Based on the recent action taken by the largest mobile network in Nigeria, MTN, it is a clear indication that the company is moving towards its exit from the Nigeria market door by selling off all its 9,151 mobile network towers to IHS Holdings in a deal that is worth close to N280 billion.
MTN, which is also Africa's largest mobile operator, said the transaction is expected to reduce MTN Nigeria's operating costs, drive network efficiencies and further expand MTN's voice and data capacity. A reliable source within the Nigerian company said the network is very proactive in the area of cost-cutting which explains why it has reduced drastically the rate of its presence in the media, specifically in advertisement.
In terms of the deal, the towers would be transferred to a new company, which will be owned jointly by MTN and IHS, with IHS having full operational control of the underlying business. The transaction essentially doubles the size of the IHS business.
The new towers company will market independent infrastructure sharing services to other mobile operators and Internet Service Providers (ISPs) in Nigeria. The transaction, currently subject to regulatory approval, is expected to be finalised in the fourth quarter of this year.
Sifiso Dabengwa, group president and chief executive officer of the MTN Group, said "we are delighted to have entered into a further transfer transaction with IHS, in our largest African market. IHS' deep knowledge and considerable experience in the sector will help drive efficiencies and enhance our network uptime, allowing us to concentrate on further raising our own service levels, improving the customer experience and ensuring we remain the number one operator in Nigeria."
This is the ninth tower transaction for IHS and its fifth with MTN following the transactions in Cote d'Ivoire, Cameroon, Rwanda and Zambia that took place in 2012 and 2013. On completion of the MTN deal, IHS will manage more than 20,000 towers in Africa.
The MTN transaction follows a deal last month between Etisalat Nigeria and IHS, involving the sale of 2,136 of Etisalat's towers. At the time, Etisalat said the deal was part of a strategy to drive improvement in the quality of its network performance and to accelerate the deployment of 2G and 3G coverage and new services.
As part of the MTN deal, the new towers company has committed more than $500 million of additional investment, over four years, into tower upgrades and a maintenance programme to improve quality of service and enhance the customer experience on the MTN Nigeria network.
In addition, further investments will be made into IHS' centralised network operations centre in Nigeria, to optimise operations and increase IHS' network uptimes of over 99 per cent. There will also be sustained investments in energy-efficiency through the deployment of advanced generators, batteries and alternative power solutions to reduce diesel consumption. IHS anticipates creating a considerable number of technical and engineering direct and indirect employment opportunities to be sourced locally in Nigeria.
Michael Ikpoki, MTN Nigeria's chief executive officer, said the separation of MTN Nigeria's mobile network towers and operation of the underlying towers business by IHS reflect a major part of the company's strategy to optimise network quality and technological assets. "Indeed, the trends and realities in our industry reveal the increased role of cost-efficiency and optimisation of assets in guiding business decisions in order to remain competitive.
Meanwhile, MTN, which has 215 million subscribers across its 22 operations, is still looking for "key operations" that can add value to the group. Dabengwa says MTN will not make an acquisition just for the sake of growing its subscriber base, or expanding its subscriber base, as any deal must add value.
The group, which recently bought a majority stake in Afrihost for an undisclosed amount, is also on the lookout for companies that can aid its digital ambitions as it moves into e-commerce on the back of a deal with Africa Internet Holding (AIH).
The partnership has resulted in the creation of an exclusive vehicle to develop e-commerce businesses across the continent.
Founded in 2012 as a joint venture between Rocket Internet and Millicom International Cellular, AIH has presence in 13 countries on the continent, including South Africa, Nigeria, Egypt, Morocco, Cote d'Ivoire and Ghana. The company has developed several e-commerce ventures in the last 18 months, including Jumia, Zando, Kaymu, Jovago, Lamudi, Carmudi, Easytaxi and Hellofood.
Dabengwa said MTN will seek to buy entities where it does not have skills internally, although this expansion could also take the form of a partnership. It will continue to acquire stakes in small entertainment companies, such as those that can provide music content, he added.
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