Full article on http://www.tmtfinance.com/news/ihs-ceo-issam-darwish-talks-towers Sam Darwish is the co-founder, Executive Vice Chairman and Group CEO of IHS Towers, the leading mobile infrastructure company in Africa. Founded in 2001 by an experienced team of engineers and business people, IHS is the largest mobile telecommunications infrastructure provider in Africa, Europe and the Middle East and provides services across the full tower value chain – colocation on owned towers, deployment and managed services. In a recent interview with TMT Finance magazine, Sam Darwish discussed a range of topics regarding the company’s successful past few years. From a business perspective the company raised $2.8 billion in equity last year, one of the highest raises by a private company in Africa. Sam cited being ‘oversubscribed’ in terms of investors as a ‘big win’ for the company. When asked about the key growth drivers for IHS Towers in Africa, Sam Darwish commented that the future is broadband connection and this is where huge room for growth potential lies. Sam followed this by mentioning a $500 million plan to upgrade the power systems of all IHS’ Nigerian tower sites. The company will execute a similar plan across its tower portfolio which included markets in Cameroon, Cote D’Ivoire, Zambia and Rwanda. In particular, Sam Darwish highlighted the upgrade from diesel generators to hybrid solar systems in a push to boost efficiency and reduce environmental impact. When asked about his process for selecting fundraising advisors, Sam Darwish commented that IHS Towers focuses on working with all investment banks not just a select few. For each new equity raise, the company alters its system and looks for the best possible advisor based on their expertise, local market knowledge and their ability to understand the project.

1. IHS CEO Issam Darwish talks towers
Published on 26.11.2015
Now the largest towerco in Africa, Europe and the Middle East, IHS has had a record
breaking year. Having raised an unprecedented debt and equity financing round to back two
major acquisitions in Nigeria, the company is one of Africa’s most exciting success stories.
At the helm of IHS is Lebanese-born, Lagos-based Executive Vice Chairman & Group
CEO, Issam Darwish, who speaks to TMT Finance Editor Ben Nice about everything from
his relationship with his private equity backers and rival towercos, to what he looks for in an
investment banker, as well as his personal projects helping SMEs in Nigeria, and where he
wants to take IHS into the future.
What are some of the highlights for you on a personal level over the past 18 – 24 months?
From a business perspective, the equity raise last year (US$2.8bn) was one of the highest by a private company
in Africa and certainly the highest over the last 10 -15 years – and I was very proud of that. It shows how the
international community view Africa, the sector and us as a company. It gave us a lot of pride. We were
oversubscribed – and we had to push back against some big, credible, international names who wanted to come
in as investors. That was a big win for us.
The transformational change in Nigeria has also been massive. We moved the size of the business from 4,000 to
15,000 towers within one year through the acquisition of MTN and Etisalat towers in the country, which was
another transformational highlight for us.
For me personally, the big achievement was losing weight!
What are some of the key growth drivers for IHS in Africa?
Africa is currently comprised of about 1 billion people and this number is expected to double within the next 40
to 50 years. It’s also a largely young population. Telephony is at 75% penetration rate, data services and
broadband is less than 10%, 3G is low and LTE is almost non-existent in many countries. We know that the
future is broadband connection and not voice anymore -- no one wants to speak anymore. So the room for
growth is massive.
Geographically we are in five out of Africa’s 54 countries and we are always on the lookout for markets of
sizeable potential with relatively low penetration rates. My guess is that for every year we will hopefully enter
one or two new markets – this is the plan for the coming period. Having said that, at the moment, we are
focusing on consolidating the towers we’ve acquired in Nigeria.
Meanwhile, we have also put in motion a US$500m plan to change and upgrade the power systems at all of our
sites in Nigeria. A similar plan has been executed in Cameroon, Cote D’Ivoire, Zambia and Rwanda. We have
bought all of our sites from MNOs, who typically did not overspend on power systems and mainly used
inefficient diesel generators. So we’ve scrapped the diesel generators and replaced them with hybrid solar
systems. This is an ongoing programme, with the first batch having been replaced in October of this year.
