MTN confirms R35 billion talks to acquire IHS Holdings

MTN has confirmed it is in talks to acquire, for an estimated R35 billion, the 75% of the shares in New York-listed IHS Holdings that it does not already own.

The telecoms group said in a statement Thursday it had noted recent speculation about a possible deal, and a potential offer was at levels that were near to the last trading price of IHS on February 4, 2023, which had increased significantly in the recent past.

IHS, one of the major independent owners, operators and developer of shared communication infrastructure in the world, has a market capitalisation of about $2.87 billion (R46.7bn) on the New York Stock Exchange.

On Wednesday, IHS's share price closed 4.86% lower at $8.23, but the price has escalated 119% from $3.76 a year ago. MTN's share price also fell sharply by 4.7% to R177.91 on the JSE in the morning, a price that has increased 54% over a year.

IHS listed in October 2021. The company was formed in 2001 in Nigeria by entrepreneur Sam Darwish. The company, which has grown profitable after two years of losses post its listing, grew by acquiring tower portfolios from major operators such as MTN and Airtel.

MTN has signalled since the end of last year that it was casting about for an acquisition, particularly in the fintech segment, and it held some $2bn in cash on its balance sheet as of November last year, which could be deployed on acquisitions.

"No final agreement has been reached and there is no certainty of the (IHS) transaction concluding. The transaction, if concluded, may have a material effect on the price of the company's securities. MTN will continue to explore options to unlock value from its investment in IHS and remains committed to its disciplined capital allocation framework," the South African group said of the IHS transaction.

MTN said it would not comment further on the matter.

IHS operates some 37 000 telecom towers in 7 operating countries in Latin America and in Africa. In the third quarter of its financial year to end-September 2023, IHS increased revenue by 8.3% to $455.1 million. The profit for the period of $147.4m represented a turnaround from the $205.7m loss reported at the same time a year before. Cash from operations increased by 42.3% in the quarter to $259.6m.

MTN's other recent corporate actions include, in November last year, the announcement of a platform strategy to support small-to-medium businesses in partnership with the Small and Medium Enterprises Development Agency of Nigeria, and increasing financial inclusion via partnerships with MasterCard for virtual payments on the MoMo wallet.

It is also progressing with the structural separation of MTN Mobile Money to accelerate growth. Shared network infrastructure agreements were also entered into in Nigeria and Uganda to improve efficiency.

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