MTN Group is set to acquire 5,709 new towers from IHS Towers in South Africa for $412 million, as the operator seeks a shift in its focus into strategic initiatives including around securing spectrum.
IHS Towers and MTN are legally independent companies, but MTN owns 25.9% of IHS Towers. Before the transaction is closed in Q1 2022 as planned, MTN is required to pay all existing debt on the facilities to be divested. IHS, whose shareholders are major private equity players in Africa, plans to borrow part of the resources on the South African debt market to finance this operation.
The company stated the move will transform it into the largest independent tower operator in South Africa and boost its efforts to be a leader in the overall continent. It expects the tower operation and power supply deals to generate revenue of $220 million in the first full year of operations. The company is also working on new international fundraising and has selected Citigroup to facilitate discussions with international investors.
The telecom tower operator has taken on debt in recent years to finance its expansion plan. This strategy seems to be paying off, as according to its recent performance indicators, profitability is back on track, with a net margin that has become profitable, and debt that has stabilized.
