Sam Darwish, Executive Vice Chairman & Group CEO of IHS Towers, recently discussed the importance of local knowledge for companies looking to succeed in an increasingly competitive world. For 15 years, IHS Towers has been building and managing telecommunications towers that are the essential backbone of mobile telecommunications in Africa – the leapfrog technology driving economic development, prosperity and self-sufficiency across the continent. Founded in 2001 by an experienced team of engineers and business people, IHS today provides services across the full tower value chain – colocation on owned towers, deployment and managed services. IHS has operations in Nigeria, Cameroon, Côte d’Ivoire, Zambia and Rwanda and currently owns and operates over 23,100 towers in Africa. . In addition, under Sam’s leadership and through its direct and indirect employment of close to 40,000 people, over 95%, of whom are African, IHS has I managed to expand its staff and footprint to cover much of Nigeria. Even previously dangerous areas in the country have not deterred IHS from expanding. Sam Darwish said: “IHS Towers is the largest mobile telecommunications infrastructure provider in Africa, Europe and the Middle East currently owning and operating over 23,100 towers in Nigeria, Cameroon, Côte d’Ivoire, Zambia and Rwanda. Our company’s infrastructure and tower sharing model coupled with our renewable energy capabilities to power the towers is crucial to telecoms accessibility for millions of Africans”. IHS continues to expand and grow quickly, and when asked for a piece of advice for investors, Sam Darwish said “Put in a strong management team and work in the private sector. Don’t look to rely on government funding”.

1. IHS: Local knowledge is important
in fulfilling towering ambitions
By Xan Rice November 27, 2012
In 2001, when Nigeria was liberalising its telecoms market, many people were
scrambling to acquire mobile licences. Sam Darwish, a Lebanese engineer working in
Lagos, had loftier ambitions: 50m high, to be precise.
To provide network coverage across a large, and in places densely populated country,
Nigeria needed many thousands of mobile towers.
The company Mr Darwish co-founded started by building base stations for mobile
operators. Today IHS, which is listed on the Nigerian Stock Exchange, is one of the
four main tower companies in Africa, with 5,700 sites under management, including
3,000 that it owns outright. Turnover for the year ended April 30 was $97.5m.
Mr Darwish, the CEO, is still looking up. Within five years he wants IHS to own 20,000
sites by building more of its own and, especially, by buying them from mobile phone
operators. The masts are leased back to the mobile operator and other service
providers seeking to share infrastructure and costs.
IHS’s story offers lessons for other businesses looking to set up in a country that offers
large rewards, but has a difficult operating environment. Crucial to the company’s
success, Mr Darwish says, is local knowledge.
“In the US and Europe, you buy a piece of land and erect a tower,” Mr Darwish says.
“There is a power grid, a clean environment and no big need to really secure the site.
In Nigeria, it’s the other extreme. You may have to build access roads. The
environment can be dirty, and the power grid is unreliable and non-existent in many
places. Each tower requires a small specialised power plant to keep it running.”
In IHS’s early years, when it was mostly only a tower builder, the mobile operators
were responsible for the maintenance.
The two generators at each tower site needed to be checked twice a month. Diesel had
be delivered, and stored safely. Guards and cameras were, and still are, essential at
most sites.
But around 2006, with the mobile market expanding fast, service providers started
realising that they should be concentrating more on selling their products than
running a diesel logistics operation. So IHS began shifting from being a site building
company to also managing towers for the likes of MTN and Airtel.
By expanding its staff – the company now has nearly 1,000 personnel – IHS was able
to cover much of the country, including areas of insecurity, such as the Niger Delta
and, more recently, northeast Nigeria, home to an Islamist insurgency. Militants there
recently attacked telecoms towers, including two belonging to IHS.

2. “The thing with telecoms is that everyone wants to talk; the good guys and the bad
guys. Of course we [as non-Nigerians] cannot go to some places any more because of
the violence, but you have people from that area who work for you. We also have about
100 dedicated subcontractors,” Mr Darwish says.
With the business growing fast, IHS needed capital, so it listed on the stock exchange
in 2008, raising $65m. It was not long before the business model shifted again. As
mobile competition increased, prices fell, and operators were seeing a drop in revenues
per user, even as their subscriber numbers – and need for more base stations – rose.
A single tower cost up to $250,000, and service providers were becoming capital
constrained. The idea of operators sharing towers – and costs – with rival mobile
service providers, internet companies and banks had already caught on elsewhere in
the world.
IHS decided that co-location would be crucial to the company’s strategy. Since then,
as its portfolio of towers has expanded within Nigeria, as well as in Ghana, Sudan and
South Sudan, so has the need for new funding.
The crash at the NSE in 2008 had left investors wary, and the pool of money available
for companies “too shallow” for IHS’s needs, Mr Darwish says.
So it looked to the global markets, selling equity to the International Finance
Corporation, Investec, the Dutch development bank FMO, ECP Private Equity,
European investment firm Wendel and Nigeria’s Skye Bank. In the 12 months to
December 2012, IHS will have raised $269m in equity, and $480m in debt to fund its
expansion.
In October, IHS paid $284m to MTN for 1,758 towers in Cameroon and Ivory Coast.
But Nigeria, which has more mobile subscribers than anywhere in Africa, remains the
company’s biggest focus – and offers the richest prize. The country has 24,000 mobile
towers and 10,000 more will be built in the next few years, IHS reckons.
Setting up a business so soon after the end of military rule in 1999, IHS has been able
to capitalise on the years of solid growth that ensued. But Mr Darwish says there are
still many prospects.
Asked for one piece of advice for potential investors, he says: “Put in a strong
management team and work in the private sector. Don’t look to rely on government
contracts.”
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