IHS Towers, the Nigerian cellphone tower operator that MTN aims to acquire, has signed a deal to sell off its Brazilian fibre business.
The transaction, which marks IHS Towers’ exit from the Brazilian fibre market, will see it sell its 51% stake in I-Systems, a specialist provider of shared optical fibre networks in Brazil, to TIM, which holds the remaining 49% of the business.
According to IHS, the deal — part of a broader strategy to create value for shareholders — reflects an enterprise value of $452.6m (R7.2bn).
For the tower operator, the deal is aligned to its previously announced strategic initiatives, “helping to focus the growth of the company in lower capex, higher return businesses”.
I-Systems’ network covers about 9.3-million homes passed, with 6.4-million of these being fibre-to-the-home (FTTH). The network spanned about 22,250km by December 2024.
IHS Towers chair and CEO Sam Darwish said: “Today’s announcement to sell I-Systems to TIM forms part of our strategic initiatives targeted at shareholder value creation, designed to help focus our growth on lower capex, higher return businesses.
“We extend our sincere appreciation to our colleagues, customers, and partners whose commitment has enabled the successful development of our fibre business in Brazil.”
The I-Systems transaction is subject to customary closing conditions, including regulatory approvals, and is expected to close later this year.
This comes almost a week after MTN confirmed speculation that it is in talks to acquire the continent’s largest cellphone tower operator.
The move would ring in a new 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.
This transaction would see Africa’s largest mobile provider acquiring the 75% of IHS it does not already own.
With a market value of $2.76bn, this would translate to a transaction worth $2.07bn.
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.
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 a greater say in IHS’ 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’ 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.
Losing half its value by mid-2023 caused tension to boil over with investors.
Now the company’s fortunes have turned, with the share 113% stronger over the past 12 months.
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