MTN & IHS Mutually Break off Tower Power Management Deal

MTN South Africa will take back the responsibility of maintaining backup power at its tower sites from IHS Towers. The company intends to make significant investments in additional battery capacity, generators, solar solutions and security to shield its tower sites from cases of vandalism.

Although MTN South Africa says the agreement was mutual, it comes at a time when MTN Nigeria and IHS have a jittery relationship. The tensions were offset by MTN Nigeria’s decision to relocate 2,500 towers from IHS to American Tower Company (ATC). IHS submitted an offer to take back the towers but MTN Nigeria maintains that the deal to allocate the towers to ATC is final.

“Given the high levels of uncertainty around loadshedding, [both parties agreed] that it would be beneficial for MTN SA to take back the operations of backup power on its portfolio of sites,” MTN told shareholders in a quarterly trading update this morning.

In June 2022, MTN SA and IHS Towers entered a power-as-a-service agreement as part of the latter’s acquisition of over 5,000 MTN towers in SA for R6.4 billion. Under the agreement, IHS Towers was to provide power management services to MTN SA on approximately 13,000 sites, including the acquired towers. At the time, the telco had said it expected the deal to deliver revenue of approximately US$192 million in the first full year of operations. 

However, in the new agreement, MTN said it will take back power management services for its portfolio of sites, to make further investments in resilience to hedge against loadshedding and increasing cases of tower vandalism. IHS will continue to own and operate the tower infrastructure in South Africa. 

MTN’s decision to take back at least partial management of its power sites goes against a recent trend in South Africa. Over the last few years, the country’s leading telcos have been selling off their tower assets and leasing them back, stating that outsourcing tower management was the best avenue to have robust balance sheets.

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