IHS swaps troubled tenants for cash repayments in pre-MTN takeover cleanup

IHS Towers is restructuring parts of its portfolio by letting tenants who can’t pay vacate tower sites in exchange for structured debt repayments, part of a broader operational cleanup ahead of its planned $2.2 billion acquisition by MTN Group.

The company’s business model is built on leasing space on its telecommunications towers to mobile network operators. These operators—known as tenants—install their equipment on the towers and pay recurring fees for access to the infrastructure and related services such as power and maintenance.

By replacing uncertain rental income with structured repayment commitments, IHS is reducing revenue risk and improving the reliability of its earnings. The restructuring also streamlines the tower portfolio, potentially allowing MTN to inherit a more stable asset base with fewer exposure risks as demand for mobile data and 5G infrastructure continues to grow across African markets. 

“The proposed sale of IHS Towers to MTN represents the next step in our long-standing partnership,” Sam Darwish, chairman and chief executive officer of IHS Towers, said in the company’s 2025 financial year report released on Monday. “The transaction brings together Africa’s largest mobile network operator with one of the continent’s leading digital infrastructure platforms.”

A key part of the restructuring was an updated agreement with 9mobile, now operating as T2 Mobile, a smaller Nigerian telecom operator that has struggled with liquidity in recent years. Under the deal, IHS allowed the company to vacate 2,576 tower sites across Nigeria in exchange for a contractual commitment to repay portions of its historic overdue balances through July 2027.

While the report does not disclose the exact amount owed by T2, IHS Towers has approximately $4.2 billion in gross debt, according to its report. The arrangement contributed to a year-on-year loss of 3,836 tenants due to churn, but it also replaced an uncertain revenue stream with a structured cash repayment schedule.

By removing a struggling tenant while securing repayment commitments, IHS can potentially improve the quality of its earnings and present a cleaner financial profile to investors ahead of the planned acquisition.

Beyond tenant restructuring, IHS pruned its geographic footprint. The company reported a net decrease of 1,639 towers year-on-year, leaving it with 37,590 towers at the end of the fourth quarter of 2025. However, most of that decline stemmed from the disposal of its Rwanda operations in October 2025, which accounted for 1,467 towers.

Excluding the Rwanda exit, the company’s tower base declined by only 172 sites.

The divestiture is widely viewed as part of the preparations for the MTN deal, allowing the telecom giant to acquire a more focused portfolio centered on core markets.

Despite the decline in headline tower numbers, the underlying business continues to expand. IHS added 580 new sites during the year and reported 4,328 new lease amendments, bringing the total to 43,999. Lease amendments typically involve upgrades such as 5G equipment installations, solar power systems, or backup energy solutions added to existing towers.

Because the physical infrastructure is already built, these upgrades generate higher-margin revenue than constructing new towers.

The company’s colocation rate, the average number of tenants per tower, declined slightly to 1.46x from 1.48x in the previous quarter. However, that drop largely reflects the Rwanda divestiture and the T2 restructuring.

When those two factors are excluded, IHS actually added 1,148 net tenants over the year, indicating continued demand for tower infrastructure and related services.

IHS reported revenue from continuing operations of $397.8 million in the fourth quarter of 2025, up 1.2% year-on-year. The growth came despite revenue headwinds from earlier asset disposals and currency movements.

Organic revenue declined slightly due to foreign exchange adjustments and changes in power indexation linked to the appreciation of the Nigerian naira. However, revenue growth from new tenants, lease amendments, and contractual escalations helped offset these pressures.

“We delivered a strong fourth quarter, completing a year of solid revenue growth and profitability, robust free cash flow generation, and continued consolidated net leverage reduction,” Darwish said. “Our full-year results reflect disciplined execution, sustained commercial momentum, and the resilience of our operations across key markets.”