American Tower has acquired MTN Uganda's telecommunications tower sites in a US$175 million deal, signaling an expansion of the companies' cooperation on infrastructure management.
The Uganda acquisition follows a similar one in MTN's Ghana operation early in the year. According to the group's half year results released on Aug. 17, MTN Ghana had concluded the sale of 400 towers to American Tower. At the time, the company said other projects were under consideration.
Now, the two companies are establishing a joint venture tower company in Uganda called American Tower Company Uganda (ATC Uganda). ATC Uganda will now acquire all of the existing tower sites from MTN Uganda, approximately 1,000.
American Tower's strategy is to invest in select African markets with strong wireless growth potential and a positive investment climate, said Jim Taiclet, the company's CEO.
Group President and CEO of MTN Group Sifiso Dabengwa said infrastructure sharing makes absolute sense for MTN and that the company expected it to play a significant role in reducing its long-term infrastructure costs.
"The Ugandan market has presented us with an opportunity to continue to build on our strong working relationship with the experienced team at American Tower," Dabengwa said.
MTN owns approximately 33,000 towers across its 22 operations in Africa and the Middle East. Dabengwa said that because market conditions in each of the markets MTN operates are unique, they will continue to evaluate infrastructure sharing opportunities on a market by market basis going forward.
MTN Uganda CEO Themba Khumalo said the move is likely to significantly improve its operational efficiencies. "We shall be able to leverage on the key learnings from MTN Ghana that concluded a similar partnership in December 2010," Khumalo noted.
ATC Uganda will be managed by American Tower, and will be controlled by a holding company of which American Tower will hold a 51 percent stake and MTN Group will hold a 49 percent stake.
American Tower will pay approximately $89 million for its stake in the new holding company.
MTN Uganda will be the anchor tenant, on commercial terms, on each of the towers being purchased.
American Tower also expects that ATC Uganda will build approximately 280 tower sites for MTN Uganda over the next three years, as well as pursue opportunities to build tower sites for other wireless operators in Uganda.
The transaction is expected to close in the first half of 2012, subject to customary closing conditions. Upon the close of the transaction, ATC Uganda will be the largest owner and operator of tower sites in Uganda.