UPDATE South African-based independent towerco IHS Holding Limited, announced it has signed an agreement to acquire 5,709 telecommunication towers from Mobile Telephone Networks (MTN) for $410 million. The MTN tower portfolio is also based in South Africa where MTN serves as one of the country’s major carriers. IHS Towers will also provide Power-as-a-Service to MTN at approximately 12,800 sites across South Africa, including at the acquired towers.
The acquired assets as well as the provisions of PaaS across MTN’s portfolio are expected to deliver Revenue and Adjusted EBITDA of approximately $220 million and $80 million, respectively, in the first full year of operations. IHS said further growth is expected through a multi-year commitment for a portion of MTN’s new towers.
“IHS is paying $410 million for 100 percent, valuing the whole portfolio at $710 million including IFRS-16 lease liabilities. The portfolio generates $80m of EBITDA so the implied multiple is 8.9x current year EV/EBITDA, which compares to IHS currently trading at 7.1x,” Chris Horare, New Street Research Analyst, wrote.
IHS Towers claimed, after the sale, it will own 70 percent of the South African tower business with the remaining 30 percent owned by a B-BBEE investor consortium. The company added they are already in “advanced discussions” with B-BBEE investors.
“By providing power to the remainder of MTN’s towers, IHS is locking itself into MTN and would be the likely preferred acquirer of these towers were MTN to decide to sell, and in addition there is a benefit to IHS of reducing its overall exposure to Nigeria,” Horare wrote.
Sam Darwish, IHS Towers Chairman and CEO, said, “I am exceptionally proud to announce IHS’ creation of the largest independent tower operator in South Africa, which represents the start of a new chapter in South Africa’s telecommunications infrastructure sector. The country has a growing population of almost 60 million people and we are committed to utilizing our operational expertise to invest in the towers acquired and provide cutting edge power services where necessary. Our long-standing relationship with MTN Group, coupled with our two decades of operation on the African continent and track record of delivering consistently strong network uptime, will enable us to deliver an infrastructure capable of meeting South Africa’s increasingly sophisticated data demands.”
In addition to its portfolio in South Africa, IHS has more than 30,500 towers across its nine markets, including Brazil, Cameroon, Colombia, Côte d’Ivoire, Kuwait, Nigeria, Peru, Rwanda and Zambia.
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