Why selling the towers made sense

To understand why MTN plans to acquire IHS Towers for an enterprise value of approximately $6,2 billion, it's essential to first understand why the group sold off these infrastructures in the first place. The rationale, widely adopted by telecom operators in the 2000s and 2010s, was commercially sound: towers are capital-intensive physical assets with demanding operational requirements. Maintenance, power supply, and security require significant resources without directly generating the subscriber growth or ARPU increases sought by investors. By selling these assets to specialists, the TowerCos, operators could convert fixed assets into cash, reduce debt on their balance sheets, and reallocate capital to spectrum and network modernization.A

In Africa, this logic became even more urgent. MTN was then expanding into 22 markets on a continent where grid electricity remained unreliable, maintenance costs were structurally high, and regulatory environments varied significantly from one country to another. Outsourcing towers to companies like IHS, which were expected to gain efficiency through scale, technical specialization, and resource sharing among multiple operators, was a rational response to capital and operational constraints that organic cash flow could not always absorb.

The core of the model rested on the sale and leaseback MTN sold the towers, continued to use them by leasing capacity to the new owner, and reduced its balance sheet by removing a depreciable physical asset. IHS was theoretically expected to achieve a better return by hosting multiple tenants on the same tower. This pooling of resources would create economies of scale that a sole owner operating their infrastructure could not achieve. The entire strategy therefore rested on increasing the average number of tenants per tower. In several African markets, this assumption proved more difficult to realize than anticipated.

Exchange rate risk: rents in dollars against a weakened naira

Historically, many tower lease agreements in Africa were structured in hard currencies, primarily US dollars or dollar equivalents, while operators received revenue in local currency. This discrepancy remained manageable as long as the naira was relatively stable. It became structural when the Nigerian currency depreciated sharply.

In Q2 2023, MTN Nigeria's pre-tax profit fell by approximately 64,3% year-on-year and its after-tax profit by approximately 67,7%, amid a backdrop dominated by the currency shock following the foreign exchange market reform.B A significant portion of tour costs was indexed to US dollars, while revenues were primarily collected in naira. For the full year 2023, MTN Nigeria recorded an after-tax loss of approximately 137 billion naira and a net foreign exchange loss of 740,4 billion naira, compared to 81,8 billion naira in 2022.C

IHS's results were also affected by this currency cycle. In Q1 2023, revenue reached $602,5 million, up 35,1% year-over-year, but this quarter included a non-recurring gain of $48,1 million related to a Nigerian client. In Q2, revenue totaled $546,2 million, still up 16,8% year-over-year but down approximately 9,3% compared to Q1. This sequential decline cannot therefore be attributed solely to the naira: it combines, in particular, the elimination of the non-recurring item from Q1 and the effect of the sharp devaluation in June. IHS subsequently lowered its annual revenue forecast, indicating a negative currency effect of $141 million, almost entirely related to the naira.D

The fundamental problem stemmed from the mismatch between the currency of revenues and the currency of a portion of contractual obligations. Lease agreements are less flexible than discretionary spending, and indexing to the dollar quickly passes on a depreciation of the naira to local costs. MTN's 2025 financial statements indicate that following the 2024 renegotiation, the portion indexed to the dollar was reduced, and the majority of affected lease payments became denominated or indexed in naira.

On August 7, 2024, MTN Nigeria and IHS renewed and extended all of their Master Lease Agreements in Nigeria until the end of 2032, covering approximately 13,500 leases.E The new terms reduced the dollar-indexed component, made the arrangement predominantly based on the naira, capped the Nigerian inflation-linked escalation component at 20%, and introduced a diesel-linked component. Of the approximately 2,500 leases that were due to expire in 2024 and 2025, IHS renewed 1,430, including new co-leases.

Foreign exchange risk does not disappear with vertical integration. Once IHS is consolidated, lease payments between group entities would be eliminated from the consolidated accounts, but the underlying economic exposure would remain through foreign currency debt, imported equipment, diesel, and other energy costs. The difference, therefore, lies primarily in the location of this risk: less in an external lease agreement and more in the group's operational and financial management.

The problem with tower sharing: a tenancy ratio that has plateaued.

The business model of an independent TowerCo relies on one essential variable: the rate of pooling, or tenancy ratioThis refers to the average number of tenants per tower. A tower with a single tenant generates a limited return on an asset with high fixed costs. With a second tenant, the margin increases significantly, as accommodating another operator's equipment in an existing structure is much less expensive than building a new tower. The entire investment thesis of TowerCos therefore assumes that this ratio increases over time.

