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MTN reviews tower contracts due to FX, fuel cost

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Nigeria is in the process of renegotiating periodic reviews of the company’s tower contracts.

The firm noted that these contract renegotiations are important in mitigating the impact of forex liberalisation and higher energy costs.

The firm stated this against the backdrop of its recent award of tower contracts to ATC, and the imminent renewal of another 1,500 site contracts.

The Chief Executive Officer of MTN Nigeria, Karl Toriola, gave this insight at the recent MTN Nigeria’s Capital Markets Day.

He said, “Efficient tower contracts are key in driving cost effective, deep broadband penetration and leading technology across our operations, and in our quest of achieving differentiated value, we will from time to time review the contracts we have with our partners to ensure they optimally meet our site requirements.

“But beyond efficiency, we will also focus on cost optimisation, green energy utilisation and sustainability.”

In his presentation, MTNN’s Chief Financial Officer, Modupe Kadri, gave the current breakdown of the company’s tower business.

He stated, “IHS currently has 14.6k sites (80 per cent) as against ATC’s 2.3k’s (13 per cent). About 2.5k network sites under IHS portfolio due to expire in 2024 and 2025 have been awarded to ATC after a highly competitive bidding process.

“This will reduce IHS’ portfolio to 12.1k sites (66 per cent) and increase ATC to 4.7k (26 per cent) of the entire portfolio. The remaining IHS sites will expire between 2025 and 2029, with the majority in 2029. It is important to say that tower contract renegotiation, supported by disciplined capital allocation is very important in mitigating the impact of forex liberalisation and higher energy costs.”

The firm further declared that it is excited at the prospect of a liberal economic reform agenda for Nigeria that presents an opportunity to unleash its latent growth potential.

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