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IHS founding partner says HTN acquisition will empower operators

IHS founding partner says HTN acquisition will empower operators.

The announcement by IHS that it intends to acquire HTN's portfolio of 1,211 diversified tower sites throughout Nigeria could be the first of many as the company says it will take up other opportunities for market consolidation.

While it is specified that HTN accepted the proposal from IHS based partly on how the deal would bolster its credit profile in a tough economy, IHS has since made a case for the value of the acquisition for mobile operators in its portfolio.

IHS Group executive committee member, founding partner and deputy CEO of IHS Nigeria Mohamad Darwish told ITWeb Africa that operators such as MTN, Airtel and Etisalat are all set to profit from the purchase of HTN.

"We are always on the lookout for any transactions that happen, being more of a mobile operator driven company and because IHS is on a massive growth phase, we are continuing to look into other African countries...When you bring these tower companies together and you benefit from economies of scale and when you do that you will have more scale to come back to the mobile operators with new ideas and solutions."

Darwish says the new deal will also be useful for the focus on green energy at IHS which will be integrated into the HTN portfolio along with their expertise.

Operator empowerment

"...eventually you will see benefit for the operators and when they see that it will naturally go back to the average consumer."

Darwish added that while the acquisition of Helios Towers Nigeria will increase the number of towers under their management and put them in a healthier financial position, their transaction will also help operators become more focused in serving Nigeria's population of 180 million in the best way that they can.

"The concept itself is extremely important and Africa is seeing that, and the operators are seeing that. Our core business when you look at it from the operator's point of view it helps them achieve efficacy on their balance sheet. It helps them raise some cash in exchange for assets but it also helps them to reduce their operating expenditures on those assets. It also allows them to outsource a particular element of their network which is the tower infrastructure which is not really their core business.

Darwish says IHS has made contact with several operators they work with to assure them that their business will not be disrupted by the acquisition in any way.

"Their core business is selling lines and minutes and data. This managing of the tower portfolio with the whole complicated supply chain that comes with it especially because Africa lacks large grid connectivity meaning you have to use a small power system every time and you have to do all the logistics. So the operators are released from a big headache and they have more resources and financial means to focus on their core business."

Imminent regulatory hurdle

The transaction between IHS and HTN is expected to close in Q2 2016 once a go-ahead has been secured from regulators in Nigeria. Darwish expects that process to run smoothly.

"We need to get confirmation from the Nigerian Communications Commission and the Securities and Exchange Commission of Nigeria. That will be more of a straightforward issue. We don't anticipate hindrances or severe requirements. As a matter of fact I think this a good thing for the industry - this type of transaction - as it increases efficiency, consolidation in our business even when it come to employment we have plans to integrate the people that come with HTN."

Darwiish would not be drawn on the costs of the HTN deal.