IHS Towers on their IPO, MTN deal, Brazilian fibre, Egypt entrance and more
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IHS Towers on their IPO, MTN deal, Brazilian fibre, Egypt entrance and more


An exclusive interview with CEO, Sam Darwish after the towerco's monumental year

IHS Towers began life as a small Nigerian engineering firm. Fast forward 20 years and the company is one of the world's largest emerging markets focussed telecoms infrastructure which has recently listed on the NYSE. In the past few months the company has gone public, undertaken a major bond refinancing, finalised the acquisition of fibre assets in Brazil, inked a major deal in South Africa and secured a towerco license in Egypt.At such a transformational time, TowerXchange was excited to once again catch up with IHS Towers' CEO, Sam Darwish.

TowerXchange: The last six weeks have been a whirlwind of activity for IHS Towers, going into Egypt, inking a deal with MTN, acquiring fibre assets in Brazil and going public on the New York Stock Exchange. So first of all, let me ask you, how do you feel?
Sam Darwish, Chairman, CEO & Director, IHS Towers:

You forgot to mention refinancing our existing $510 million bond and raising a total of $1.0 billion at substantially improved pricing! So, yes, it’s been quite busy. But, I feel great. This is indeed one of the highest points in my career, if not the highest. Taking a small engineering company that I founded 20 years ago in Lagos, Nigeria, to having operations in nine countries across three continents, and then listing it on the NYSE, just before entering a further two markets to cover a combined total of 750 million people, is not something that gets done every day. Today, we are one of the largest, if not the largest, emerging markets focused telecom infrastructure companies in the world. While our private shareholders and other telecom stakeholders may have been familiar with us for many of those years, we have been working hard post listing to ensure our public markets debut was followed with a strong statement of intent regarding what we’re capable of and what we’ll be doing next. What’s a more powerful statement than closing the TIM fibre deal in Brazil, entering Egypt, South Africa, and refinancing and enhancing our bonds? Having just listed the largest company with an African heritage, but global ambitions, on the NYSE. 


Although, personally, the real story and emotional commitment is for the future. The next steps. While I was ringing the NYSE opening bell on October 14th, I was mostly thinking “what’s next?”. The answer is, more of the same, but deeper and wider. We now have access to the deepest pool of capital in the world and the credibility that comes with this. So, we need to make sure that our organic growth remains strong, and we continue to acquire the right assets. We need to continue to build and provide connectivity, while finding and implementing technological solutions that help address the unequal mobile connectivity status that persist in the emerging markets. All of which must be done while being a responsible and responsive corporate citizen – this is my non-negotiable. But, of course, with our secret sauce: our extensive operating experience spanning twenty years of building and running telecom infrastructure in some of the world’s most challenging geographies. 

TowerXchange: MTN’s towers in South Africa are some of the most sought-after assets in Africa, what was unique about IHS Towers’ deal that made MTN choose you?
Sam Darwish, Chairman, CEO & Director, IHS Towers:

MTN ran an open competitive process and several towercos participated. It was merit that gave us the winning position. A combination of commercial value and technical expertise – especially around power management, which is sadly becoming more and more of an issue in South Africa.

TowerXchange: It is great to see IHS Towers bring its power-as-a-service expertise to South Africa. Given the deteriorating quality of the grid and the problems of theft and vandalism, what will be your energy investment strategy in South Africa to balance site availability and ROI?
Sam Darwish, Chairman, CEO & Director, IHS Towers:

We are increasing our investment in renewable power sources for environmental reasons, and to ensure we maintain our consistent network uptime that is not reliant on the intermittent grid. As with all of our African markets, we are committed to investing in alternative power sources to help lower our overall emissions. Our business model aims to be inherently sustainable given we promote infrastructure sharing. We will continue to adopt this model in South Africa, and we are increasingly investing in hybrid and solar energy as we seek to reduce our use of diesel generators in a sustainable way. Already, over 45% of our African sites are powered with hybrid power, a combination of diesel generators with solar and/or battery systems and we will strive to increase this proportion as we move into South Africa.


