MTN Renegotiates Tower Leases With IHS, ATC To Reduce FX Shock

MTN Nigeria Communications said it has renegotiated the commercial terms of the existing infrastructure sharing and master lease agreements with IHS Tower Nigeria Limited.

MTN said the renegotiation would support the recovery of its capital position.

In the first half of 2024, MTN suffered a foreign exchange loss of N887.7bn. The telecommunication service provider consequently declared a record N519.1bn loss after tax and negative retained earnings of N727.2bn.

THE WHISTLER had reported that MTN relied on the deal with IHS Towers to support its margin recovery.

MTN disclosed that the infrastructure leases have been renegotiated to reduce the FX exposure of the company.

According to MTN, the leases have been renegotiated to be more naira-denominated.

The telecom company said, “The terms of the amendments are effective from 1 April 2024, and the existing contracts have been extended to 31 December 2032. Prior to the renegotiation, the site leases expired variously between December 2024 and December 2029, with the majority expiring in 2029.

“The revised terms substantially reduce the US dollar-indexed component of the leases linked to a discounted US consumer price index (CPI), making the leases majority naira-based, as well as set a cap for the naira CPI escalator component.

“They also remove technology-based pricing, allowing payments for new upgrades based on tower space and power.

“The renegotiated agreements incorporate an energy cost component indexed to the cost of providing diesel power; however, the terms also provide for some discounts and incentives over the life of the contracts. The renegotiated terms aim to mitigate
macro risks affecting our business as well as support margin recovery and the resolution of our negative equity position.”

The MTN said ATC Nigeria Wireless Infrastructure Solutions Limited (ATC) and IHS (the Parties) have reached a mutual agreement regarding the approximately 2,500 sites that were awarded to ATC from the IHS portfolio in September 2023.

“Following trilateral discussions commenced in Q2 2024, the parties have agreed to a revised allocation of sites in terms of which ATC will provide tower services for up to approximately 2,100 sites; while IHS will manage up to approximately 1,400 sites.

“This includes 1,000 new MTN Nigeria sites to be rolled out over the next few years and allocated between the two tower operators.”