The reason IHS has been so successful is that it is an engineering company at its core – I’m an engineer, my
partner is an engineer, and funnily enough, my CFO is an engineer – this is what we do. We realised we cannot
do everything on our own so over time we have groomed and helped train subcontractors that work exclusively
for us. We guarantee them work and some of them have been with us for over 12 years – those are the guys we
rely on. If you include those guys we have approximately 40,000 people working for us.
Where does IHS see opportunities aside from towers?

2. Currently we provide regular towers and rooftop sites to operators. But we are looking at more innovative
options that would provide urban solutions: in-building office coverage, for example. We are looking to wire
some of the urban commercial buildings and have already started that in Nigeria – where we have already wired
several buildings. We plan to roll this out in all of the countries in which we operate. It is slower and more
complex than erecting a tower because you have to convince the landlord, association, etc. and implement
without any disruption, but this is where we see the future.
There are other things that we are working on too, but these are a bit more confidential at this stage.
What are your thoughts on expansion outside of Sub-Saharan Africa?
Although we started in Africa, we don’t have Africa-only restrictions – not from our shareholders or from our
own strategic objectives. We look for good opportunities and good towers. We look at every market – if it
makes sense to us then why not? For the moment, though, there is a lot to be done in Africa and we will
continue expanding in Africa. If we see something that makes sense to build value for our shareholders, then we
will take a look at it.
Given the unprecedented debt and equity financing round earlier this year, do you sense that there has been a
wider mind shift by international funds and lenders on how they view IHS and Africa TMT in general?
I’ve dealt with Private Equity guys since 2009 when I did my first fundraise – at that time we managed to get
development funds such as the IFC and the FMO, as well as Investec, which are very bullish on Africa. It took
me six months or more to convince these guys to come in. Since then it’s gotten easier and easier. I think there
are macro reasons for this – the size of the population, quality of demographic and the sector itself.
There is plenty of demand out there and genuine Africa interest but there are not enough quality assets in my
opinion. I’ve seen it time after time, investors come to me and say: “we’re interested in this sector, but we can’t
find the right company and can’t find the right group to work with.” That is an issue because sometimes
governance does not evolve as quickly as the business expands, so the balance of governance and economics
does not necessarily grow at the rate and that is a problem that all companies operating in Africa, including
ourselves, need to handle and improve.
We were lucky as a group that at the beginning of our growth in 2001-2004, when we created the company, we
worked exclusively with Motorola for four years – which was one of the most rigid companies at the time – and
the US was strengthening regulation around its foreign corrupt practices act. The Foreign Corrupt Practices Act
was a major focus for Motorola and their partners, so within four years, we were transformed into a machine
that prioritised governance and we took that on as we moved into our own growth phase. That was a big factor –
in my opinion – in terms of the IHS investor interest.
How would you describe the relationship with your equity backers?
I think my relationship with all our equity backers is excellent. They respect us a lot, we like them and we
respect them and we have a very close relationship. Wendel in particular has been very helpful, very flexible,
very progressive, very commercial and very supportive. They’ve put all their resources at our disposal, they
have invested in excess of US$700m already in the business – something that one or two years ago would have
been unthinkable for them being a predominantly Europe/US focused fund, so the relationship is great.
Are there any more fundraising plans in the pipeline?
We have a good amount of cash on our balance sheet at the moment. We have enough to fund our current
growth plans including our ongoing build-to-suit programme. If and when we find another opportunity which is
of a certain size that requires us to raise more money then we will of course raise money.
According to our records, IHS has tended to use banks such as UBS and Goldman Sachs for recent M&A
and fundraising. What’s your approach to selecting advisers and what do you look for?

3. We tend to work with all the investment bankers, not only Goldman and UBS. Every time we have a process or
an equity raise, we reset our system and we look at who is there, based on their expertise, their local market
knowledge, their ability to understand the project under evaluation, etc. So we’re not married or attached to any
banker or bank per se - we work with almost all of them.
What are some of the challenges of doing business in Nigeria and the other countries in which IHS
operates?
