The World Bank has lent $200 million to London-based African tower manager, IHS, for the acquisition of about 2,100 tower sites from Nigeria’s fourth largest mobile operator, Etisalat Nigeria.

“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.

According to the terms of the deal, IFC will contribute $50 million, $37.5 million from the IFC Managed Co-Lending Portfolio Program and $112.5 million from the Industrial and Commercial Bank of China (ICBC). The portfolio programme is an association of institutional investors.

Why sell?

In September 2014, South African based  MTN agreed to sell 9,151 mobile towers to IHS in a joint venture deal. At the time, MTN said the deal will help drive its costs trimming plan and boost call and data capacity in Africa’s most populous country.

IHS will  therefore have full operational control of the core business which has 58.5 million subscribers, the largest number of mobile operators in Nigeria.The towers company will market independent infrastructure sharing services to other mobile operators and Internet Service Providers (ISPs) in Nigeria, thereby generating funds for future projects.

 Discouraging environment

When compared to other regions, Africa requires more funding due to security costs and electricity shortages. In 2013 power generation in Nigeria dropped to 2,628.6MW, barely enough to meet the basic energy needs of over 167 million people, let alone power almost 10,000 mobile towers.

Nigeria is also in the middle of critical security phase, with insurgencies – the country’s most prominent being the Boko Haram group – rendering parts of the country ungovernable and undermining business activities activities within these areas. Already activities perpetuated by Boko Haram have resulted in over 4,300 deaths in the last five years.

These challenges have forced mobile operators to rethink the strategy of holding onto tower assets in such harsh conditions.

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