MTN Nigeria, the country’s biggest telco, has renewed its lease agreement with tower infrastructure provider IHS Towers, ending a two-year boardroom tussle between the two companies. The new deal will see IHS manage MTN networks sites beyond the initial September 2023 deadline.
The renegotiation comes eleven months after MTN selected American Towers Corporation (ATC) to take over its tower operations from IHS by 2025.
Under the new agreement, ATC will provide tower services for 2,100 sites, while IHS will manage 1,400 sites. The 1400 sites include new 1000 MTN sites to be rolled out over the next few years, allocated between the two tower operators. These new agreements are effective April 1, 2024, until December 31, 2032. Before the renegotiation, the site leases expired between December 2024 and December 2029.
The deal would benefit IHS Towers, which earns 63% of its tower revenue from Nigeria. By servicing Airtel and MTN Nigeria, the largest telcos in the West African nation, the tower could witness an improvement in revenues. In a separate filing on Wednesday, IHS Towers said the tower lease renegotiation is a testament to the deepened relationship between the two companies.
The renegotiation, which includes new financial terms focusing on currency stability and diesel costs, aims to mitigate the impact of Nigeria’s economic challenges on both companies.
The new contracts include a dollar-denominated component linked to US inflation, a naira-denominated component tied to Nigerian inflation, and a diesel-linked component to hedge against rising fuel prices and currency fluctuations.
The agreement is expected to bolster IHS’s position in the Nigerian market, where it competes with ATC for tower management contracts. It also provides MTN with a more diversified tower infrastructure and potentially improved cost management.
