MTN Nigeria Secures New Terms in Tower Lease Agreements
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MTN Nigeria Communications Plc has announced the successful renegotiation of its infrastructure sharing and master lease agreements with IHS, as disclosed at its Extraordinary General Meeting (EGM) on 30 April 2024. The revised terms, effective from 1 April 2024, extend the contracts to 31 December 2032, a significant move aimed at fortifying the company’s capital position.
Before renegotiation, the site leases were set to expire between December 2024 and December 2029, with the majority ending in 2029. The updated agreements now predominantly base the leases in naira, reducing the US dollar-indexed component linked to a discounted US consumer price index (CPI). Additionally, a cap has been introduced for the naira CPI escalator, and technology-based pricing has been removed, allowing payments for new upgrades to be determined by tower space and power needs.
An energy cost component, indexed to the cost of providing diesel power, is incorporated into the agreements, with provisions for discounts and incentives throughout the contract duration. These measures are designed to mitigate macroeconomic risks and support margin recovery, addressing MTN Nigeria’s negative equity position.
Moreover, MTN Nigeria, ATC Nigeria Wireless Infrastructure Solutions Limited (ATC), and IHS have reached a mutual agreement regarding the approximately 2,500 sites initially awarded to ATC from the IHS portfolio, as per the announcement on 7 September 2023. Following trilateral discussions beginning in Q2 2024, the parties agreed on a revised site allocation. ATC will now provide tower services for up to 2,100 sites, while IHS will manage up to 1,400 sites, including 1,000 new MTN Nigeria sites to be rolled out in the coming years.
Karl Toriola, CEO of MTN Nigeria, commented on the agreements: “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.”
These strategic adjustments underline MTN Nigeria’s commitment to strengthening its financial health and operational efficiency amid challenging economic conditions.
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