MTN ups stake in African cell tower operator

2017-02-01 13:14 - Gareth van Zyl
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MTN. (Duncan Alfreds, Fin24)

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Johannesburg - Mobile network MTN [JSE:MTN] has increased its stake in cellphone tower company IHS Group from 15% to approximately 29%, the company said on Wednesday.

To facilitate the transaction, MTN said it will exchange its 51% interest in Nigeria Tower InterCo, the parent company of Nigerian telecom tower operator INT Towers Limited, for the additional shareholding in IHS Holding.

INT Towers, which was founded in 2014 by IHS Group and MTN, previously acquired 8 850 existing towers from MTN Nigeria.

MTN said the transaction is expected to close once the new shares in IHS Group have been issued during Q1 2017.

In an update to shareholders, MTN said the transaction is aimed at simplifying its tower ownership structure and diversifying its infrastructure exposure across Africa.

IHS Group - founded in 2001 - describes itself as the largest independent tower operator in Africa, Europe and Middle East and the tenth largest independent tower company in the world, with over 23 300 towers.

In recent years, mobile networks across Africa have pushed to reduce their ownership of towers and increasingly lease them instead from companies such as IHS, in a bid to reduce capital expenditure.

“The transaction represents a significant step in MTN’s long-standing partnership with IHS,” said MTN’s executive chairman Phuthuma Nhleko.

“It simplifies our ownership structure and diversifies our tower investments across the IHS Group. IHS Group is extremely well positioned for future growth and build-out from 3G upgrades and the move to LTE across its key markets,” said Nhleko.

Issam Darwish, executive vice chairman and group CEO of IHS Group, said: “The MTN transaction and partnership was transformational for IHS and has allowed us to invest a significant amount of capital to better serve our customers, accelerate our growth and the development of critical telecommunications infrastructure across Africa.”

In a note to shareholders, MTN further said that prior to the transaction, MTN's interest in IHS Group was non-voting.

Following the transaction, MTN said its influence on IHS Group is still significantly restricted by a number of limitations including on voting rights, no board representation, and restrictions on access to information.  

This is in a bid to ensure MTN’s “independent and competitive proposition of IHS Group”, the mobile network said.

“These restrictions do not impact MTN's economic interest,” the company said.

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