IHS Towers announces $2.6bn capital raise for acquisitions

By Tom Jackson, South Africa

African independent telecoms infrastructure provider IHS Holding Limited has announced it has signed agreements for a capital raise of US$2.6 billion, which it will use for further acquisitions of towers.

The raise, which is the largest equity raise in Africa since 2007, comprises equity of US$2 billion and a loan facility of US$600 million, with the company saying it underlines the company’s position as the largest tower firm in Europe, the Middle East and Africa (EMEA).

IHS, which has now raised a total of $4.5 billion since 2012, has deployed its funds in establishing market-leading positions in the likes of Nigeria, Cameroon, the Ivory Coast, Zambia and Rwanda, with acquisitions more than doubling the size of its portfolio in the last year.

The new funding will be applied to further acquisitions, new site build programmes across its footprint, and the continued rollout of leading, efficient power technologies and operational management solutions including solar systems and high efficiency generator units.

“We are delighted to announce this successful capital raise and that we continue to create enormous value for our stakeholders,” said Issam Darwish, IHS executive vice chairman and chief executive officer (CEO).

“The contribution of our investors significantly strengthens our position and the ability to move into the next phase of growth and development with confidence. We are clear in our ambition to play a leading role in the creation of the widest, most efficient and reliable mobile networks in Africa. The social and economic benefits to the local economies where we operate are significant.”

The lastest raise has been secured from both new and existing shareholders, with the debt component of US$600 million split between US$ and Naira. The facility was fully underwritten.

Acquisitions of tower infrastructure by independent companies from telecoms operators has been on the up in Africa over the last year. BizTechAfrica reported in September telecoms tower firm Eaton Towers acquired over 3,500 telecoms towers from Bharti Airtel. Airtel had in July sold another 3,100 towers to Helios Towers for US$2 billion, while Etisalat Nigeria is amongst operators to have also sold towers to the likes of IHS.

Analysts told BizTechAfrica the sale of tower assets was a win-win situation, with operators benefitting from reduced costs and buyers obtaining potentially valuable long-term assets.

“The process aims at reducing operating costs while at the same time operators can focus telecoms services, customer services, and marketing, rather than managing infrastructure,” said Ovum telecoms analyst Thecla Mbongue. “Since 2013, we’ve seen such deals happening In Africa but also in Asia-Pacific, in the Americas and in Europe, as reducing costs is a concern globally. Managing infrastructure like towers is often difficult and costly in Africa, so there’s a further incentive to outsource this. And there are several credible outsource partners to work with.”

Siphiwe Nelwamondo, technical marketing manager for Aviat Networks in South Africa, said selling off towers meant operators could save on infrastructure costs by as much as 20 per cent.

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