TOWER DEFENSE

Nigeria 2017 | TELECOMS & IT | VIP INTERVIEW

TBY talks to Mohamad Darwish, Co-founder of IHS Towers and Interim CEO of IHS Nigeria, on the role of the company in improving efficiencies in the telecoms sector.

Can you tell us about the history of IHS Nigeria and what its major milestones have been over the years?

IHS started 15 years ago when the Nigerian telecommunications sector was privatized in 2001. We started by building telecommunications sites for operators and essentially stimulated the initial growth spurt of the telecommunications sector, which has become one of the largest contributors to the Nigerian economy. We are a B2B company with our clients including various mobile operators, internet provides, and private companies. In 2008, we undertook a strategic shift and decided to focus on infrastructure sharing and the leasing of telecommunications towers while continuing to build sites when necessary. Sites that were previously owned by operators now belong to us, an independent company, which has allowed for these tower assets to be shared between operators. So instead of multiple operators spending more money and resources to build their own infrastructure, we enable these shared sites to provide coverage for all of their networks. This naturally saves money on equipment, infrastructure, utilities, raw materials, and other expenditures, all of which eventually translates into cheaper rates for end users, and less repatriation of hard currencies from the countries we operate in. The operators can then focus on doing what they do best, which is to sell lines, sell data, and attend to their customers. We subsequently expanded into Cameroon and Cote d'Ivoire, followed by Rwanda and Zambia. We also acquired the portfolios of MTN and Etisalat in Nigeria, and in March 2016 we acquired Helios Towers Nigeria's portfolio, one of Nigeria's first independent tower operators. Presently we have approximately 16,000 towers that we manage in Nigeria, out of our portfolio of over 23,300 towers in Africa. We are considered the tenth largest tower company in the world. We provide jobs to more than 40,000 people across the five countries in which we operate, who are either directly employed by IHS or through our partners and suppliers.

As a major telecommunications firm with significant energy needs, what do you think can be done to address the lack of power across the continent and what measures are you taking specifically in this respect as IHS Nigeria?

Some statistics say around 600 million people in Africa do not have access to electricity. Other statistics say that the populations of only seven Sub-Saharan African countries have more than 50% access to electricity. In Nigeria, the frequent power outages and shortages lead to a loss in annual sales revenue of more than 10-15% for manufacturing firms. IHS Towers is a huge user of power, consuming more than 200 million liters of diesel per year, which is why we are so interested in renewable energy. Of course, this takes long-term planning and investment. Our business demands a complex, well-functioning supply chain and we must work to ensure the government is 100% behind us and our investments. We have invested more than half a billion dollars in upgrading our network in Nigeria to be powered by renewable energy systems; that is the direction we are taking. Similar projects are underway in other countries across the continent. For instance, we're keen to build a solar farm in Rwanda and, in Zambia, we hope our portfolio will eventually become almost diesel neutral in the near future. That's the vision, and that's the dream, but it's a viable dream.

What are the biggest challenges for the telecommunications sector and operators in Nigeria?

Nigeria is nowhere near saturation, but many challenges remain. The operators face two major issues: coverage and capacity. The current focus is on expanding coverage to include rural areas, which is a challenge as these areas are not always a commercial priority. Our job is to make those places accessible and to design solutions for operators to expand to those areas. We rely on the government for assistance, and it is active and helpful in that sense, inviting operators to expand to these areas. Congestion is another problem. But, that can be solved via expansion and more towers across other parts of the country. Other challenges include a lack of access to market-leading equipment and technologies. Moving to 4G will provide better value and better quality in the sector overall. Nigeria needs 20,000 to 30,000 more towers for the network to be at the level it should be, which is mostly just for voice. Data is an underserved and underdeveloped part of the sector, with a penetration rate of just 10-20% for all of Nigeria. There is still a lot to be done.

What can IHS do to reduce noise and pollution created by the towers and their effects on surrounding communities?

It's important to realise that our tower-sharing business model fundamentally seeks to reduce noise, carbon emissions, and pollution by enabling mobile network operators to share tower sites and power sources. In other words, where there were previously three or four towers in one area, all generating noise and pollution, with our sharing model you now have one single tower, one site, and one generator. However, the regulators are tough on us and we have to abide by their stringent standards. For every single site, we bring in their consultants, who study and audit the surroundings as well as our site to ensure that we comply with all regulations. If we don't comply, we simply do not get the permit. As new renewable technologies such as solar and DC generators come into play, our operations become quieter and quieter. Our aim is to eventually use zero diesel, and that will do a lot to improve the noise our sites produce, making our operations even more environmentally friendly.

The National Assembly is considering passing the Communications Service Tax Bill into law. How would that bill affect IHS and the end user?

The Communications Service Tax Bill will affect the whole telecoms sector, but of course it is just one of many taxes that are affecting the supply chain as well as our operations. There are federal taxes, state taxes, local taxes, and other agencies, so the sector is already heavily taxed. In terms of the Communications Service Tax Bill, it is not yet clear as to who will bear the burden of the new tax because the operators will charge the subscribers and then it will go to the government. In our opinion it's not charging taxes that will bring the best outcome; it's re-consigning, consolidating, standardizing, and regulating that will make the sector stronger, healthier, and more profitable for all in the long term.