MTN Nigeria Renegotiates Annual N100 Billion Savings From Tower Leases

Renegotiating its tower lease agreements with IHS Towers was a calculated strategic decision that should save the telecom behemoth about N100 billion a year.

This renegotiation is a component of the company’s continuous endeavors to improve its financial performance in the face of Nigeria’s difficult business climate.

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The telecom behemoth said that the new conditions will drastically slash total expenses and lessen its vulnerability to currency changes, which will increase its earnings before interest, taxes, depreciation, and amortization (EBITDA) margin.

Recall THE MATRIX earlier reported that the company said it has renegotiated the binding commercial terms of the existing infrastructure sharing and master lease agreements with IHS and ATC Nigeria. However, details of the cost savings were captured in the financial report of MTN Group

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The revised agreements between MTN Nigeria and IHS Towers have introduced several significant changes aimed at reducing operational costs and mitigating the impact of currency fluctuations.

The most notable change is the reduction of the US dollar-indexed component of the leases, which has now been linked to a discounted U.S. consumer price index (CPI).

This shift is crucial in lowering MTN Nigeria’s exposure to the volatile naira, providing the company with more predictable and stable cost structures.

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Additionally, the renegotiated terms have removed technology-based pricing, a move that simplifies MTN Nigeria’s cost framework.

Under the new terms, payments for upgrades will now be based on tower space and power consumption, rather than the technology deployed on the towers.

This change is expected to bring more clarity and control over the company’s expenditure on infrastructure.