SENS Note - 06 December 2010
MTN -- strategy and new agreement
 
On 15 July 2010 the group advised that it would increase its focus on the following:
  • optimising efficiencies including infrastructure sharing, standardisation of systems and processes, rationalisation of suppliers, cost management and cash optimisation;
  • monitoring infrastructure investments to ensure appropriate levels of capacity and quality of service, incorporating continued investment in fibre and cable to service its evolving voice and data requirements;
  • continued engagement with regulatory authorities in the development and refinement of the telecommunications sector in its markets;
  • investigating options to meaningfully improve cash returns to shareholders; and
  • conclusion of the MTN Black Economic Empowerment ("BEE") transaction. Since this announcement, MTN has declared and paid a maiden interim dividend and concluded its BEE transaction.

One of the key aspects of the Group strategy is to embark on an infrastructure sharing initiative. MTN has in the recent past explored and considered various permutations of the costs and benefits of passive infrastructure sharing in its key markets. MTN has now resolved to pursue more extensive passive infrastructure sharing in general, whilst taking into consideration the unique prevailing circumstances of its operations in each market. This is with a view to MTN ultimately establishing a tower holding company at sub-Saharan Africa level. The Ghanaian market presents an ideal opportunity to commence pursuing the group's medium term objectives with respect to its towers.

Joint TowerCo in Ghana
MTN and American Tower Corporation ("ATC") have announced that they have entered into a definitive agreement for the establishment of a joint initiative in Ghana ("TowerCo Ghana"). ATC is a leading owner, operator and developer of wireless and broadcast communications sites and currently owns and operates approximately 33 000 communications sites in the United States, Brazil, Chile, Colombia, India, Mexico and Peru. TowerCo Ghana, which will be managed by ATC, will be at least 98.5% owned by a holding company of which a wholly owned ATC subsidiary will hold a 51% share and a wholly owned MTN Group subsidiary a 49% share. The transaction involves the sale of up to 1 876 of MTN Ghana's existing sites to TowerCo Ghana for an agreed purchase price of USD428.3m. This requires ATC to pay up to approximately USD218.5 million for its 51% stake in the holding company. MTN Ghana will be the anchor tenant, on commercial terms, on each of the towers being purchased. In addition, TowerCo Ghana is expected to build at least 400 more sites for both MTN Ghana and other wireless operators in Ghana over the next five years. MTN Group, ATC and MTN Ghana expect to close the transaction by early 2011, subject to customary closing conditions.

The agreement with ATC builds on an existing relationship between ATC and MTN. In February 2010 ATC and MTN Ghana entered into a marketing and services agreement which provided for ATC to assist MTN Ghana in commercialising its tower portfolio and entering into passive infrastructure sharing lease arrangements with operators in Ghana. The marketing agreement in Ghana will be superseded by the agreements referred to above on closing of the transaction.
 
Click here for original article