NIGERIA: Nigerian telecoms company IHS is tapping investment groups to raise 200 million US dollars as it seeks to double the size of its operations in western Africa in the next year

Record ID: 235448

  • Title: NIGERIA: Nigerian telecoms company IHS is tapping investment groups to raise 200 million US dollars as it seeks to double the size of its operations in western Africa in the next year
  • Date: 6th December 2011
  • Summary: LAGOS, NIGERIA (RECENT) (REUTERS) VIEW OF LAGOS CITY SKYLINE VARIOUS OF PHONE TOWERS IN LAGOS VARIOUS OF TRANSMITTERS AND RECEIVERS MOUNTED ON A PHONE TOWER OWNED BY IHS NIGERIA ISSAM DARWISH, CHIEF EXECUTIVE, IHS PHONE TOWER COMPANY, WORKING IN HIS OFFICE IHS COMPANY LOGO IN THE OFFICE (SOUNDBITE) (English) ISSAM DARWISH, CHIEF EXECUTIVE, IHS PHONE TOWER COMPANY SAYING: "For next year, we are going to need around $500 million of capital for the first phase. The immediate tranche would be to raise $200 million and we have already kick started that process. That money materialize within the next quarter or two months." ENGINEERS INSPECTING EQUIPMENT AT A PHONE TOWER OWNED BY IHS (SOUNDBITE) (English) ISSAM DARWISH, CHIEF EXECUTIVE, IHS PHONE TOWER COMPANY SAYING: "The cheaper digital phones that are out there that allow various data networking capabilities are getting cheaper and cheaper, the more these things become cheaper, the lower the barrier to entry becomes, the higher the penetration we will see, and that will form another massive growth . So in order to support that growth, we need towers." VARIOUS OF GENERATORS RUNNING PHONE TOWER (SOUNDBITE) (English) ISSAM DARWISH, CHIEF EXECUTIVE, IHS PHONE TOWER COMPANY SAYING: "Operating a tower in the (Niger) Delta area, or Darfur, or South of Sudan is not like operating a tower in Paris or in London, it cannot be. Even if you have the money, even if you have the skill, somewhere outside Africa or outside Nigeria, it is not a defacto thing that you will be able to succeed in here, so how do we compare against others, I think we are among the top two or three and in Nigeria we are the largest." VARIOUS OF PHONE TOWER
  • Embargoed: 21st December 2011 12:00
  • Keywords:
  • Location: Nigeria, Nigeria
  • Country: Nigeria
  • Topics: Communications,Technology
  • Reuters ID: LVA6ZF20OBTYE8ET2NUMEGCMJSHA
  • Story Text: The largest telecoms infrastructure provider in West Africa the Nigerian based IHS plans to double its operation in six African countries next year, by raising 500 million US dollars, according to its chief executive, Issam Darwish.
    Darwish said IHS planned to grow its tower sites to around 10,000-15,000 towers in the next five years, from the 850 it owns now, expanding in Ivory Coast, Democratic Republic of Congo, Uganda, Rwanda, Kenya and Nigeria.
    IHS builds towers and leases them to telecoms firms around Africa. It cost around $150,000-$600,000 to build a tower in Africa depending on the location.
    "For next year, we are going to need around $500 million of capital for the first phase. The immediate tranche would be to raise $200 million and we have already kick started that process. That money materialize within the next quarter or two months," said Darwish.
    Africa has been the world's fastest growing telecoms market over the last decade, attracting billions of dollars in new investment from multinational phone companies.
    Darwish said he expected penetration rates, the amount of telecoms firms sharing towers from independent operators like IHS, to grow to around 50 percent from under 5 percent in the next 3-5 years, driven by increases in the number of towers on the continent and as phone companies cut costs.
    He added that 60 percent of Africa had access to mobile phone coverage to make calls but as more towers are built he expects this to rise to 95 percent in the next five years.
    "The cheaper digital phones that are out there that allow various data networking capabilities are getting cheaper and cheaper, the more these things become cheaper, the lower the barrier to entry becomes, the higher the penetration we will see, and that will form another massive growth. So in order to support that growth, we need towers," said Darwish.
    IHS has been on an aggressive expansion and capital raising drive. It sold $79 million in equity to a group of investors, including the International Finance Corp. (IFC) in June at 3.08 naira per share. IHS was trading at 2.47 naira on Nigeria's bourse on Thursday.
    The company raised another $52 million in equity sales to two international investors a few weeks ago and has raised $110 million in debt from local lenders this year.
    Darwish said doing business in Africa was a unique opportunity and a lot of effort is required to ensure company operations succeeded to survive the sometimes very harsh business conditions on the continent.
    "Operating a tower in the (Niger) Delta area, or Darfur, or South of Sudan is not like operating a tower in Paris or in London, it cannot be. Even if you have the money, even if you have the skill, somewhere outside Africa or outside Nigeria, it is not a defacto thing that you will be able to succeed in here, so how do we compare against others, I think we are among the top two or three and in Nigeria we are the largest," he said.
    Darwish believes the industry is still at a very infant stage given the total number of towers in Africa is 150,000 and independent tower companies own roughly 6,000-7,000 towers.
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