Loss on derecognition of long-term loan receivable

With effect from 27 December 2017 MTN Nigeria Towers SPV B.V. assigned its shareholder loan of R2 840 million to IHS Group. The shareholder loan arose as part of MTN Nigeria’s tower transactions whereby MTN Nigeria sold a portfolio of towers to INT Towers (Nigeria) (INT) in 2014 and 2015 which, through Nigeria Tower Interco B.V., was 51% owned by MTN Nigeria Towers SPV B.V. and 49% by IHS Group. When forming INT, MTN Group (through MTN Nigeria Towers SPV B.V.) as well as IHS, provided proportionate shareholder loans to INT. These loans were subordinated and due for repayment in 2024 and 2025 with interest capitalised until two years prior to repayment. In return for the assignment of the loan, IHS has facilitated certain network volume commitments and provided more attractive terms for MTN Nigeria’s future network rollout, applicable from 2018 onwards.

The cash flow benefits to be realised from the improved commercial terms of the future rollout have not been capitalised as a prepayment and will be accounted for as and when they are realised. This is due to MTN contractually not controlling the realisation of the future economic benefits referred to above. However, the group believes it will obtain economic benefits through IHS being incentivised economically to transact with MTN under the current master services agreement.