In a $2,2-billion transaction, the MTN group has agreed to acquire the 75,3% of tower operator IHS shares that it doesn’t already own, with particular focus on the company’s African operations.
The all-cash transaction will be funded from IHS cash balances and MTN funding sources.
In terms of the agreement, IHS will conclude the already-announced disposal of its Latin American (LatAm) businesses, and MTN will acquire 100% of IHS’ African tower portfolio, assuming control over a substantial portion of the group’s passive mobile infrastructure footprint in Africa.
IHS announced the disposal of its LatAm fibre and towers businesses earlier this month.
MTN expects the transaction to deliver operating synergies and efficiencies and to support its digital infrastructure strategy across Africa.
After the acquisition is concluded, IHS will be de-listed from the New York Stock Exchange (NYSE).
The rationale for the acquisition is rooted in increased volatility in key indicators such as foreign exchange movements and inflation, as well as instability in power supply and energy costs.
These all have a direct bearing on the economics of MTN’s tower infrastructure leases in Africa.
It is believes the transaction could unlock substantial value through ownership economics, with cost savings and synergies expected to be realised within the MTN group.
In addition, MTN will be able to manage key operational risks and underlying cost drivers linked to its operating environment.
The group will also be able to improve operational coordination across its operating companies and infrastructure businesses, enhance its strategic position in the context of the evolving technology landscape and complement its open-access infrastructure strategy.
On a strategic level, it means MTN will have-end-to-end ownership of its infrastructure value chain, and it will be able to control key risks such as network performance, built-to-suit (BTS) provision, forex and inflation.
Operational alignment between MTN operating companies and IHS should enable better energy optimisation and coordinated infrastructure rollou.
The transaction is subject to conditions precedent, including:
- Regulatory clearances and approvals from relevant authorities in applicable jurisdictions and fulfilment of remaining conditions precedent;
- IHS having minimum and maximum levels of cash and indebtedness, respectively;
- Completion of relevant regulatory and filing processes, including with the US Securities and Exchange Commission (SEC), where applicable;
- Two-thirds approval from voting IHS shareholders; and
- Completion of the one-step merger process under Cayman law.