transaction aims to ensure:
- Limited financial impact on MTN SA’s current running costs versus leaseback costs
- Improved network performance, including improved power management
- Flexibility to maximise the benefit of MTN SA’s active network sharing, including current agreements in place with Cell C and Telkom
- Local currency exposure, that is, all payments in rand
- A minimum 30% Broad-based Black Economic Empowerment (BBBEE) ownership
- Cooperation between MTN and IHS to work towards the group’s emissions targets aligned to net-zero by 2040 for scope 3 emissions.
MTN South Africa said the transaction will enable it to service its retail and wholesale clients more efficiently while creating substantial value.
MTN has barter arrangements on approximately 2,000 sites that are not being monetised as part of this transaction, the company stated.
“Completion of the transaction is subject to certain conditions precedent, including regulatory approvals, and is expected to close in Q1 2022,” MTN said.
MTN currently has a 29% stake in IHS Towers, which the company estimated to be worth R30.5 billion in June 2021.
IHS Towers launched an initial public offering (IPO) of 18,000,000 shares on the New York stock exchange in October.
At an initial price of $21 per share, the sale raised $378 million (R5.9 billion).
Following the IPO, shares in IHS Towers traded lower, dipping from around $17 per share to $15.50.
MTN said it would retain 85,176,719 ordinary shares from IHS Towers following the IPO.
At the current price of $15.75 (R245), MTN stake in the company is worth about R20.8 billion.
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