Etisalat signs sale and lease back deal for telecoms towers in Nigeria

Out-Law News | 11 Aug 2014 | 2:49 pm | 2 min. read

Etisalat Nigeria, part of leading Abu Dhabi-based telecoms operator the Etisalat Group, is selling 2,136 of its towers to IHS Holding Limited (IHS) as part of plans to improve the quality of its network performance and to speed-up its ability to offer new services.

IHS said the sale and lease back agreement with Etisalat Nigeria is the first by a major GSM operator in Nigeria and is expected to close later this year. Financial details of the transaction were not disclosed.

After completion of the transaction IHS said it will own and manage over 6,540 towers in Nigeria, “all of which will be managed by the most advanced network operations centre (NOC) in the country”.

IHS said the partnership with Etisalat is designed “to promote network sharing, ensure higher quality, sustain reliable mobile services, lower overall costs and also promote a cleaner environment through reduced diesel usage and increased investments in alternative energy solutions”.

Nigeria-based IHS Towers, which currently manages more than 10,000 towers across Africa, is the continent’s leading independent mobile telecommunications infrastructure provider with operations in Nigeria, Cameroon, Cote d’Ivoire, Zambia and Rwanda.

IHS said it has installed a number of alternative energy sites in Nigeria over the past 18 months which, in addition to further investments in its NOC “mean that uptimes of over 99% are achieved” on its owned sites. Under the terms of the deal with Etisalat, IHS said it has committed to investing a further $100 million in the acquired towers, on advanced generators, efficient batteries and alternative energy solutions “to reduce diesel consumption and improve efficiency of grid use”.

Etisalat Nigeria chief executive officer Matthew Willsher said: “Continued demand for mobile connectivity along with increased consumption of data requires reliable and effective networks that are also cost efficient for 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.”

In five years of operations Etisalat Nigeria has become a major industry player with a growing subscriber base of more than 19 million and a portfolio of voice and data-centric products.

The Etisalat Group, which has a market value of about $24.5 billion and annual revenues of more than $10.6bn, is the leading telecoms operator in the Middle East and one of the largest corporations in the six Arab countries of the Gulf Cooperation Council. The group also operates in Asia and serves more than 182 million subscribers.

A survey published earlier this year by Ericsson of Sweden (8-page / 224 KB PDF) said sub-Saharan Africa was “rapidly closing in” on the global penetration rate of mobile communications usage. Total mobile subscriptions in sub-Saharan Africa stood at about 70% at the end of 2013, compared to about 92% globally, and digital technology is “fast becoming a part of everyday life” in the region, the survey said.

According to the survey, in the first quarter of 2014 Nigeria and South Africa were the leading sub-Saharan countries in terms of mobile subscription numbers, followed by Kenya, the Democratic Republic of Congo and Ghana. In terms of net subscription additions per country, Nigeria was the leader, followed by the Democratic Republic of Congo, Uganda and Ghana, the survey said.

A joint report published in 2012 by the World Bank and African Development Bank, with support from the African Union, said that at the start of 2012, Africa’s mobile telephony market was “bigger than either the EU or the US.