MTN Group said that MTN South Africa has finalised the sale of part of its passive tower infrastructure to IHS Towers for ZAR 6.4 billion. The deal reached following a lengthy competitive process covers the sale and leaseback of 5,709 MTN SA towers comprising approximately 4,000 greenfield and 1,700 rooftop sites. IHS said the takeover makes it the largest independent tower operator in South Africa.
The transaction also will include outsourcing power and related services (power as a service, or PaaS) for the entire MTN SA footprint of approximately 12,800 sites incorporating another 7,100 third-party sites.
The transaction aims to ensure a limited financial impact on MTN SA's current running cost versus leaseback costs, along with improved network performance including better power management. MTN said the deal should maximise the benefit of MTN SA's active network sharing including deals with Cell C and Telkom, as well as local currency exposure and work towards the group's target for net-zero by 2040 for scope 3 emissions. IHS also in talks to attract an investor for a minimum 30 percent Broad-based Black Economic Empowerment (BBBEE) ownership in the operations.
The sale value amounts to approximately ZAR 6.4 billion, which incorporates the 5,709 sites and the power assets on third-party sites. IHS said the assets are expected to generate USD 220 million in annual revenue and USD 80 million in adjusted EBITDA in the first full year of operations. Further growth is expected through a multi-year commitment for a portion of MTN’s new towers, IHS said.
MTN said the transaction will enable MTN SA to service its retail and wholesale clients more efficiently while creating substantial value, as reflected in the proceeds realised. These proceeds will be reinvested in strategic growth initiatives, such as obtaining high demand spectrum frequencies, and providing more balance sheet flexibility.
MTN has barter arrangements on approximately 2,000 sites that are not being monetised as part of this transaction. Completion of the transaction is subject to certain conditions precedent, including regulatory approvals, and is expected to close in Q1 2022.
