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Nigeria, Helios Towers Telecoms

Connecting Nigeria's population to affordable, reliable telecoms and broadband.

Background

In Nigeria, demand for access to mobile and broadband technology is unprecedented, and the current telecoms infrastructure cannot keep pace with demand.

It is estimated that each telecoms tower / base station typically supports 4,000-4,500 subscribers in Nigeria; service is often unavailable for up to 30% of the time. By contrast, towers in developed countries have only 1,200-1,500 subscribers per site, providing 100% availability. There were 110 million subscribers in Nigeria in 2012 and the number is forecast to increase to 152 million by 2016. Also the number of broadband connections is expected to rise from 1.5 million to 2.1 million by 2015. The country will need up to 14,000 more base stations in the next four years just to maintain current levels of provision for the increasing number of subscribers.

The most effective solution is a dedicated outsourcing of the construction and management of telecoms towers, which can then be shared by a number of providers. The construction of additional tower sites means that existing mobile operators can expand their reach, in both geography and capacity. Sharing the use of towers reduces the cost of expansion for all carriers, enabling them to provide a service to remote and economically less developed areas, where revenues and usage will be lower.

Helios (HTN) builds, manages and maintains a network of telecommunications towers, leasing space to multiple providers of wireless services under long-term lease agreements. Currently, it manages 1,185 towers. With HTN in the Nigerian market, new and smaller wireless operators can gain entry, as they will have access to leased tower facilities rather than having to build their own. This will increase competition, and reduce costs for consumers.

So far, HTN is one of three tower companies operating in the market. Its performance standards and service availability make it the preferred provider by many operators in the market.

The project also includes the refinancing of existing debt to harmonise terms and to lengthen the maturity profile of HTN’s debt stock

The deal

The total project investment is made up of US$200 million of loans, along with an additional amount of equity from the project sponsor. US$22 million of commercial loans have been raised domestically from Nigerian banks, supplemented by US$18.75 million from international sources, including Cordiant and NedBank. The balance US$159.25 million has been raised through a variety of debt instruments from DFIs, including the IFC and EAIF.

PIDG position

This type of long-term funding for capital intensive projects is not currently available domestically in Nigeria. Thus, the US$19 million loan from EAIF (of which only US$14.25 million has been disbursed), alongside a US$50m commitment from the IFC and various long-term loans from other DFIs have been required for the project to reach financial close.

Development Impact

Private Sector investment

Total expected investment

 

US$200m

Fiscal benefits

The company is expected to pay US$157 million in taxes and royalties until 2021.

Job creation

Long Term

 

200 - 230 people

 

Additional Benefits

Number of people with improved quality of service – 3.3 - 4 million subscribers.

Increased competition – the presence of Helios Towers in the Nigerian market will allow smaller, and newer, wireless operators to benefit from reduced barriers to entry.

Expanded access to other ICT technologies – the tower network is capable of supporting not only mobile cellular networks, but also wireless broadband and backhaul networks.

Material and energy savings –  there is a significant benefit in sharing tower infrastructure – building one tower, instead of three or four, reduces the quantity of construction materials required, associated energy use and emissions.

Visual impact – fewer towers will involve less intrusion in the landscape, especially in rural areas.

Tower sharing in rural areas makes access to telecom services more affordable.

Tower sharing is not yet a common model in sub-Saharan Africa (unlike Asia, Europe and USA). Therefore, this project is expected to have a significant demonstration effect and act as a model to be replicated elsewhere. A similar project is already being discussed by EAIF in another sub-Saharan country.