MTN Nigeria is planning more periodic reviews of its tower contracts with the goal of optimising performance from vendors, according to Karl Toriola, CEO of the company. Toriola gave the insight at MTN Nigeria’s Capital Markets Day, which was held at the Transcorp Hilton, Abuja on November 14 and November 15.
The mobile network operator recently awarded tower contracts to the American Tower Corporation (ATC) giving it 13 percent share of the total tower assets. Toriola disclosed that IHS currently has 14,600 sites representing 60 percent of MTN Nigeria’s total tower assets, compared with ATC’s 2,300 representing 13 percent of the assets.
ATC would see its share of tower assets jump to 26 percent when it inherits 2,500 network sites, previously under IHS, which contract is due to expire in 2024 and 2025. The contracts for the remaining 12,100 sites representing 66 percent still operated by IHS will expire between 2025 and 2029, with the majority in 2029.
According to Toriola, tower contract renegotiation, supported by disciplined capital allocation, is critical in mitigating the impact of forex liberalisation and higher energy costs.
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,” 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,” Toriola said.
MTN and IHS have been embroiled in a battle for a review of the corporate governance system in the telecom infrastructure company. The fight between the companies has reached the point where other shareholders have gotten involved. With no resolution in sight IHS is likely to lose its tower contracts from MTN. IHS became the largest tower operator in Nigeria with about 40 percent share of the market after it secured the MTN deals. It went on to become a listed company on the New York Stock Exchange.
Modupe Kadri, MTN Nigeria’s chief financial officer, who also made a presentation at the Capital Markets Day, said energy efficiency initiatives and independent power projects (IPP) are essential in achieving excellent delivery of the company’s expense efficiency programme.
Amongst other things, Toriola also used the CMD event opportunity to announce the progress made on achieving the company’s ‘Ambition 2025’ Strategy, and the emerging opportunities in Nigeria’s digital economy to local and international investors.
“I am encouraged and excited at the prospect of a liberal economic reform agenda for Nigeria that presents an opportunity to unleash its latent growth potential. The recognition that private sector investment will be critical to that is clear, and we are already seeing steps being taken to enable the business environment. We believe that Nigeria continues to present significant opportunities for us to deliver inclusive growth, and expand access to connectivity while also supporting the drive for financial inclusion.”
The event was attended by local and international investors who had the opportunity to engage high-level representatives of the Nigerian government on the country’s macroeconomic reforms, as well as MTN Nigeria executives, who provided a comprehensive overview of the company’s progress against key ‘Ambition 2025’ growth indicators.