IHS Towers signs deal with Airtel Nigeria
Firm diluting reliance on MTN, its biggest shareholder
Nigeria’s IHS Towers is working to dilute its reliance on MTN, its biggest customer and shareholder, announcing that it has signed up Airtel for thousands of new network sites in West Africa.
Africa’s largest cellphone tower provider said Airtel Nigeria committed to take 3,950 tenancies over the next five years, with the majority expected in 2024 and 2025. At the same time, Airtel has extended the term of its existing tenancies covering about 6,000 tenancies until December 2031.
Tenancy refers to an arrangement where a mobile operator takes up space at a cellphone tower site or makes use of its infrastructure for a fee, a rental agreement of sorts.
This week’s agreement includes 2,500 colocations in addition to 5G amendments and build to suit sites to be owned and operated by IHS Nigeria.
“The expansion and renewal of our relationship with Airtel Nigeria is a testament to our continued commitment to serving our customers and the connectivity demands of Africa,” said Sam Darwish, chair and CEO of IHS.
“Airtel Nigeria, as well as Airtel Africa who we serve in other markets in Africa, has been a long-term partner of IHS, and I am delighted that we continue to strengthen our collaboration to help facilitate mobile connectivity in our largest market, supporting our customers in rolling out new sites throughout Nigeria.”
The deal comes just weeks after IHS announced a settlement with Wendel Group, its second largest shareholder, on governance issues at the cellphone tower company.
IHS, in which MTN is the largest shareholder with a 26% stake, has had an acrimonious relationship with investors in the past year due to governance issues. The company was cofounded in 2001 by Darwish.
Much of the tension between IHS and shareholders comes down to its stock market performance.
IHS, now valued at $965m, has lost almost 83% of its value since listing on the New York Stock Exchange in October 2021.
BIDDING PROCESS
Tensions between MTN and the tower operator have spilt over into their commercial relationship. Recently, a court in Nigeria put on hold the implementation of a relocation of 2,500 towers from IHS to American Tower Company (ATC). In September 2023, MTN Nigeria said its leases on 2,500 sites, due to expire in 2024 and 2025, had been awarded to ATC Nigeria after a bidding process.
Darwish told Reuters in December that IHS would be willing to match ATC’s terms to win this business back, but MTN reportedly said the deal is final.
IHS owns 16,000 towers in Nigeria, of which MTN leases 14,600. Deals like the one with Airtel go some way to diversify the tower company’s customer base amid the tension.
The commercial relationship extends to MTN’s home market where the group completed the sale and leaseback of its SA towers in a R6.2bn deal in June 2022. That deal saw IHS taking ownership of and leasing back 5,700 towers to Africa’s largest mobile operator.
In July 2023, Wendel filed a case with the grand court of the Cayman Islands to force a vote at IHS on governance proposals after the board failed to put them forward at its June shareholders meeting. In August, MTN threatened similar court action against IHS.
Wendel and MTN, Africa’s largest mobile operator, together own about 45% of the company.
While IHS and Wendel appear to be making peace, a spokesperson for MTN says “Our own issues [with IHS] remain unresolved. MTN’s concerns are still the same. The proposals that we initially communicated to the market, none of that is resolved.”
Last year, MTN called out “governance concerns at IHS”. The mobile operator wants to have a greater say in IHS’s activities. It drafted a proposal to align its 26% equity stake and voting rights — capped at 20% — that were not voted at IHS’s AGM.