More Africa NewsSouth Africa: sale of more than 5,000 MTN towers to IHS Towers approved with conditions

March 14, 2022by myles0

Many telecom operators on the continent are moving towards asset relief models by entering into sale-leaseback agreements for telecom towers with specialized companies. The tower sale operation launched in 2020 by MTN South Africa is gradually entering its finalization. 

IHS Towers has obtained regulatory approval from the Competition Commission of South Africa (CompCom) for the acquisition of 5,713 passive tower infrastructure sites and associated business operations from MTN SA. However, CompCom imposed a series of strict conditions ”  due to various competition and public interest concerns  ”. This includes the market exclusion of rival independent tower operators and vendors, as well as the potential exclusion of rivals from access to space on the affected towers.

New York-listed IHS Towers must meet black South African economic empowerment conditions, such as obtaining a 30% black equity stake within 24 months. In addition, the tower company must ensure that the sites it acquires from MTN are made available to all existing users, under the same conditions. 

MTN, for its part, is prohibited from reducing the number of its employees for 24 months following the transaction. In addition, the telecom company is to spend 60 million rand (4 million USD) per year for 10 years to support SMEs and suppliers belonging to “historically disadvantaged people (HDP)” in the telecommunications sector. This amount will be increased by the rate of consumer inflation each year during the period.

Since 2020, MTN South Africa has been engaged in the sale of part of its telecom tower fleet, comprising some 13,000 infrastructure assets. For this purpose, the company had retained Citigroup Global Markets and Standard Bank as financial advisers. MTN announced last November that it had reached a 6.4 billion rand agreement with the telecom tower manager IHS Towers for the transfer of passive infrastructure of more than 5,000 telecom towers to the latter. The company had clarified that the sale agreement, which should be finalized in the first quarter of 2022, was subject to regulatory approvals.

If the agreement with IHS Towers is successful, nearly eight thousand towers will still be available for further sale. With the sale of the telecom towers to IHS Towers and the transactions that are expected to follow, MTN hopes to generate revenues, which will in particular help to reduce the operational expenses of the company. The company also intends to invest in improving the coverage and quality of its services, as well as in the development of new value-added products that will support its growth ambitions. 

Source: Agence Ecofin

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