American Tower Corporation is going to take over MTN Group’s Nigerian tower operations from IHS Holding beginning in 2025, according to MTN Group.
As the lease on around 2,500 of the business’s network sites in its largest market, for which IHS has provided services, will expire in 2024 and 2025, the company stated that it was aggressively renegotiating its tower contracts in Nigeria.
MTN was able to acquire more than 5,700 of IHS’s tower sites in South Africa after completing a sale-and-leaseback transaction with IHS in the previous year. Since then, the relationship between the two firms has deteriorated, and MTN is currently engaged in a shareholder dispute with the tower firm, in which it has 26% of the shares, over concerns pertaining to governance.
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Details of the dispute between MTN and IHS Towers
At an annual meeting of the firm in June, a simmering dispute between shareholders of the massive telecoms provider IHS came to a head, escalating into a dramatic confrontation after IHS rejected demands from MTN and another of its main stakeholders.
IHS is the fourth largest independent international tower firm in the world and the largest provider of telecommunications infrastructure in Africa, Latin America, and the Middle East based on the number of towers they operate.
IHS Towers and its subsidiaries handle about 16,700 sites in the mobile communications market which is the largest in Africa. IHS Towers’ corporate office is located in Lagos, the capital of Nigeria.
According to a report, the board of directors of IHS rejected the suggestions that were made during Wednesday’s annual meeting. The proposals were made by Wendel SE and MTN Group Ltd., which together own around 45% of the firm. They argued that all shareholders with at least a 10% holding should have the option to propose board members.
“The proposals requested to be put forward were not in the best interests of the company as a whole or our collective shareholder base,” IHS said in a statement.
The IHS board came to the conclusion that the plan was crafted with the intention of providing benefits to particular large shareholders at the expense of other owners.
Both Wendel and MTN have refrained from making any official statements regarding the standoff.
Following IHS’s stock’s precipitous decline, which resulted in a sixty percent drop in its market value from the company’s first public offering in New York in 2021, some investors are looking to make a switch.
Tower companies in Africa are having a difficult time keeping up with the increasing demand for investments in their networks to accommodate the growing use of smartphones and broadband internet.
The two shareholders also claimed that IHS management did not provide timely notice of their proposed resolutions, and they are demanding that the general meeting be reconvened in order to discuss them.
Operation of American Towers in other African countries
An agreement was reached in 2020 between American Tower and MTN for the latter’s 49% holdings in the company’s joint ventures in Ghana and Uganda to be acquired by American Tower.
The transaction, which has an estimated value of roughly $523 million and is scheduled to be finalised in the third quarter of 2020, subject to the customary regulatory restrictions, will result in a ‘one-time impact for America Tower’ costing close to $65 million for the year from the payment of previously postponed case interest related to joint venture debt.
When I spoke to Matthew Edwards, who is the head of research for EMEA at TowerXchange, he stated that the recent news of American Tower buying out MTN’s part in its tower assets sale will mark the end of mobile carriers holding an equity stake in their towercos, since the practise is now dying out in Africa.
“Although towers are an important operational component of MTN’s business, the investments in existing tower companies have run their course, and realised a healthy return, but are not viewed as long-term strategic holdings for MTN, hence its sale to American Tower,” he added.
The announcement comes after American Towers successfully completed the acquisition of Eaton Towers Holdings, which would add 5,700 communication sites to its portfolio of properties in Africa. It is estimated that the overall cost of the acquisition, which includes any post-sale modifications and the debt that Eaton Towers already had, was around $1.85 billion.