IHS Holding Limited, one of the largest independent owners, operators, and developers of shared communications infrastructure in the world by tower count, has completed the acquisition of 5,701 towers from MTN South Africa, one of the leading mobile telecommunications operators in that country.
Under the agreement, IHS Towers is also providing Power Management Services to MTN South Africa on approximately 13,000 sites, including the acquisition portfolio, across the country.
Cash consideration for the transaction is US$412.25 million – on a cash and debt free basis, excluding International Financial Reporting Standard 16 (IFRS 16) lease liabilities estimated to be US$296.2 million.
Applying IFRS 16 lease liabilities means that in its financial reporting on the transaction, the MTN excluded items to the tune of US$296.2 million in the form of cross pricing for the purposes of avoiding taxes in South Africa.
In a statement, MTN said, the acquired assets as well as the provision of Power Management Services across MTN SA’s portfolio are expected to deliver Revenue and Adjusted EBITDA of approximately US$192 million and US$85 million, respectively, in the first full year of operations. This transaction has received the necessary regulatory approval from the South African Competition Commission.
The Power Management Services component of the transaction is aligned to IHS Towers’ existing service offering in other African markets – this service will be delivered to the acquired sites, as well as to other third-party sites on which MTN SA is present. This service will primarily involve power systems and security at sites.
IHS Towers will own 70% of the South African Towers business with the remaining 30% to be owned by a Broad-based Black Economic Empowerment (B-BBEE) consortium, per regulatory requirements.
With this acquisition, IHS now has an operational footprint in eleven emerging markets with seven in Africa, in addition to four in Latin America and the Middle East, with a global tower count of nearly 39,000 towers.
IHS Towers Chairman and CEO, Sam Darwish commented “The closure of this acquisition is an important milestone in IHS’ growth story. IHS was founded in Africa and the region continues to be a key anchor for our company. Through this transaction, IHS has now entered the most industrialised economy in Africa as South Africa’s largest independent tower operator. MTN Group have been a long-term partner of IHS, and I am delighted that we will expand that collaboration and facilitate mobile connectivity in South Africa. We will leverage our deep operational excellence and engineering expertise, honed across our other African markets, to meet South Africa’s increasingly sophisticated data demands and expedite the roll-out of new technologies.”
MTN Group President and CEO, Ralph Mupita commented “With the regulatory approvals and all conditions precedent to the deal finalised, we are pleased to have IHS bring global capabilities to our South Africa network. Additionally, with this deal, we continue to deliver on our Asset Realisation Programme, strengthening the balance sheet and improving returns.”
“Over the years, MTN SA has built and maintained the best network in the country, and we believe that in IHS, we have found a partner with the necessary experience and expertise to maintain and enhance this critical part of the business. This international partnership also brings foreign investment into the market to create greater competition,” added Charles Molapisi, MTN SA CEO.