IHS Towers, through key shareholder Wendel Group, today announced its full-year 2020 results and re-confirmed its ambitions to bring the company public through an initial public offering (IPO) in 2021. Overall, IHS Towers’ parent company, IHS Holding, is a provider of telecommunications infrastructure, with a focus on emerging markets. The company operates in nine countries throughout Africa, the Middle East, and South America.

Operations Overview – IHS Towers

IHS Towers’ total portfolio comprised 27.8k owned and managed towers at year-end 2020. Specifically, the company’s top five markets by tower count include Nigeria (16.5k towers), Côte d’Ivoire (2.7k towers), Brazil (2.3k towers), Cameroon (2.2k towers), and Zambia (1.8k towers). IHS Towers’ 27.8k towers have a tenancy ratio of 1.56x, equating to 43.4k tenants with equipment on the company’s towers.

During 2020, IHS Towers grew its tower count by 3.7k towers or 15.5% from 24.1k at year-end 2019, primarily through acquisition. Firstly, IHS Towers added 1.2k towers in Kuwait through a sale and lease back transaction with wireless carrier Zain. Secondly, IHS Towers bolstered its portfolio by 2.3k towers from its acquisition of Cell Site Solutions, which owned towers in Brazil, Peru, and Colombia.

Financial Performance – IHS Towers

IHS Towers’ results for 2020 show the company generated revenue of $1.4bn, up $172m or 14%, from $1.2bn in 2019. This revenue increase was driven by growth across all of IHS Towers markets, with Nigeria having the strongest performance. Additionally, IHS Towers’ organic revenue growth rate was 16% for 2020, driven by new tenancies, new lease amendments, inflationary rental escalators, and a positive foreign exchange impact.

In terms of earnings results, IHS Towers grew EBIT (post-IFRS 16) for 2020 by 44% to $410m (29% margin), as compared to $284m in 2019. Additionally, EBIT (pre-IFRS 16) for 2020 increased by 43% to $396m (28% margin) as compared to $276m in 2019.

Strategic Updates – IHS Towers

Below we highlight strategic updates from IHS Towers in 2020, including developments on its initial public offering (IPO) in 2021, M&A transactions, operations, and financing.

Initial Public Offering (IPO) – Update

In August 2020, IHS Towers announced, in accordance with Rule 135 under the Securities Act of 1933, that it is exploring a potential registered initial public offering in the United States. Indeed, the IHS Towers initial public offering (IPO) is anticipated to occur during 2021. This is in-part due to Wendel Group’s unique co-investment structure, which has implications for IHS Towers.

Wendel Group made its first investments into IHS Towers in 2012 and 2013. Notably, for co-investments made in 2011 and 2012, the firm is governed by explicit principles for liquidity. Specifically, the first automatic liquidity maturity date for IHS Towers is March 31, 2021. Indeed, this corresponds to the eighth anniversary of Wendel’s initial investment.

Given recent market dynamics, it is a clear possibility that IHS Towers enters the U.S. public markets through a combination with a special purpose acquisition company (SPAC). Dgtl Infra highlights two SPACs below which have recently raised capital and have personnel ties to IHS Towers:

Plum Acquisition Corp I (NASDAQ: PLMIU)

On March 17, 2021, Plum Acquisition Corp I priced its $300m initial public offering (IPO). Plum notes that it is focusing on investments in the “enterprise software, SMB software and infrastructure” sectors.

In terms of personnel, former CEO of Xerox, Ursula Burns, represents Plum and is also on the board of directors at IHS Towers. For Plum Acquisition Corp I, Ursula Burns is a founder and serves as its Executive Chairwoman and a director.

North Atlantic Acquisition Corp (NASDAQ: NAAC)

On January 25, 2021, North Atlantic Acquisition Corp priced its $330m initial public offering (IPO). North Atlantic’s business strategy focuses on pursuing a business combination in the “consumer, industrials or telecommunications industries”.

In terms of personnel, Tamara Sakovska, represents North Atlantic. While serving as an Investment Partner at Global Family Partners, Sakovska originated, evaluated, and executed an investment in IHS Towers. For North Atlantic Acquisition Corp, Tamara Sakovska is serving as a director.

M&A Transactions – Update

In January 2021, IHS Towers acquired Skysites Holdings, a provider of small cells and urban telecommunications infrastructure in Brazil. Specifically, Skysites’ operations comprise 1.0k sites, along with exclusive access to tens of thousands of urban real estate locations. IHS Towers’ Brazilian operations will fully integrate Skysites during 2021.

In March 2021, TIM Brasil announced that it had entered into exclusive talks with IHS over the potential sale of a stake in its fiber network assets unit, FiberCo Soluções de Infraestrutura Ltda (FiberCo). TIM Brasil expects that formal signing of the transaction will occur at the end of March or early April 2021.

Operations and Financing – Update

In July 2020, IHS Towers expanded and amended key terms in its tower lease agreement with MTN Nigeria. Notably, MTN is IHS Towers’ largest customer in Nigeria. Specifically, these terms include an increased focus on rural connectivity and fiber access. Additionally, an updated pricing structure for future technology upgrades and backhaul in the network was agreed.

Separately, in July 2020, IHS Towers successfully issued additional debt. Specifically, the company raised $150m across its 8.000% Senior Notes due 2027 and 7.125% Senior Notes due 2025.

IHS Holding – Key Shareholders

IHS Holding’s owners include a consortium of global investors. Notably, MTN Group (29% equity interest) and Wendel Group (21% equity interest) are the largest shareholders of IHS. Additionally, International Finance Corporation (IFC), Government of Singapore Investment Corporation (GIC), Korea Investment Corporation (KIC), and Emerging Capital Partners (ECP) are shareholders of IHS Holding.

Adam Simmons is the Founder & CEO of Dgtl Infra. He started his career with an S&P 500-listed big box retailer, in an operations management role. Adam's entrepreneurial "itch" led him to start a 5G-driven company, focused on innovative retail solutions using augmented reality and shoppable videos, which was eventually sold to an advertising and consulting group. After, realizing the potential of 5G, Adam shifted his efforts towards investing in the "building blocks" of 5G - known as digital infrastructure, completing a number of strategic investments, buying cellular towers, data centers and fiber networks.

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