MTN’s IHS Acquisition to Increase Group Debt, Exposure to Nigeria
MTN Group’s acquisition of IHS Holding will elevate the telecom company’s leverage positions and increase its exposure to Nigeria, Moody’s Rating said in a commentary note.
Recall that MTN Group Limited announced that it is in advanced discussions to acquire the remaining 75% stake in IHS Holding Limited at a price close to its latest NYSE trading level.
The transaction values IHS’s equity at approximately $2.7 billion, and MTN would need to pay approximately $2.0 billion, as per the deal.
Taking into account MTN’s available liquidity, Moody’s analysts said they do not anticipate the acquisition to be fully debt funded.
Nevertheless, analysts expect the acquisition to modestly elevate leverage and increase its exposure to Nigeria. If the transaction materializes, MTN would fully consolidate IHS.
Under the assumption of a partially funded acquisition, MTN’s consolidated Moody’s adjusted leverage would increase to a pro forma 2.9x for 2024 and projected 2.3x for 2025, compared with the 2.4x reported for 2024 and 2.0x projected for 2025 before this transaction.
“We would expect MTN’s consolidated leverage to trend downward below 2.0x in the next 12 to 18 months”, Moody’s said, adding that the modest increase in leverage is the main driver of the near term credit negative effect of the transaction.
However, analysts highlighted that the net effect of the acquisition would not be significant because MTN would fully consolidate IHS’s EBITDA, reduce its tower lease liabilities, and improve cost control measures that provide a path for gradual deleveraging over time.
At the holding company level, leverage implications depend on where the acquisition debt is raised. If incurred at IHS level and on a non-recourse basis, MTN’s holding company leverage would remain broadly unchanged.
However, if MTN raises debt at the holding company level and the acquisition is partly debt funded, leverage would increase from approximately 2.8x at year end 2024 to around 3x to 3.4x, Moody’s stated.
“We do not expect a fully debt funded acquisition because of MTN’s available liquidity, including ZAR15.7 billion or $0.9 billion cash at the holding level as of 30 June 2025.
“The acquisition would also increase MTN’s exposure to Nigeria, where IHS generates around two thirds of its revenue and EBITDA and operates around 41% of its towers.
“This further exposes MTN to a challenging operating environment characterized by FX shortages, high inflation, and regulatory uncertainty, heightening the group’s earnings vulnerability”.
MTN is expected to benefit from the acquisition because of the reduction of its external tower lease liabilities with IHS.
The holdings operates the majority of MTN Nigeria’s tower infrastructure, and its leases have historically carried US dollar linked escalators, contributing to significant FX related losses, including ZAR42 billion or $2 billion in 2023-24.
With the business consolidation, lease liabilities and costs would become intercompany charges, eliminating external lease liabilities and meaningfully reducing MTN’s lease-related debt and volatility.
This transaction follows the 2024 renegotiation of Nigerian tower lease terms, which replaced dollar-indexed escalators with power-linked mechanisms more aligned with naira-based operating costs.
Moody’s said full ownership would further strengthen the alignment between tower-related economics and MTN Nigeria’s local currency cash flows, improving margin stability and supporting the recovery of the Nigerian business.
Ownership would provide MTN with more direct control over essential tower infrastructure, improving its ability to manage capex, optimize investment cycles, and reduce reliance on external tower companies. This strategic shift enhances operational visibility and strengthens MTN’s long-term network planning Crude Oil Prices Fall as Supply Risks Ease
