MTN Nigeria Communications Plc (“MTN Nigeria”) has announced a successful renegotiation of its infrastructure sharing and master lease agreements with IHS, following the Extraordinary General Meeting (EGM) held on April 30, 2024. This strategic move aims to bolster the company’s capital position and enhance its financial stability.
Effective from April 1, 2024, the revised agreements extend the contract period to December 31, 2032. Previously, the leases were set to expire between December 2024 and December 2029, with the majority ending in 2029. The updated terms significantly shift the financial structure of the leases, reducing the US dollar-linked component and introducing a predominantly naira-based model. This change is coupled with a cap on the naira Consumer Price Index (CPI) escalator component and the removal of technology-based pricing, focusing payments on tower space and power usage instead.
The new agreements also incorporate an energy cost component tied to diesel power costs but include discounts and incentives throughout the contract duration. These adjustments are designed to mitigate macroeconomic risks, support margin recovery, and address MTN Nigeria’s negative equity position.
In addition to the lease renegotiations, MTN Nigeria, ATC Nigeria Wireless Infrastructure Solutions Limited (ATC), and IHS have reached a revised agreement concerning the management of approximately 2,500 sites initially awarded to ATC from the IHS portfolio. After discussions that began in Q2 2024, the parties have agreed on a new site allocation: ATC will provide services for about 2,100 sites, while IHS will manage approximately 1,400 sites. This includes 1,000 new sites for MTN Nigeria, which will be developed and allocated between the two tower operators over the coming years.
Karl Toriola, CEO of MTN Nigeria, expressed his satisfaction with the renegotiations, stating, “We are pleased with the successful renegotiation of our tower lease agreements with IHS and ATC. These agreements represent a collaborative and mutually beneficial outcome that aligns with the long-term interests of all parties. We expect these amendments to drive significant network cost efficiencies, enhance our operating margins, and improve our capital position in the medium term.”
