TMT Finance quote an “unnamed source” that MTN is in “formal discussions” with American Tower to acquire assets in a private sale, rather than through the usual auction process. Tech Central suggests that MTN has “moved to play down the report”. TMT Finance tend to have the ear of certain key investment managers, so there may be enough smoke to suggest a fire, so we’ll explain the obvious reasons why people are putting two and two together in this case.
With MTN owning approximately 6,000 towers (and co-located on a further 2,000 towers) in South Africa, if a portfolio of consisting of the majority of their assets did come to market, American Tower may be the only African towerco with immediate access to the necessary capital to partner MTN in such a transaction. That doesn’t preclude Eaton, Helios, IHS or any other new market entrant accessing additional capital of course – we’ve seen many occasions where a winning bid has preceded the announcement of a new tranche of PE.
The rumour also makes sense because MTN and American Tower are already working together in joint venture towercos in Ghana and Uganda. In 2010 American Tower paid MTN $218.5m for 1,876 towers and a 51% stake in the joint venture towerco in Ghana. In 2011 American Tower paid MTN $89m for 1,000 towers and a 51% stake in the joint venture towerco in Uganda.
American Tower already has a significant presence in South Africa, having acquired 1,400, plus a further 1,800 towers under construction, from Cell C in 2010 for a price of $430m. ATC’s Q3 2012 Quarterly Report suggested they were marketing 1,601 towers in South Africa at that time.