Power is one of the biggest challenges and the complications it brings. When I say that power is a problem I
mean that, firstly, we have to replace the diesel with solar - when you set up a tower and you don’t have a grid
connection you then need a diesel generator, which means you have to fuel the site twice a month so you have to
send thousands of tankers to pick up fuel, unload, make sure the deliveries arrive and people don’t steal the
diesel – to many it is like cash. This is a complicated process, that involves intense monitoring and security, but
we’ve found a good solution.
What are your thoughts on the new Nigerian telecoms minister?
There is a new minister of telecoms and a new minister of power, and we are very optimistic that they are both
of the highest caliber. I think the choice of President Buhari is immaculate – the Cabinet is full of high caliber
and high quality officials who I believe are going to change Nigeria for the better. We will be meeting with the
new ministers soon.
What are your thoughts on the situation around MTN being fined in Nigeria? Does it have any impact on
IHS?
Frankly, the size of the MTN fine has been a shock to the telecoms sector and could have consequences on the
long-term growth of our industry. The security situation in the country, of course, remains the priority, and is
clearly complicated, but the US$5.2bn fine is quite high. If an operator has made a mistake, they need to face
the consequences, but we do believe the government should be more lenient and will hopefully reach a
settlement with MTN that can deter such actions in the future. Equally important, this would allow MTN and the
sector to continue to invest in the future of communications.
What drives you personally – outside of IHS?
I started a fund two years ago that helps and promotes startups and young companies. Africa has a lot of
problems that need to be fixed – education, power and health to name a few – but in my opinion the immediate
issue is finding jobs for people and promoting employment.
In light of that, earlier this year we partnered with the Economist Intelligence Unit to create a report on SMEs in
Nigeria (entitled ‘Enabling a more productive Nigeria: Powering SMEs’) which found that more than 90% of
the workforce in Nigeria is employed by SMEs – which you would think would be the other way round. You
can imagine the impact of trying to help those SMEs and the population at large. For me as a person, this is what
drives me at the moment.
As for the fund, it invests and trains businesses and helps take them to the next level. So we sit on their boards,
invest money, give them specialised training to ensure they reach their potential. It’s somewhere in between VC
and PE. So we are actively helping businesses in this space.
What are your thoughts on the longer term trends in the African tower market? Will the market
consolidate?
There aren’t enough of us to tell you the truth. We are too few. It is such a big market place and sometimes I
wonder why more haven’t come and then the operational challenges remind me why; because it’s not an easy
thing – we wake up every day to tens of little problems that we have to solve. This is not easy and if you’re not
on the ground, not in right mindset, or if you don’t have the right company structure, then you cannot do that.

4. Consolidation could or could not be a good thing – and it’s yet to be seen. It’s not that this sector needs
consolidation or does not need it – growth is so massive and towercos can keep growing on their own. We can
afford more towercos if more come in, without those companies degrading our returns or our growth potential -
there is massive potential out there. Having said that, I would like to and strive to remain the market leader!
Of the other towercos, who do you see as IHS’ biggest threat?
All of them are my friends, we wine and dine together. This is how it is – there is no competitive tension,
because Africa is so big, the world is big and we’re so few, so in a way we’re like a group. It’s not that we
compete or take away from each other’s businesses. There’s something nice about our business – once I have a
tower in a particular place it doesn’t make business sense to build a tower next to me. By definition we’re
exclusive, which is beautiful.
How would you describe your relationship with your clients?
As long as we keep it in our DNA that the client is the most important aspect to our business – more important
than management, shareholders and the actual towers – then we are fine. This is the services-oriented mentality
which I have and by which everyone in IHS abides by. This cannot be shaken, changed or diluted. The customer
is always the customer – whether it’s 10 years or 50 years down the road, or if they own the site or we own the
site, they are our client and need to be treated accordingly.
If they have issues, however trivial or substantial, we will address them as soon as possible. At the core of our
success are our excellent client relationships. We do not have issues. We may have an argument here, an
argument there, but these get resolved by our team of engineers. We have enormous respect for all of our clients
and if there is ever a dispute then I make sure we lose, not them – for sure.
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