IFC invests $100 million in Nigerian telecommunications

The International Finance Corporation (www.ifc.org), a member of the World Bank Group, is investing $100 million into bringing the benefits of better telecommunications to many Nigerians via Helios Towers Nigeria Ltd. (www.heliostowers.com). HTN builds and maintains a network of telecommunications towers and leases space to providers of wireless telecommunications services.

According to an announcement on 13 October, the IFC is leading a $250 mln capital injection that will help Helios Towers increase its network to 2,000 sites nationwide. On 21 August, the IFC disbursed $50 mln in mezzanine financing and on 30 September 30 signed an agreement to lend another $50 mln in senior debt. IFC is arranging a further $150 million in senior debt from other commercial and development finance institutions. The towers and better coverage will help wireless operators roll out services more economically and extend affordable mobile services to the edges of towns and countryside.

The principals of Helios Investment Partners (www.heliosinvestment.com) founded HTN in 2005 to capitalize on very strong growth in mobile telephony in Nigeria by deploying the successful tower leasing business model pioneered by US-based companies such as Crown Castle International and American Tower. The business is characterized by high operating leverage, recurring revenues underpinned by long-term contracts, and high returns on invested capital.

Helios says in sub-Saharan Africa, the model exhibits the high growth characteristics of wireless communications and the defensive characteristics of a real estate business. According to the website, Helios and affiliated entities invested approximately $12 million and hold a majority interest in the company on a fully-diluted basis. Nigeria’s telecommunications sector has developed significantly, but 43% teledensity shows there is still room for growth. As HTN develops its network, operators outsource non-core activities and infrastructure and focus on developing products and services.

Kayode Akinola, HTN Director and Investment Principal at Helios Investment Partners says: “IFC’s long-term investment enabled us to leverage additional funding from capital markets, which is often not readily accessible for frontier markets,” said. “Nigeria remains one of the most high-growth telecom markets worldwide and wireless infrastructure sharing will continue to play a critical role in supporting operators in efficiently providing services to customers.” Helios aggregates more than $575 mln in capital commitments and also manages the $110 mln Modern Africa Fund.

Mohsen Khalil, IFC Director for Global Information and Communication Technologies, says: “Affordable mobile telecommunications enable access to knowledge and services, innovation across sectors, and more efficient delivery of government and business services, all of which will contribute to economic growth and opportunity creation.”

IFC supports sustainable economic growth in developing countries by supporting private sector development, mobilizing private capital, and providing advisory and risk mitigation services to businesses and governments. New investments totaled $14.5 bln in fiscal 2009, helping address the financial crisis.

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