At the IHS group level, the pooling rate has increased from 1,51x at the end of 2024 to 1,46x at the end of 2025, with 54,874 tenants on 37,590 towers.G This consolidated 2025 ratio still includes Latin American operations classified as discontinued operations; it should therefore not be interpreted as a strictly African ratio. In Q2 2026, prior to the completion of the Latin American divestiture in August, IHS reported a ratio of 1,47x.

In Nigeria, the agreement concluded in 2025 with T2, formerly 9mobile, resulted in the churn of 2,576 tenants in Q3 2025; for the whole year, IHS reports 2,676 T2 tenants removed from its portfolio, on which the group did not recognize any revenue.G These are tenants or tenancies, not 2,500 physical towers. Market concentration, the limited number of major operators, and Globacom's self-managed portfolio further reduce colocation opportunities in certain segments of the Nigerian market.

IHS also experienced governance tension with its main client-shareholder. MTN held approximately 24,7% of IHS's capital at the time of the 2026 announcement, while the articles of association had historically capped its voting rights at 20%. The dispute over board representation and governance rights is documented in the publications of both groups. Of the roughly 2,500 MTN Nigeria leases that were due to expire in 2024 and 2025, IHS renewed 1,430 in the August 2024 agreement; IHS's primary publications confirm this number but do not, on their own, attribute each of the remaining leases to American Tower.E

A decade of transition: from sale to acquisition

The economics of reintegration: what the numbers say

The financial rationale published by MTN is based on internalizing the margin currently paid to IHS, capturing revenue from third-party tenants, and better cost predictability.H The transaction presentation values ​​100% of IHS's diluted equity at approximately $2,9 billion. After accounting for MTN's existing 24,7% stake, the cash consideration is approximately $2,2 billion. The financing plan includes approximately $1,1 billion in cash on IHS's balance sheet and approximately $1,1 billion in net financing from MTN. This latter figure represents the financing requirement for the acquisition; it should not be confused with an amount of annual savings or with an assumed value of up to 30% of IHS Nigeria from the future divestiture.

At the end of 2025, MTN Group reported R74,985 billion in lease liabilities, compared to R76,325 billion in restated 2024 figures. This total covers all of the group's lease contracts and is not directly comparable to the acquisition price of IHS. After consolidation, payments between MTN and IHS would be eliminated at the group level, but the physical costs of the towers—energy, maintenance, security, personnel, and capital expenditures—would remain. The economic equation therefore combines the effects of consolidation, third-party revenues, debt structure, operating costs, and the ability to improve asset utilization.

Revenue from non-MTN tenants constitutes the third pillar of the equation. In Q3 2025, Airtel represented 15% of IHS's revenue, according to the company's investor presentation.H MTN has indicated its intention to maintain IHS's service standards and capture third-party revenue; in Nigeria, the condition published by the FCCPC further stipulates that the local divestiture of up to 30% must be conducted on an arm's length basis. The operational challenge will be how governance, pricing, and investment decisions will maintain the infrastructure's attractiveness to MTN's competing customers.

Competitive reactions: Airtel, Helios and the question of neutrality

Airtel Nigeria is simultaneously pursuing a significant network expansion program. In 2026, its management indicated that the operator had added 1,561 base stations in three years and exceeded 17,000 network sites, following an expansion of approximately 15% over the previous two years; it announced its intention to maintain a high pace of investment in 2026.I However, the sources consulted do not allow us to explicitly attribute this program to the project of the acquisition of IHS by MTN: the chronology is concurrent, but the stated motive is primarily the improvement of the capacity and quality of the network.

Indus Towers, for its part, confirmed in its stock market publications the establishment on January 15, 2026 of subsidiaries in Nigeria and Zambia.J This step establishes a legal presence in both markets, but it doesn't yet allow us to gauge the scale of a future operational portfolio in Africa. If a significant rollout follows, it could provide Airtel and other operators with an additional option to compete with the large TowerCos already present.

Helios Towers remains one of the continent's leading independent tower companies. Its consolidated occupancy rate increased from 2,05x in 2024 to 2,17x in 2025, while the number of leases reached 31,944. By the end of 2025, the group had a total of 14,746 sites, including 2,648 in Oman: its African portfolio thus comprised 12,098 sites across eight markets. Helios indicated that it had come close to its 2026 target of 2,2x, a year ahead of schedule, rather than having strictly exceeded it.L

Sub-Saharan Africa: Four parallel infrastructure models

The MTN-IHS transaction is not an isolated event. It represents the most visible development in a sub-Saharan tower market where four infrastructure models coexist, each reflecting a different operator strategy, market structure, and financing conditions. Understanding their interaction allows us to gauge the continental implications of MTN's reintegration.

