Telecommunications group MTN South Africa has concluded a passive tower infrastructure transaction with IHS Towers following a lengthy competitive process.

The completion of the transaction is subject to certain conditions precedent, including regulatory approvals, and is expected to close in the first quarter of 2022.

The R6.4-billion deal includes the sale and leaseback of 5 709 of MTN South Africa’s towers, which comprises 4 000 greenfield and 1 700 rooftop sites, as part of the telecommunications giant’s asset realisation programme (ARP).

The transaction will also include the outsourcing of power and related services, such as power-as-a-service, across the entire MTN South Africa site footprint of about 12 800, thus incorporating an additional 7 100 third-party sites.

MTN, in an update to shareholders, said that one of the key goals of the transaction has been to achieve an “OpCo-friendly” outcome, which aims to ensure a limited financial impact on MTN South Africa’s current running cost versus leaseback costs; improved network performance, including improved power management; and flexibility to maximise the benefit of MTN South Africa’s active network sharing, including current agreements in place with Cell C and Telkom.

It also includes local currency exposure; a minimum 30% broad-based black economic empowerment ownership; and cooperation between MTN and IHS to work towards MTN Group’s emissions targets aligned to net zero by 2040 for Scope 3 emissions.

“The transaction will enable MTN South Africa to service its retail and wholesale clients more efficiently while creating substantial value, as reflected in the proceeds realised,” the company continued.

Proceeds will be reinvested into strategic growth initiatives, such as securing high demand spectrum frequencies and providing MTN with additional balance sheet flexibility.

MTN has barter arrangements on about 2 000 sites which are not being monetised as part of this current transaction.

Citigroup Global Markets and Standard Bank acted as financial advisers to MTN on the transaction and Webber Wentzel as legal advisers.