Mobile operator MTN has mobilised its plans to establish a tower holding company in sub-Saharan Africa, concluding a $428 million (R2.9 billion) deal with American Tower Corporation (ATC) to establish a joint venture, called TowerCo Ghana.
The operator has identified the Ghanaian market as ideal for its tower infrastructure plans, following the company's recent announcement that would place its aggressive African acquisition strategy on ice.
TowerCo Ghana, which will be managed by ATC, will be owned by a holding company of which a wholly-owned ATC subsidiary will hold a 51% share and a wholly-owned MTN Group subsidiary will hold a 49% share.
The transaction involves the sale of up to 1 876 of MTN Ghana's existing sites to TowerCo Ghana, for an agreed purchase price of up to approximately $428.3 million, of which ATC will pay up to approximately $218.5 million for its 51% stake in the holding company.
MTN Ghana will be the anchor tenant, on commercial terms, for each of the towers being purchased. American Tower also expects that TowerCo Ghana will build at least an additional 400 sites for both MTN Ghana and other wireless operators in Ghana over the next five years, explains the operator.
The transaction is expected to close by early 2011, subject to customary closing conditions.
Group president and CEO of MTN Group Phuthuma Nhleko explains: “Infrastructure sharing makes absolute sense for MTN and was a key aspect of the updated strategy outlined to MTN shareholders on 15 July 2010.
“We have in the recent past looked at various permutations to reduce our infrastructure roll-out costs, as well as the ongoing costs of operating our passive infrastructure in our key markets. Because market conditions in each of the markets are unique, we have resolved to evaluate infrastructure sharing opportunities on a market-by-market basis,” he notes.
The agreement with ATC builds on an existing relationship between ATC and MTN. In February, ATC and MTN Ghana entered into a marketing and services agreement, which provided for ATC to assist MTN Ghana in commercialising its tower portfolio and entering into passive infrastructure sharing lease arrangements with operators in Ghana.
ATC recently concluded a similar deal with third mobile operator Cell C.
Cell C cashes in
Last month, Cell C and ATC entered into a definitive agreement for the sale of the operator's existing towers, as well as those towers in the process of construction.
ATC will buy 1 400 of Cell C's existing towers, and up to 1 800 additional towers that are either under construction or will be constructed over the next two years. The companies expect to close the sale of existing towers by early 2011.
The deal is said to be valued at approximately $430 million.
Cell C CEO Lars Reichelt said this is an important strategic transaction for Cell C, allowing the company to realise the value embedded in Cell C's passive infrastructure.
Related story:
Cell C in $430m tower deal
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