MTN Nigeria’s Margin Story Runs Through Its Towers
August 20th 2026
- The entire fall in MTN Nigeria’s direct network costs came from one line: the power and maintenance component of its tower contracts, down ₦76.3 billion ($55.3 million) to ₦440.1 billion. Every other cost in that category rose.
- Lease interest reached ₦197.4 billion ($143.0 million) in the half — almost six times what MTN paid on its borrowings — and a ₦43.9 billion ($31.8 million) exchange gain on those leases shows a significant part of the obligation moves with the dollar.
- MTN Group is buying the tower operator behind much of that cost base. IHS shareholders approved the $6.2 billion transaction on 4 August; regulatory clearances are outstanding.
MTN Nigeria Communications Plc, the country’s largest mobile operator with 92.2 million subscribers in the West African country, reported a 70.6% increase in first-half profit. The biggest contributor to its margin expansion was not sales growth but a fall in what it pays to keep leased tower sites running.
Direct network costs dropped 8.2% in the six months through June, according to interim financial statements filed with the Nigerian Exchange. Only one item in that category declined: power and maintenance costs under tower contracts, down 14.8%, or 76.3 billion naira ($55.3 million). Regulatory fees, network maintenance and every other line in the category rose.
Chief Executive Officer Karl Toriola pointed to the same dependency. Diesel prices had eased from earlier peaks, he said in the earnings statement, but “energy costs remain an important consideration given their impact on network operating expenses.” Toriola has led the company since 2021.
The decline was contractual rather than operational. MTN renegotiated its master lease agreements with IHS Holding Ltd. in 2024 and extended them to 2032, telling the exchange at the time that the revised pricing cut the dollar-indexed share, capped the naira inflation escalator and added a component indexed to the cost of running diesel generators. The tower bill was designed to track fuel and the currency. This year it tracked them down.
Tower Economics
The same mechanics produced a paper gain. MTN said it had cleared its last foreign-currency loans, leaving only naira borrowings, yet the accounts recorded a 43.9 billion naira translation gain on lease liabilities after the naira firmed to 1,380 per dollar from 1,530 a year earlier. The residual dollar-linked component generated the gain, and it reverses if the naira weakens.
Accounting rules keep lease costs outside the earnings measure MTN highlights. Interest on the tower leases reached 197.4 billion naira in the half, almost six times what the company paid on bank debt. Strip lease depreciation and lease interest out of earnings and the margin falls to roughly 45%, against the 55.9% reported, though on that basis it still widened.
MTN was candid about the purpose of the 2024 renegotiation, saying the terms were meant to mitigate macroeconomic risk, support margin recovery and address its negative equity position. Shareholders’ funds turned positive during the first half. The recovery reported in July was in part negotiated two years earlier.
MTN Group, the Johannesburg-listed parent operating across 19 markets, is now moving to take control of the counterparty. It agreed in February to acquire the IHS shares it does not already own, valuing the tower company at about $6.2 billion. IHS shareholders approved the transaction on Aug. 4, according to a statement from MTN Group. Regulatory clearances remain outstanding.
The two companies described the same six months in opposite terms. IHS reported that a stronger naira lifted revenue while higher power-generation costs pushed adjusted earnings lower and left it with a quarterly net loss. What relieved the tenant squeezed the landlord it is about to buy.
Elsewhere, the picture is tightening. Revenue growth slowed to 13.3% in the second quarter from about 42% in the first quarter, as last year’s tariff increase fell out of the comparison base. Nigeria’s new tax framework lifted the effective tax rate above 35%, and tax payables on the balance sheet nearly doubled while cash payments lagged well behind the charge.
The board more than quintupled the interim dividend, payable Sept. 7. MTN said it expected capital spending to ease in the second half and margins to hold in the mid-to-high 50% range. Whether they do turns less on Nigerian data demand than on diesel, the naira and who ends up owning the towers.
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