MTN, Africa’s biggest mobile provider, may soon acquire IHS Towers, the continent’s largest cellphone tower operator, in a deal worth more than R33bn.
The move would bring in a new next chapter for a long-running partnership between the two African operators, whose relationship has been a symbiosis of aligned business interests, punctuated by moments of boardroom rivalry.
As IHS’s largest shareholder with a one-quarter stake, MTN has been mulling the future of its investment in the Nigerian tower company for a few years.
After some speculation in recent weeks, MTN confirmed on Thursday that it is in talks to acquire IHS.
The JSE-listed group said it is “at an advanced stage of discussions” with IHS to acquire the 75% shares that it does not already own, “with a potential offer price that is at a level near to the last trading price of IHS on the New York Stock Exchange, as of February 4”.
With a market value of $2.76bn, this would translate to a transaction worth $2.07bn (about R33.44bn)
“No final agreement has been reached, and there is no certainty of the transaction concluding. Should the transaction not materialise, MTN will continue to explore options to unlock value from its investment in IHS and remains committed to its disciplined capital allocation framework.”
The relationship between the two companies has had its ups and downs. In August 2024, IHS and MTN put aside some of their differences, announcing a renegotiated agreement for the mobile operator’s tower leases in Nigeria. The move helped MTN to reduce the amounts that it has to pay for the infrastructure in foreign currency, specifically the dollar.
With this new deal in place, IHS and MTN completed the renewal of about 26,000 MTN tenancies on IHS’s infrastructure across six African markets: Nigeria, Rwanda, Ivory Coast, Cameroon, Zambia and South Africa.
IHS had a public spat with investors in 2023/24 due to governance issues. Apart from being its largest investor, MTN is also IHS’s largest customer. In 2023, MTN said it wanted to have a greater say in IHS’s activities and drafted a proposal to align its 26% equity stake and voting rights, which are capped at 20%. The proposal failed to be put to a vote at IHS’s AGM.
Much of the tension between IHS and shareholders comes down to its stock market performance. In October 2021, IHS made its US stock market debut, listing on the New York Stock Exchange. At the time, MTN owned about a third of the company and was thought to be on a path to a bumper payday when it eventually sold down the investment.
By June 2021, the group estimated the value of that 29% equity at R30.5bn. Selling down this stake, plus other moves such as repatriation of funds from Nigeria, was billed as a way to wipe out the group’s debt. Unfortunately, market conditions saw IHS lose half its value by mid-2023, causing tensions to boil over with investors.
Now the company’s fortunes have turned, with the share now 109.31% higher over the past 12 months.
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