MTN has agreed to form a joint venture with IHS that will see the specialist tower operating company manage and control the South Africa-based mobile operator’s 9,151 mobile network towers in Nigeria.
In a release on Thursday, IHS said the transaction is expected to reduce MTN Nigeria’s operating costs, drive network efficiencies and further expand the operator’s voice and data capacity.
The companies did not release a value, but Reuters, quoting unnamed sources, reported that the deal is understood to be worth around $1.8 billion.
As part of the deal, the new towers company - which will be jointly owned by MTN and IHS - has committed more than US$500 million of additional investment over four years into tower upgrades and maintenance in an effort to improve quality of service. IHS also plans to make further investments in its network operations centre (NOC) in Nigeria to improve network uptimes, which the company said are already at 99%.
The transaction, which is subject to regulatory approval, is expected to close in the fourth quarter of this year. IHS said the new company would also market independent infrastructure sharing services to other mobile operators and ISPs in Nigeria.
IHS noted that this is its ninth tower transaction and its fifth with MTN following transactions in Cote d’Ivoire, Cameroon, Rwanda and Zambia that took place in 2012 and 2013. The company added that it would manage more than 20,000 towers in Africa on completion of the Nigeria deal.
“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,” said Sifiso Dabengwa, group president and CEO of MTN Group.
According to the Nigerian Communications Commission, MTN has a 46% share of the country’s mobile market by subscribers, with more than 58 million subscribers as of April 2014. Airtel is in second place with a 20% share, followed by Globacom (19%) and Etisalat (15%).