MTN Group, Africa’s largest mobile operator, is currently engaged in advanced discussions to acquire the 75% stake in IHS Holdings that it does not already own. This strategic move could potentially value the telecom infrastructure company at approximately $2.76 billion, a figure based on IHS’s latest closing share price on the New York Stock Exchange. IHS also maintains a secondary listing in Frankfurt. MTN's existing relationship with IHS is substantial; the mobile operator leases towers from IHS in crucial markets such as Nigeria and South Africa and holds the distinction of being IHS's largest customer, in addition to possessing a minority equity stake in the company.

A successful acquisition would grant MTN greater control over its essential tower infrastructure, which is a core asset vital for maintaining extensive network coverage and effectively managing costs, especially as data usage continues to surge across its operational markets. This potential transaction signifies a notable shift in the approach of major African telecom groups towards their tower assets. Historically, over the past decade, operators like MTN had opted to sell off their towers to specialist firms such as IHS to alleviate debt burdens and concentrate on their core service offerings.

However, the current landscape is evolving, driven by increasing data demand and persistent pressure to enhance profit margins. By potentially bringing these towers back in-house, MTN aims to gain more direct control over crucial operational aspects, including pricing structures, the speed of network rollouts, and the efficiency of network upgrades. This strategy is also expected to lead to a significant reduction in long-term lease costs and mitigate reliance on external third parties for a critical component of its infrastructure.

This decisive move by MTN comes at a time when dedicated tower companies are grappling with various challenges, including slower growth rates, elevated interest rates, and risks associated with tenant concentration. For MTN, the ultimate decision on this acquisition will hinge on a thorough evaluation of whether direct ownership delivers superior returns compared to leasing, all while meticulously preserving its balance sheet flexibility. The outcome of these negotiations is keenly anticipated by investors, as it could signal a broader trend among other telecom operators across Africa considering similar strategies regarding their infrastructure ownership.