MTN, IHS Adjust Currency Agreement To CBN NAFEX Rate

MTN Nigeria Communications Plc, has agreed to amend its currency conversion provision for tower services with IHS Holding Ltd.

They both agreed to move the rates for conversion of the Naira from the Central Bank of Nigeria’s official rate to the Nigerian Autonomous Foreign Exchange rate.

The new reference rate for the transaction of the companies will be moved from N360 CBN rate to N385 NAFEX rate.

The NAFEX rate is the forex window where Investors and Exporters transact dollars on market-determined prices.  

The development announced by MTN Nigeria on Friday was a  move to adjust to the Central Bank’s move to converge the naira under one rate.

The CBN Governor, Godwin Emefiele, had in June revealed plans of unifying Nigeria’s  currency exchange systems around the NAFEX rate.

The move to unify the naira has however devalued the currency to N472 at the parallel market.

The telecom firm said the change in the reference rate would reduce the Earning Before Interest, Tax, Depreciation and Amortization margin in 2020 by approximately 0.4 percentage points.

MTN said that it plans to offset the loss by improved pricing and increased focus on rural connectivity and backhaul in the network.

The company added that it would continue to focus on operational efficiency to further mitigate these impacts.

MTN which is the largest telco in the country further agreed to expand the scope of their current tower service agreement with IHS.

MTN revealed that it leases the majority of the tower and site space required for its network equipment from IHS and has concluded a renegotiation of certain terms in the tower rental agreement.

The area of negotiation includes an increased focus on rural connectivity and fibre redeployment.

According to the network service provider, the changes would result in improved cost for future technology evolution and backhaul in the network.

MTN in the statement however noted that the benefits were attainable in the long run.

The mobile service provider said that in 2014, it had taken a strategic decision to sell its passive infrastructure including towers and focused on its core business in the country.

The services provider added that despite retaining a small number of towers in the country, it currently has agreements in place with a number of tower providers across Nigeria.

IHS currently owns over 715 towers in Nigeria where it leases space on the towers to Mobile Network Operators under contract between 10-15 years.