Mobile tower owner IHS targets double-digit growth as it expands in Middle East
Zain KSA has signed a $672m agreement with the company to sell and lease its network infrastructure
Mauritius-headquartered IHS Towers expects double-digit revenue growth as it buys 8,100 mobile towers in Saudi Arabia and will build up to 1,500 more in the kingdom in the next six years.
The company signed an agreement with Zain KSA - the Saudi unit of Kuwait-based telecoms operator Zain Group - to sell and lease infrastructure including towers, storage and power supply of its 8,100 mobile tower portfolio.
“They [towers] are located in prime and strategic locations across Saudi Arabia. The lease period is for approximately 15 years and could be renewed for another five years,” Sam Darwish, executive vice chairman and group chief executive of IHS, told The National.
“We have an undertaking to build up to another 1,500 in the next six years but if there is more market demand or Zain demands more, we will seek to build more.”
Co-founded by Mr Darwish in Lagos in 2001, IHS specialises in building mobile towers and managing sites for network operators. It is the largest telecommunications infrastructure provider in Europe, the Middle East and Africa by number of mobile towers.
IHS has also signed a similar deal in Kuwait for about 1,600 towers.
“The deal with Zain Kuwait was signed in 2017, but it is not closed yet as we are waiting for some regulatory approvals. At this point in time, we cannot comment on the size of the deal,” said Mr Darwish.
According to Zain KSA, the IHS deal is worth almost $672 million and the final agreement is subject to the approval of Saudi Arabian Communications and Information Technology Commission and financing authorities.
“Apart from the amount disclosed by Zain, we will be investing more to upgrade the network and building new towers in Saudi Arabia. The existing 8,100 towers and new sites could be leased to any operator, such as Zain, Mobily or STC,” said Mr Darwish.
“Operators don’t have to build new towers and invest in capex. They are only required to roll out the network into any new area with minimal equipment by just paying the rent.”
With the signing of the Kuwait and Saudi deals, IHS aims to raise its tower portfolio to 33,000 from more than 24,000.
“We are focused on growing our regional market. We will be investing in Saudi Arabia and will try to enter new markets such as Oman, Bahrain, Egypt, Ethiopia and North Africa. Such deals take time to materialise as it involves getting regulatory approvals from governments,” said Mr Darwish, without disclosing how much investment would be involved.
IHS, which is currently operating in five countries and has offices in nine, said it is open to more local partnerships in the Arabian Gulf.
“We are looking at regional sovereign wealth funds and large operators for potential partnerships. Local partnership is strategic as it will bring the element of native work ethics and know-how,” Mr Darwishsaid.
Mr Darwish said the company has enough money on its balance sheet to execute the projects and there is no need to raise money from outside.
“However, locally we will raise money as part of our partnerships with local banks, equity providers, it is part of our long-term strategy,” he added.
IHS, which employs 2,000 people, aims to play a central role in implementing 5G in the region by reducing the amount operators need to invest.
“5G is an expensive roll-out and it’s an entirely new technology. Operators will need many more locations than 4G,” said Mr Darwish.
“Operators can simply rent towers from us. If demand builds up, we are happy to explore new locations and construct towers right from scratch.”
Updated: May 7, 2019 03:19 PM