Nigerian phone tower group IHS has raised $2 billion in equity and $600 million in debt in what it says is the biggest equity fund raising by an African company this decade.<\/p>\n
IHS, the continent\u2019s largest tower company, will use the money to finance infrastructure spending and recently agreed acquisitions, according to a company statement on Monday.<\/p>\n
It said the equity funding was from new and existing shareholders, but did not provide further details.<\/p>\n
The loan facility is split into two parts: a seven-year tranche of $500 million denominated in U.S. dollars and an eight-year tranche of $100 million in Nigerian naira.<\/p>\n
Ecobank, Standard Chartered, Standard Bank, Investec and the World Bank\u2019s International Finance Corporation (IFC) participated in the loan, IHS chief executive Issam Darwish told Reuters.<\/p>\n
\u201cThis is the largest equity raising by a private entity for the past 7-8 years in Africa — you\u2019ve had mining, banks and now telecom infrastructure as a standalone sector is commanding this much interest from the international markets,\u201d said Darwish.<\/p>\n
\u201cThis sends the right signal, it\u2019s saying the international investor community believes in Africa and they\u2019re putting a substantial amount of money behind that.\u201d<\/p>\n
Building and maintaining mobile communications towers in Africa is typically more expensive than in other regions because of security costs and electricity shortages, while revenue per user is often lower.<\/p>\n
That has prompted many mobile operators to sell or lease towers to specialist companies such as IHS, which can reduce building and maintenance costs by hosting multiple tenants — mobile operators and Internet providers — on the same towers.<\/p>\n
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.<\/p>\n
That was MTN\u2019s fifth tie-up with IHS following deals in Ivory Coast, Cameroon, Rwanda and Zambia.<\/p>\n
IHS in August agreed to buy and lease back 2,136 towers from Etisalat Nigeria, a unit of Abu Dhabi\u2019s Etisalat.<\/p>\n
Darwish said a \u201csubstantial part\u201d of the money IHS has raised would go towards paying for its recent acquisitions, with the remainder spent on boosting its infrastructure in the five countries it operates in.<\/p>\n
He said IHS would complete the two acquisitions soon, with one set to be concluded in a few weeks and the other shortly after that, although he declined to provide more details.<\/p>\n
Darwish predicted demand for broadband would drive growth in Africa\u2019s telecoms sector.<\/p>\n
\u201cThe size of the middle class in Africa is now roughly one-third (of the population) -\u2013 15-20 years ago it was 10 percent or less,\u201d said Darwish. \u201cBroadband penetration is extremely low, less than 10 percent, so the potential is massive and you need towers to service that.\u201d<\/p>\n
He predicted Africa could need 200,000-300,000 mobile towers over the next 10 years to meet future broadband demand, including up to 40,000 in Nigeria alone.<\/p>\n
IHS may raise further debt before the end of 2015.<\/p>\n
\u201cThings keep growing and evolving for us so we may come back to the market very soon,\u201d added Darwish.<\/p>\n