Etisalat Nigeria has declared its intention to sell 2,136 of its communication towers to IHS Nigeria, Africa’s largest independent phone tower company, before leasing the towers back for its network, as part of strategic plans to raise network performance and also roll-out 2G and 3G across the country.
The as yet unvalued deal is set to close later this year, Etisalat said in a statement, while Reuters has reported that the deal will raise as much as $400m, and under the terms of the agreement, IHS has committed to invest a further $100m installing efficient generators and batteries at tower sites.
The deal will leave IHS owning and managing over 6,540 towers in Nigeria, and the move by Etisalat reflects a broader trend among operators in Africa, where tower maintenance, security and back-up electricity costs are high and are often best left to specialised firms.
Matthew Willsher, CEO of Etisalat Nigeria, noted that, “the increased consumption of data requires reliable and effective networks that are also cost efficient for network operators. The decision to sell our passive infrastructure to an experienced commercial partner, such as IHS, is part of our strategy to increase network coverage and capacity.”
The transaction is also the first by a major GSM operator in Nigeria, and Etisalat is perhaps surprisingly handing over its network at a time when it is already rated number one for the quality of its coverage, capacity and service by the Nigerian Communications Commission.
However, Abu Dhabi state investment vehicle Mubadala also recently announced plans to sell its 30% stake in Etisalat Nigeria to the UAE-based Emirates Telecommunications Corporation (Etisalat), parent company and 40% stakeholder of Etisalat Nigeria, once the sale of the towers is complete.
Etisalat also recently agreed to sell $650m in assets in West Africa – across its businesses in Benin, the Central African Republic, Gabon, Niger and Togo, and Prestige Telecom in the Côte D’Ivoire – to Maroc Telecom prior to the completion of a $5.8bn acquisition of the firm from Vivendi SA.
Issam Darwish, CEO of IHS, added, “We are delighted to have been trusted by Etisalat Nigeria with their passive network infrastructure, but our continual investment in systems and technologies will ensure that that trust is well-placed and allow them to focus entirely on marketing new customer propositions to a wider market.”
Over the past 18 months, IHS has installed a large number of alternative energy sites in Nigeria, which in addition to further investments in an advanced Network Operations Centre (NOC) has resulted in lower diesel use and an uptime figure for the firm of over 99% on its owned sites.
IHS will also in turn openly market services on the Etisalat towers, promoting tower-sharing and colocation to help drive more revenue, network improvements and a better service.
MTN Nigeria has meanwhile also announced plans to sell 9,183 telecom base transceiver station (BTS) sites and reduce operational cost (Opex) by transferring the staff responsible for the sites to third party telecom infrastructure providers, according to Nigeria’s Leadership.
At the start of the year, Etisalat also began a partnership with MTN, despite its rivalry with the group in Nigeria, for MTN to make use of the Etisalat SmartHub, a communications platform aimed at expediting data traffic traversing the Middle East, Africa, Asia and Europe.