Pan-African mobile telecoms infrastructure group IHS has agreed to buy Nigerian rival Helios Towers Nigeria (HTN) for an undisclosed sum.
Issam Darwis, who founded IHS, said Africa’s largest tower company, which builds and leases mobile telecoms towers in five countries across the continent, will acquire 1,211 towers spread across 34 of Nigeria’s 36 states.
IHS will acquire the entire issued share capital of HTN, IHS said in a statement.
“IHS will have full operational control of the underlying business and will market independent infrastructure sharing services to mobile network operators and internet service providers in Nigeria,” it said.
The deal is expected to close in the second quarter of 2016, it said.
IHS already has around 23,000 towers across Nigeria, Ivory Coast, Cameroon, Zambia and Rwanda. It has around 15,000 towers in Nigeria, its biggest market and Africa’s most populace nation.
“We remain committed to the Nigerian tower market where coverage levels are yet to mature and explosive data growth continues,” Darwis said. “This is a statement of how confident we are in the Nigerian economy.”
Africa’s biggest economy and top oil producer is flagging due to the fall in crude prices and restrictions imposed by the central bank to defend its currency.
Building and maintaining mobile communications towers in Africa tends to be more expensive than in other regions because of security costs and electricity shortages, while revenue per user is often lower.
These costs have prompted many mobile operators to sell or lease towers to specialist companies such as IHS, which can reduce building and maintenance costs by hosting multiple tenants — mobile operators and internet providers — on the same towers.
Naija247news recalled that IHS, the African mobile infrastructure group, has doubled the size of its business following a $2bn deal to acquire more than 9,000 telecoms towers from MTN, the South African-based telecoms group.
The deal with IHS, which is raising equity from investors to help fund the transaction, will be the largest transaction for towers in Africa.
The sale will help reduce MTN’s costs in Nigeria and improve the quality of the network for the operator. IHS, which is the largest African towers group, has committed to invest more than $500 million over four years in upgrades and maintenance to improve the network.
Mobile operators in Africa are looking at ways to reduce the heavy investment needed in maintaining and improving their networks at a time when customers are expecting faster speeds over 3G and 4G services. Towers in Africa are costly to run given the need to provide power and security for sites across large but sometimes thinly populated areas.
Nigeria is also one of the most competitive markets on the continent, which has caused operators to look for ways to cut costs in spite of high demand as more people use phones to access the internet.
By selling towers to infrastructure groups such as IHS, MTN can offload the responsibility for the work needed in future, although they will incur the rental cost of continuing to use the towers. IHS, meanwhile, can open the towers up to rival groups to share, which generates additional revenues.
Issam Darwish, IHS chief executive, declined to comment on the value of the deal but added that it would double the size of the group’s asset value. He said Nigeria was of particular importance in the regional telecoms industry.
“Nigeria is at the heart of the continent and one of the fastest growing markets,” he said. “Operators want to improve the performance of their networks [through such deals].”
Mr Darwish said that equity was being raised from existing and new shareholders in the group, which delisted from the Nigerian stock exchange earlier this year. He added that the group would consider another listing in future, however, on a larger stock exchange such as in London or in Asia.
One person familiar with the situation said the deal would be valued at close to $2bn. The terms were kept confidential in the disclosure by the groups on Thursday.
IHS acquired MTN’s towers in Rwanda and Zambia this year, and bought 2,000 towers from Etisalat in Nigeria last month. Mr Darwish said the group would consider further deals in future to maintain its growth. IHS has raised funds from investors such as Goldman Sachs and the World Bank’s International Finance Corporation in the past year.
Rivals are also raising money to participate in forthcoming auctions of tower infrastructure. Helios Towers Africa, which is backed by funds of George Soros, Madeleine Albright, the former US secretary of state, and Jacob Rothschild, recently acquired 3,100 telecoms towers in four countries in Africa from Bharti Airtel in a deal valued at about $500m. Helios will become much smaller than IHS, however, following the deal with MTN.
Source: http://africabusinesscommunities.com/news/african-telecom-towers-firm-ihs-to-buy-nigeria’s-helios-towers.html