MTN Nigeria Renegotiates Tower Lease Deal to Curb FX Losses
MTN Nigeria Plc said the telecom company has renegotiated tower lease agreement with its contractors, IHS and ATC Nigeria Limited, according to a regulatory filing.
The telecom company added further to its Extraordinary General Meeting (EGM) held on April 30, 2024, has successfully renegotiated binding commercial terms of the existing infrastructure sharing and master lease agreements with IHS.
MTN Nigeria Plc said this was one of the initiatives outlined at the EGM to support the recovery of our capital position. The telecom company said the terms of the amendments are effective April 1, 2024, and the existing contracts have been extended to 31, 2032.
Prior to the renegotiation, the site leases expired variously between December 2024 and December 2029, with the majority expiring in 2029.
MTN Nigeria said 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. It also set a cap for the naira CPI escalator component in the new deal with contractors.
The telecom giant explained that the renegotiated deal 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”, MTN Nigeria said in the statement submitted to the market regulator.
It added that 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.
In addition, MTN Nigeria, ATC Nigeria Wireless Infrastructure Solutions Limited (ATC) and IHS have reached a mutual agreement regarding the approximately 2,500 sites that were awarded to ATC from the IHS portfolio, which was announced on 7 September 2023.
The company said 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.
Commenting on the agreements, MTN Nigeria’s CEO, Karl Toriola, said: “We are pleased with the successful renegotiation of our tower lease agreements with IHS and ATC, which reflect a collaborative and mutually beneficial outcome aligned with the long-term interests of all parties involved.
“We anticipate that these amendments will unlock significant network cost efficiencies in line with our expense efficiency programme to improve our operating margins and capital position over the medium term.” #MTN Nigeria Renegotiates Tower Lease Deal to Curb FX Losses