In terms of security, the protection of our sites is key to ensuring our sustainability. All our sites are appropriately secured. We have high quality measures in place which includes systems that monitor diesel flow to the tower designed to prevent theft. We apply rigorous access control policies at all our sites and require each visitor to be pre-approved with customer representatives. Our remote monitoring systems, and state of the art Network Operating Centres, allow us to track all access to restricted areas on the sites.


We are also in the process of quantifying our emissions across the IHS group as we work to establish science-based targets and assess net zero goals. 

TowerXchange: The structure of the PaaS deal is relatively unique, what do you see as the challenges and opportunities for managing power at sites you do not own?
Sam Darwish, Chairman, CEO & Director, IHS Towers:


As one of the leading operators of shared telecoms infrastructure in the world, we have significant experience managing power at outsourced sites. We will harness this to drive value through the transaction with MTN and see outstanding opportunities to deliver cutting-edge power solutions to one of Africa’s largest and most industrialised economies, while also maximising efficiencies within those sites.  Through our PaaS model, we also hope to help drive low-carbon energy and we look forward to unlocking the full potential of this model to benefit South Africans. 


TowerXchange: South Africa is a very competitive towerco market, what is your plan for organic growth in South Africa? Are you optimistic about spectrum auctions next year and the creation of a Wholesale Open Access Network for unlocking 5G build out?


Sam Darwish, Chairman, CEO & Director, IHS Towers:

Through the transaction, we will become the largest independent tower operator in South Africa, which positions us well to capitalise on the range of opportunities the market presents. South Africa has a population of almost 60 million people, with growing connectivity needs being served by several competing MNOs. These are ideal conditions for our organic growth strategy which is focused on growing within existing markets by investing in superior infrastructure and offering better value for MNOs through our colocation model. 


As the creation of a Wholesale Open Access Network gets underway, we will consider opportunities to expand our offering beyond the current infrastructure services, that support MNOs in their intention to build the 4- and 5G-enabled networks of tomorrow.


As our South African customers ready themselves for a 5G rollout, we believe existing services such as DAS and small cells will likely increase in prevalence and become a core component of our growth. Here our Latin American expansion comes into play as we have acquired several companies whose expertise in this area is unparalleled.  We work collaboratively, and there is continuous opportunity for cross-learning and sharing between our entities and markets. 

TowerXchange: Turning to your other activities in Africa, why have you partnered with EDCI and how do you intend to build up to 5,800 sites over three years in Egypt?
Sam Darwish, Chairman, CEO & Director, IHS Towers:

Similar to the MTN transaction, the agreement with EDCI, a subsidiary owned by the Egyptian Government, is testament to our continued commitment to facilitating mobile connectivity across the African continent, and emerging markets more broadly. The closure of both, will provide IHS with a leading position across seven of the continent’s major economies including its largest three economies: Egypt, Nigeria and South Africa.


The EDCI transaction, which still requires MNO commercial agreements for site builds, is unique in that it is a joint venture to obtain a license and then build and lease tower infrastructure, as opposed to an outright acquisition of existing towers. This is advantageous because as a partnership, it will enable us to leverage EDCI’s extensive local market knowledge and capitalize on our own innovative operating capabilities to facilitate a broad range of telecommunication solutions across Egypt.


Under the license, approximately 5,800 towers will be built during the first three years of the term. The license also provides the possibility of acquiring wireless telecommunications towers owned by third parties for the purpose of utilizing them to provide the services as specified by the license. Egypt offers incredible growth potential, with a population of over 100 million, an almost 70% subscription penetration and expectations that by 2025 smartphone adoption will top 78 million. This will undoubtedly present further opportunities as IHS continues to grow its African, and broader emerging markets, foothold. 

