IHS, Zain Sign $165m Tower Portfolio Agreement

Mobile communications infrastructure company, IHS has entered into agreements to buy and leaseback the passive physical infrastructure of Kuwait-based mobile operator, KSCP (Zain), for US$165 million.

According to IHS, which has operations in Europe, Middle East, and in Africa, the transaction will result in the formation of a new entity that will acquire and manage Zain’s tower assets in Kuwait, with Zain assuming a minority shareholding in the newly formed entity.

“I’m very proud of Zain team for its professionalism in completing the first agreement of its kind in the MENA region,” says Bader Al-Kharafi, Vice-Chairman and Group CEO of Zain, adding that the transaction is set to support Zain’s transformational strategy in becoming a digital lifestyle provider.

“The transaction has been approved by Kuwait’s Communication and Information Technology Regulatory Authority (CITRA), and is still subject to other regulatory and statutory approvals, and is expected to close in the first quarter of 2018,” notes IHS in a statement.

Under the terms of the transaction, Zain is selling only its passive, physical infrastructure to the new company and will retain its intelligent software, technology, and intellectual property with respect to managing its network.

IHS says upon completion, the transaction will be the first sale and leaseback of telecom towers in the Middle East region by a licensed mobile operator, and creates the first independent tower operator of scale in the region. “This transaction is part of IHS’ broader strategy to apply its operational expertise from its international portfolio further throughout emerging markets.”

In Africa, IHS has operations in Nigeria (15,754 towers), Cameroon (2,408 towers), Cote d’Ivoire (2,560 towers), Rwanda (804) towers, and Zambia (1,966 towers).The company claims to be the largest independent tower operator in Europe, Middle East, and Africa by tower count and the third largest independent multinational tower company globally.

Frost & Sullivan analysts estimate that the mobile network tower industry in Sub-Saharan Africa will be worth approximately US$1.5 billion in the next four years. “This will be on the back of increased take-up of tower management arrangements in some markets, with authorities in various regions also pressing telecom firms to share infrastructure.”

In August, the take-up of tower management arrangements in South Africa was seen to be in stark contrast to establishments in Nigeria, where 77% of the country’s 28,241 towers are owned by independent towercos, according to Tower Exchange. Etisalat, MTN, and Airtel in Nigeria had divested their portfolios through transactions with IHS Towers and American Tower Corporation.

During January 2017, MTN exchanged its 51% share of Nigeria Tower InterCo B.V. (the parent of Nigerian telecoms tower operator INT Towers Limited) for an increased stake in IHS.

MTN’s stake in IHS increased to approximately 29% from approximately 15%. “This transaction enables MTN to simplify its tower ownership structure and diversify its exposure to tower infrastructure across the IHS Group,” said MTN.

In July last year, IHS completed the acquisition of Helios Towers Nigeria Limited’s 1,211 diversified tower sites throughout Nigeria.