MTN group trades 50% shares in INT Towers for stake in IHS group
The South African MTN Group on Wednesday announced that it will exchange its 51 per cent interest in Nigeria Tower InterCo B.V., the parent company of INT Towers Limited, the Nigerian tele mast operator, for an additional shareholding in IHS Holding Limited, a telecom mast provider.
As a result of the transaction, MTN’s economic interest in IHS Group will increase from about 15 per cent to 29 per cent. The transaction is a category 2 transaction in terms of the JSE listings requirements.
INT, a Nigeria-based tower operator company, was founded in 2014 by IHS Group and MTN which subsequently acquired 8,850 existing towers from MTN Nigeria. IHS Group, founded in 2001, is the largest independent tower operator in Africa, Europe and Middle East and the 10th largest independent tower company in the world, with over 23,300 towers.
MTN Group, the parent company of MTN Nigeria, the country’s largest cellco operator by subscription, revealed that there are no conditions precedent to the transaction which is expected to close once the new shares in IHS Group have been issued in the next 43 week days of the first quarter (during Q1 2017).
In a statement issued by MTN Group Corporate Affairs and made available to Daily Times Nigeria the company said that in exchanging all of its interest in INT in Nigeria for additional shares in the pan-African IHS Group, all of its interest in IHS will sit alongside a world-class group of investors including Wendel, the International Finance Corporation (IFC), Government of Singapore Investment Corporation (GIC), Korea Investment Corporation (KIC) and Emerging Capital Partners (ECP), among other international investors.
The statement revealed that the deal enables MTN to simplify its tower ownership structure and diversify its tower infrastructure exposure across the IHS Group which operates in a number of markets across Africa. – According to the statement, the ratio at which MTN shares in Nigeria Tower Interco BV were exchanged for new IHS Group shares was based on historic financial performance adjusted for growth, leverage and other adjustments.
The transaction, which will also enable MTN to crystallize value for its shareholders in the future, allows MTN to benefit economically from its previously owned passive infrastructure and continued network investment.
Executive Chairman, MTN, Phuthuma Nhleko, said that the transaction represents a significant step in MTN’s long-standing partnership with IHS. “It simplifies our ownership structure and diversifies our tower investments across the IHS Group. IHS Group is extremely well positioned for future growth and build-out from 3G upgrades and the move to LTE across its key markets.”
IHS Group Executive Vice Chairman and Group CEO, Issam Darwish, said that the MTN transaction and partnership has been transformational IHS as it has empowered the company to invest a significant amount of capital to better serve its customers. The business relationship with MTN, he said has also accelerate IHS’s growth and the development of critical telecommunications infrastructure across Africa.
“We are delighted to announce the transaction which simplifies the shareholding structure of IHS Group and marks an important milestone as we strengthen our capital structure and our position as the leading independent tower company in EMEA,” Darwish said.
Prior to the Transaction, MTN’s interest in IHS Group was non-voting. Post the transaction, to ensure the continued independent and competitive proposition of IHS Group, MTN’s influence on IHS Group is significantly restricted by a number of limitations including on voting rights, no board representation, and restrictions on access to information.
These restrictions, the statement revealed do not impact MTN’s economic interest. Given limitations on influence, MTN’s interest in IHS Group has to date been accounted for as a financial instrument “available for sale” in accordance with IAS 39 Financial Instruments.
Daily Times recall that MTN has assured of listing its shares on the Nigerian Stock Exchange, a development expected to be completed in 2017.
However, MTN Group Ltd was reported to have said recently that it may put off plans to list its Nigerian operation until 2018, as it strived to resolve a regulatory dispute.
Phuthuma Nhleko, MTN Chairman and Acting Chief Executive Officer, was quoted as saying at the World Economic Forum in Davos, Switzerland that the listing may be within the 12 to 18-month period.
MTN Group fingered regulatory issues and macroeconomic conditions as barriers to early listing ion the Nigerian Stock Exchange (NSE).
The company said that prevailing regulatory issues with the Nigerian government need to be resolved before its Nigerian subsidiary goes on to lists its shares on the local stock exchange,
‘It’s a work in progress and hopefully within the twelve to 18-month period we will be able to do it,’ MTN Chairman and Acting CEO Phuthuma Nhleko was quoted as saying at the World Economic Forum in Davos, Switzerland, adding: ‘Regulatory issues need to be resolved, and the macro conditions need to have improved.
MTN Nigeria revealed last July that it planned to list its shares on the Nigeria Stock Exchange (NSE), subject to suitable market conditions, and had appointed Citigroup and Stanbic IBTC Capital as joint transaction advisors and global coordinators.
The planned initial public offering (IPO) forms part of a settlement arrangement with the Nigerian government regarding a NGN330 billion ($1.0 billion) fine awarded to MTN Nigeria in October 2015 for not keeping to deadline to disconnect about 5.1 million partly registered subscribers.