TowerXchange: This month also saw you finalise an acquisition of TIM Brazil’s fibre assets – what is the investment thesis behind this diversification? And would you consider fibre investments in other markets?
Sam Darwish, Chairman, CEO & Director, IHS Towers:

The transaction with TIM Brasil, one of the leading MNOs in the market, demonstrates our focus on and commitment to Latin America. It builds upon the footprint we have established through the acquisitions of Cell Site Solutions, Skysites, and Centennial Towers’ Brazil and Colombian operations. The provision of fibre connectivity is less about diversification and more about continuation – we already deliver fibre connectivity solutions in select African markets, and we will leverage those capabilities for the Brazilian market. 


TIM will serve as the anchor tenant and the initial asset base will include TIM’s access network infrastructure, covering approximately 6.4 million homes passed. The deal also requires us to build an extra three million homes passed for TIM over the next three years. 


We not only believe this agreement is a great standalone project, but an opportunity to build out a fibre business from a strategic positioning perspective. The way the telecom industry will build 5G in the future will differ from its predecessors. While the macro tower is a critical standalone component of wireless networks, and will remain so, we believe the combination of location and connection to location will drive 5G rollout as fibre is harder to connect in dense, urban areas. Carriers will likely use our macro towers, and others, for initial 5G coverage but if they want to realize the full potential of 5G and densify as a second step, millions of small cells will need to be built globally and potentially hundreds of thousands in Brazil over time. We now hold one of the largest access fibre networks in Brazil. This is fibre on the streets of Sao Paulo, Rio de Janeiro etcetera. This is a massive advantage for us as we rollout 5G cells and edge data centres by pushing computing further from the larger centralized data centres into the RAN and closer to the users of the services. 


Please remember the government of Brazil has just auctioned the 5G spectrum and we expect services to be rolled out as of 2022. I am extremely excited by this potential! 

TowerXchange: IHS Towers has signed a deal with MTN to deliver turnkey revenue-share sites in rural Nigeria, how important do you see this new segment becoming for network expansion across Africa?
Sam Darwish, Chairman, CEO & Director, IHS Towers:

We remain focused on providing connectivity to areas in Africa where coverage does not exist. We are sharing learnings and continue to leverage our experience in Brazil and Africa to reduce costs on satellite backhaul, which, in addition to the build CAPEX, are the largest inhibitors to providing such solutions. We are happy and proud of these enhancements because they help advance the lives of local communities by providing access to mobile services including health services, the digital economy and education tools. 

TowerXchange: Finally, congratulations on 20 years of IHS Towers, what is your reaction to the wave of investment pouring into African telecom infrastructure? I’m referring to Axian Group’s activities, Vodacom’s carve-out plans, Eastcastle and Paradigm’s entrance and the multiple rural-specialist towercos starting up– you have a lot more company than you did in 2001.
Sam Darwish, Chairman, CEO & Director, IHS Towers:


Let’s not forget Google’s October announcement to invest $1 billion to support ‘digital transformation’ across Africa, and Facebook’s five-year commitment to invest in Africa’s infrastructure and connectivity throughout 2020 to 2024, including their 2Africa internet project, amongst many others. 


Africa has approximately 40% 4G coverage with almost no progress on 5G (yet). As at June 2021, there were just seven commercial 5G networks across the region. It is expected that by 2025, 5G will account for 3% of Sub-Saharan Africa’s total mobile connections. The 4G rollout has still not even been completed. However, most people depend on mobile phones for their day-to-day activities. Many emerging markets countries don’t even have fixed phones. For example, 50% of the global mobile money users are in Africa, and in Sub-Saharan Africa, more than 40% of the population are under the age of 15. These young consumers are the primary source of current and future mobile growth. This is how critical and important this sector is to the continent. So, the more investors, the more competition the better. It is, and will be for years to come, a market driven by supply, not demand.


And of course, we have great confidence in our competitive advantages. We are the largest independent infraco in all our African markets. IHS was established by three engineers 20 years ago and is still run by them. Engineers prevail at almost every level. We pride ourselves in our strong engineering expertise.  


We also have the scale. Pro forma for the South Africa deal (with around 36,000 towers) and our fibre capabilities (roughly 70,000 km of fibre) we should be the third largest independent, multinational towerco by tower count globally. And with our access to the NYSE capital pool, the sky is the limit.

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