IHS Towers, a network infrastructure provider with a primary focus on Africa, is working towards an initial public offering on the New York Stock Exchange (NYSE) that could give it a valuation of $7 billion, reports say.
That figure would see IHS surpass rival Helios Towers, one of the biggest telecoms tower leasing companies operating on the continent, which raised $364 million (with a valuation of around $1.5 billion) after its IPO last year, albeit on the London Stock Exchange.
IHS CEO, Sam Darwish, in an interview last year, had disclosed plans to gain entrance into new markets in the Middle East and Southeast Asia ahead of potential attempt to list in either New York or London. But the company prefers the former, reports show, as some of the largest tower companies such as American Tower Corporation (ATC) and Crown Holdings Inc., all based in the United States, trade at higher valuation multiples.
The Mauritius-based wireless towers operator has engaged American investment banks Citigroup Inc. and JP Morgan Chase as global coordinators for the IPO, expected to be the biggest by an African company in the U.S. Other lenders will be included as part of the syndicate for the listing which could happen as soon as the first half of this year. However, no final decision has been taken and the timeline could be pushed back depending on market conditions, a company official said.
Last year, IHS secured $1.3 billion in the debt market as the company expands its network of towers which stood at about 24,000 after recently acquiring portfolios of MTN and Etisalat in Nigeria. The expansion drive in existing and new markets is based on the relatively low mobile penetration numbers in Africa, compared to international standards, despite a surge in uptake of mobile use on the continent in recent times.
With many customers yet to acquire a mobile device, or even transition to advanced technologies such as 4G connectivity, the growth potential for tower operators remains strong across Africa. This is evident in ATC’s $1.85 billion deal for Eaton Towers, another tower firm with African operations, last May.
A successful IPO on the NYSE would give IHS enough capital and a platform to raise further money for acquiring more towers from Mobile Network Operators such as MTN, who typically sell towers to release balance sheet value and invest in consumer-facing technology such as the rollout of 4G.
Around the world, a huge proportion of towers have been outsourced by MNOs in a consolidation drive that offers further expansion opportunities for network infrastructure operators such as IHS and plenty of scope for future purchases.
IHS, whose owners include South Africa’s MTN Group and banking giant Goldman Sachs, is said to be the largest mobile telecommunications infrastructure provider in Africa, Europe, and the Middle East by tower count and the third-largest independent multinational tower company globally. Founded by Sam Darwish in Lagos, in 2001, the company specializes in building towers and managing sites for mobile network operators with operations in Nigeria, Cameroon, Ivory Coast, Zambia, and Rwanda.