Don't Miss

World Bank lends $200m for purchase of Etisalat towers

By on December 10, 2014

Etisalat Nigeria on Monday said the sale of 2,136 of its towers to IHS Holding Limited was on course, and confirmed the World Bank lent $200m to IHS to help to fund its purchase

The transaction is the first by a major Global System of Mobile communication operator in Nigeria and is expected to close before December 30, 2014.

To this effect, Reuters reported the IHS had raised $2bn in equity and $600m in debt in November and the money from the World Bank’s International Finance Corporation was part of this.

Under the terms of the transaction, it was gathered that HIS would invest a further $100m in the acquired towers, advanced generators, efficient batteries and alternative energy solutions to reduce diesel consumption and improve efficiency of grid usage.

The Chief Executive Officer of Etisalat Nigeria, Mr. Matthew Willsher, said continued demand for mobile connectivity along with increased consumption of data required reliable and effective networks that were also cost-efficient for the network operators.

“The decision to sell our passive infrastructure to an experienced commercial partner, such as IHS, is part of our strategy to increase network coverage and capacity, which is already rated number one for quality of service by the Nigerian Communications Commission,” Willsher said.

The Chief Executive Officer, IHS, Mr. Issam Darwish, said the company was delighted to have been trusted by Etisalat Nigeria with its passive network infrastructure.

He said, “Our market leading operations team, managed through a state-of-the-art network operations centre, and our continual investment in better, more efficient systems and technologies will ensure that that trust is well placed.

“This partnership will provide significant long-term benefits to Etisalat Nigeria, allowing it to focus entirely on marketing new customer propositions to a wider market.”

Construction and maintenance of mobile communications towers in Africa is more expensive than in other regions because of security costs and electricity shortages, while revenue per user is often lower.

That has prompted many mobile operators to sell or lease towers to specialist companies such as IHS, which can reduce costs by hosting multiple tenants mobile operators and Internet providers – on the same towers.

However, the IFC’s contribution to the funding is made up of $50m from the IFC itself, $112.5m from the Industrial and Commercial Bank of China and $37.5m from the IFC Managed Co-Lending Portfolio Programme, according to an IFC statement on Monday.

The portfolio programme is a syndicate of institutional investors.

IHS will use the money to pay for its phone tower deal with Etisalat Nigeria, part of Abu Dhabi’s Etisalat, the statement said. In August, IHS agreed to buy and lease back 2,136 towers from the Nigerian mobile operator.

“With support from ICBC and other lenders, IHS is expanding its lender base for network development and increasing financing between Africa and China,” Eme Essien-Lore, the IFC Nigeria Country Manager, Eme Essien, said in the statement.

In September, South Africa’s MTN agreed to sell 9,151 mobile towers in Nigeria to a new joint venture with IHS in a deal MTN said would cut its costs and boost its call and data capacity in Africa’s most populous country.