The World Bank’s private sector arm has lent $200 million to Nigerian phone tower company IHS to help to fund its purchase of about 2,100 tower sites from the country’s No.4 mobile operator Etisalat Nigeria.
Privately-owned IHS raised $2 billion in equity and $600 million in debt in November and the money from the World Bank’s International Finance Corporation (IFC) is part of this.
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.
The IFC’s contribution to the funding is made up of $50 million from the IFC itself, $112.5 million from the Industrial and Commercial Bank of China (ICBC) and $37.5 million from the IFC Managed Co-Lending Portfolio Program, according to an IFC statement on Monday. The portfolio programme is a syndicate of institutional investors.
IHS will use the money to help 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, IFC Nigeria country manager 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.
MTN Nigeria is the country’s largest mobile operator with 58.5 million subscribers, according to data from the telecom regulator. Globacom has 27.3 million, Airtel Nigeria, part of India’s Bharti Airtel, has 25.3 million and Etisalat Nigeria 19.4 million. Reuters