Two telecoms firms seal multi-billion dollar deal to boost telecoms infrastructure
In a landmark achievement in the country’s mobile telecommunications industry, two infrastructure providers and competitors, IHS Holding Limited and Helios Towers Nigeria (HTN) Limited have agreed to merge their operations and form one company.
The deal will see IHS, which has footprints in Africa, Europe and Middle East, acquire HTN’s portfolio of 1,211 diversified tower sites throughout Nigeria. Both companies are in the business of overseeing telecoms masts for operators.
Founded in 2001, IHS provides services across the full tower value chain – colocation on owned towers, deployment and managed services. The firm owns over 23,300 towers in Nigeria, Cameroon, Côte d’Ivoire, Zambia and Rwanda.
According to The Guardian investigations, the process actually started some few months back, but an agreement was reached yesterday, and the deal is expected to be sealed completely by the second quarter of 2016.
Under the terms of the transaction and subject to requisite regulatory approvals, IHS will acquire the entire issued share capital of HTN from HTN Towers Plc, which is ultimately owned by Helios Investment Partners, Pembani Group, First City Monument Bank and other minority shareholders.
Upon completion of the transaction, 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. Business will, however, continue as usual for HTN’s towers, which will be seamlessly integrated into the IHS network and connected to IHS’s state- of-the-art network operating centre, which monitors each tower 24 hours a day, and seven days a week.
HTN and IHS established the mobile telecommunications infrastructure industry in Nigeria in the early 2000s, and this transaction will be the first in-market consolidation in Africa.
The merger, according to analysts, is expected to boost delivery of best-in-class solutions to customers and additional investment in infrastructure upgrades. The Guardian learnt that IHS is committed to maintaining the existing relationship and position with the bondholders. IHS believes the benefits of the transaction extend to all stakeholders.
Findings further showed that IHS shareholders base include global institutional investors such as Wendel, GIC, International Financial Corporation, Emerging Capital Partners and Korea Investments Corporation, and the strength of IHS’s balance sheet enhances the HTN credit profile. The net leverage position of the combined entity is likely to be approximately 50 per cent lower than the current HTN stand-alone leverage position. In addition, there are meaningful synergies that management believes will be derived from the transaction given that a considerable part of the IHS portfolio is located in Nigeria.
The Guardian observed that with a population of nearly 180 million people, increasing smartphone penetration and limited fixed line infrastructure, Nigeria’s vibrant wireless industry is poised for a sustained period of network investment and growth. This transaction strengthens IHS’s position as the market leading tower company in Nigeria and provides IHS the opportunity to optimise a larger portfolio through innovative green energy solutions and delivery of market leading quality of service. IHS will work to roll out its renewable energy solutions and diesel reduction initiatives while maintaining unparalleled network uptime.
Speaking on the deal, the Chief Executive Officer of HTN, Inder Bajaj, said the company has built a unique urban-centric portfolio across Nigeria with the highest tenancy ratio in the industry and a diversified tenant mix.
“IHS is the natural buyer of our business and we believe their deep knowledge and extensive experience in the sector will help to continue the strong level of customer service already being achieved by HTN,” he stressed.
Executive Vice Chairman and Group Chief Executive Officer of IHS, Issam Darwish, said: “This transaction is significant in that it combines Africa’s two original tower companies and will enable us to strengthen our service offering to our customers while focusing on their needs.
“We remain committed to the Nigerian tower market where coverage levels are yet to mature and explosive data growth continues. The growing data traffic and increased smartphone use present an exciting market opportunity for IHS, with the potential for up to 40,000 more towers required to meet this demand.”
Analysts are of the opinion that transactions such as the acquisition of HTN have allowed IHS to create significant local technical and engineering employment opportunities throughout Africa. Over 95 per cent of IHS’s employees are Africans and has employed close to 40,000 people directly and indirectly through its exclusive subcontractors.
The Guardian gathered that IHS and HTN were advised by UBS and Citigroup, respectively. Already, IHS in January 2015 was announced by the former Executive Vice Chairman of the Nigerian Communications Commission, Dr. Eugene Juwah, as the winner of the North Central Infrastructure Company (InfraCo) licence.
Juwah said that after due consultations and evaluations, “MainOne Cables and IHS Communications have been selected as InfraCos for Lagos and North Central respectively.”
HTN is a leading tower operator in Nigeria and the first independent tower operator in Africa. Currently operating in 34 of 36 states in Nigeria and the Federal Capital Territory, with over 1,200 towers and over 2,500 technology tenants, HTN is an ISO 9001:2008 certified company and is recognized by its customers as delivering best in class service and efficiency.