IHS Nigeria Set to Double Assets After Raising $1 Billion

IHS Nigeria Plc, which operates telecommunications infrastructure in three African countries, is set to more than double its assets after raising $1 billion for investment, Chief Executive Officer Issam Darwish said.

IHS wants to increase the number of telecommunications towers under its management to 20,000 by 2016 from the 8,500 towers it currently runs in Nigeria, Cameroon and Ivory Coast, Darwish said on Aug. 5 in a phone interview from Beirut, Lebanon’s capital. “We have funding available for various opportunities that we are currently analyzing,” he said.

The Lagos-based company said in July it raised $522 million in new capital, $280 million in debt and $242 million in equity in the preceding year to fund its expansion across Africa. It shares were unchanged at 2.55 naira in trading at the Nigeria Stock Exchange and has gained 19 percent this year, compared with a 35 percent advance of the bourse index.

Nigeria has Africa’s highest number of mobile-phone users, with 109 million subscribers at the end of 2012, according to the Nigerian Communications Commission. MTN Group Ltd.’s Nigerian unit was the market leader with 47.4 million customers, followed by Nigeria’s Globacom Ltd. with 24.1 million, New Delhi-based Bharti Airtel with 23.1 million, and Abu Dhabi-based Emirates Telecommunications Corp., known as Etisalat, with 14.9 million, according to data on the NCC’s website.

Growth Opportunities

IHS sees opportunities for growth as more mobile-phone companies step back from running their own infrastructure in favor of leasing access from tower providers, Darwish said. Telecommunications infrastructure, including transmission sites, have also come under attack from Islamist insurgents active in the country’s mainly Muslim north in the past four years, with about 70 run by MTN targeted in the past year alone, the company said last month.

IHS isn’t deterred by the insecurity and is building its business model on relieving mobile-phone companies of the inconvenience and costs of running their own infrastructure, Darwish said.

“These are massive costs that operators accrue. When you think that Nigeria has about 25,000 towers, the numbers become gigantic,” he said. “Our concept is a solution. Instead of every operator building their sites, why not let someone else build the site and allow two or three or four operators to use it at the same time?”

Shared Infrastructure

IHS bought 931 transmission sites in Ivory Coast for $141 million and 827 in Cameroon for US$143 million from MTN in October and leased more than 2,000 from Orange SA’s subsidiaries in Ivory Coast and Cameroon, in April, according to Darwish. He said about half of the telecommunications assets under its management remain in Nigeria.

The company is also favored by the push by many regulators for shared infrastructure to reduce the environmental impact of mobile-phone operations, Darwish said, citing a new requirement in Cameroon that towers must be at least 500 meters apart. IHS is able to help phone companies cut costs, meet environmental regulations and run efficient services, he said.

Its competitors include Lagos-based Helios Towers Nigeria Ltd., which has 4,700 towers across Africa, and London-based Eaton Towers, with more than 1,500 towers.

Before it's here, it's on the Bloomberg Terminal.