MTN clears South Africa’s competition hurdle in its $2.2bn IHS Towers takeover

MTN has secured Competition Tribunal approval for its proposed takeover of IHS Towers in South Africa, clearing a significant local regulatory hurdle in a deal designed to bring a major slice of the mobile operator’s tower infrastructure back under its control.

The Tribunal approval comes with conditions intended to protect competition, customers and employment. MTN announced in February that it wanted to acquire the IHS shares it does not already own, offering $8.50 a share. Business Day reports the cash transaction values the remaining 75% stake at about $2.2 billion, or roughly R36 billion.

The transaction is bigger than a conventional telecoms acquisition. IHS is one of Africa’s largest tower operators, with nearly 29,000 towers across five important MTN markets after planned Latin American disposals. MTN is therefore proposing to combine Africa’s largest mobile operator with infrastructure on which rival networks also rely.

Why the conditions matter

Tower companies became independent partly because shared infrastructure can reduce duplication and allow multiple operators to use the same physical sites. Bringing IHS under MTN ownership creates an obvious competition question: whether a network operator that owns the tower company can continue serving rival mobile networks on fair terms.

The Competition Tribunal’s conditions are intended to address that risk. Business Day reports that the approval includes safeguards around fair treatment for mobile network operators and customers, alongside protections for local jobs.

MTN said when it announced the deal that it would maintain appropriate governance and service standards for IHS customers. That commitment becomes more important once the tower company is no longer structurally independent from its largest shareholder and customer.

The balance-sheet bet

MTN already owns about 25% of IHS. Its February offer would take that to 100%, subject to shareholder, regulatory and other closing approvals.

The group has said it does not plan a new equity issue to fund the transaction, although the financing plan allows for a short-term increase in leverage. MTN expects the acquisition to add to net income and cash flow.

For South African investors, that sets up a clear trade-off. Reintegrating tower assets can give MTN more control over critical infrastructure and the economics attached to it. It also puts more infrastructure exposure and financing risk back onto the group balance sheet.

What remains unresolved

South African competition approval is not the same as completion. The transaction still depends on the remaining approvals and closing conditions across the relevant jurisdictions, as well as the shareholder process set out when the offer was announced.

The more durable test comes after closing: whether IHS can continue operating as a credible shared-infrastructure provider for networks that compete directly with its prospective owner.