Model 1: Operator control, MTN and Globacom. MTN's proposed acquisition of IHS represents a return to greater vertical integration. In Nigeria, NCC data reported by TechCabal indicates that Globacom will own or manage approximately 8,774 tower assets in 2024, with the operator maintaining a more integrated strategy than MTN and Airtel. These models provide greater control over deployment timing and operations, but also require more capital and operational capacity.

Model 2: Independent, multi-operator TowerCo, Helios and American Tower. American Tower owned 26,338 towers in seven African markets at the end of 2025: Nigeria, Ghana, Uganda, South Africa, Kenya, Niger, and Burkina Faso. Its scale is therefore close to that of IHS's 28,662 African towers. Helios published 2025 colocation rates of 2,23x in East and West Africa and 2,31x in Central and Southern Africa. These figures show that colocation can reach significantly higher levels depending on the market mix, demand density, and number of active tenants.

Regulation and sovereignty

Tower infrastructure supports mobile networks, mobile money, emergency communications, and some last-mile connectivity. When ownership of this infrastructure is concentrated in an entity that is also a mobile operator, the transaction can raise questions about competition, non-discriminatory access, resilience, and digital sovereignty.

On August 24, 2026, MTN announced that the transaction had received approval from several regulators, including the Federal Competition and Consumer Protection Commission (FCCPC) in Nigeria.M The condition published by MTN stipulates the sale of up to 30% of IHS Nigeria to Nigerian investors on an arm's length basis and subject to market conditions. MTN's primary communication does not publicly detail, country by country, all pending authorizations; it indicates that regulatory approvals remain necessary and continues to target closing in the second half of 2026.

On August 26, BusinessDay reported, citing the Nigerian Communications Commission (NCC), that the latter had granted a Approval-in-Principle The transaction is expected to proceed as early as mid-July, subject to conditions relating in particular to governance, existing contracts, market access, and future investments. This approval in principle is not presented as final authorization: according to this report, the NCC still needs to verify compliance with the conditions before its final validation.N

The competitive landscape is particularly concentrated: according to the NCC, in July 2026 MTN represented 51,76% of mobile subscribers in Nigeria and Airtel 34,26%, compared to 12,13% for Globacom and 1,85% for T2.F Even after the planned sale of up to 30% of IHS Nigeria, MTN would retain a controlling interest in the entity, subject to the final structure of the transaction.

Ivory Coast and Cameroon are among the five African IHS markets that would come under MTN's control if the transaction is finalized, along with Nigeria, South Africa, and Zambia. The final structure will therefore have to meet the applicable regulatory requirements in the relevant jurisdictions; MTN indicates that some authorizations still need to be obtained, without publishing, at this stage, a complete list on a country-by-country basis.

Transparency is another issue. As a NYSE-listed company, IHS published quarterly results and SEC filings that provided relatively rare visibility into the African tower economy. By the end of 2025, this published scope covered five African countries: Nigeria, South Africa, Ivory Coast, Cameroon, and Zambia, following the divestiture of its Rwandan operations in 2025. Once IHS is delisted and consolidated into MTN's accounts, this level of independent granularity will disappear. For researchers, regulators, and competing operators, this represents a significant loss of information, regardless of the transaction's commercial merits.

What this cycle reveals about the infrastructure economy

The MTN-IHS journey—selling assets, signing lease agreements, weathering currency fluctuations, renegotiating terms, and then considering a full-scale acquisition—appears less like a strategic failure than a case study in how the infrastructure economy operates in certain African markets. The turnaround doesn't prove the TowerCo model was flawed. It shows it was calibrated for conditions that didn't hold.

Three factors reinforce each other. First, the monetary structure When a significant portion of rents is indexed to a strong currency while revenues are received in the local currency, depreciation rapidly increases costs in the local currency. Furthermore, market concentration In Nigeria, MTN and Airtel together accounted for 86,02% of mobile subscribers in July 2026, thus reducing the number of large, independent tenants available for shared accommodation. Finally, the governance of the main tenant : the coexistence of a dominant client, a significant minority stake and historically capped voting rights has effectively given rise to a governance dispute between MTN and IHS.

The valuation cycle also matters. MTN's transaction presentation indicates an implied multiple of 5,8x EV/EBITDA LTM, based on the offer price of $8,50 per share and excluding Latin America.H The same document shows that the offered price remains about 60% below IHS's IPO price, while representing a premium of about 239% compared to the price observed when the strategic review was announced in March 2024. These references measure different starting points: they mainly illustrate the extent of the revaluation since the 2024 low and the persistent high discount compared to the IPO.