Sunday, June 5, 2016

We’re insulated from Nigeria’s forex problem, says IHS

BUSINESS

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We're insulated from Nigeria's forex problem, says IHS

By Kokumo Goodie, Lagos, Nigeria

IHS Towers says it has not been hard hit by ongoing foreign exchange (forex) squeeze in Nigeria because it is a foreign direct investment (FDI) vehicle into the country.

IHS co founder and Interim CEO, Mohamad Darwish, who spoke with ICT editors in Lagos, said with the measures put in place by President Muhammadu Buhari, the challenges faced by the country were a temporary phase that would ease with time.

According to him, as a major FDI driver, the firm has invested $4 billion into the telecoms sector over the last one decade of its operation, adding that it has spent over $5 million in upgrading its facilities in Nigeria over the last one year.

Speaking while a report titled: Power Up: Delivering renewable Energy in Africa published by the Economist Intelligence Unit and sponsored by the firm, he said IHS will continue to invest in infrastructure upgrade and expansion to redefine end user experience on telephone network.

According to him, one of the solutions to the vexed issue of low quality of service (QoS) is outsourcing which allows telcos to focus on their core areas of competence and leaving the headaches of running and maintaining BTS to another organization that has the competence to do so.

Darwish identified coverage and capacity as two major problems associated with QoS in the country. According to him, coverage has been a major challenge in the rural areas where returns on investment has made it unattractive for telcos to build infrastructure. He however added that the Nigerian Communications Commission (NCC), through the Universal Service Provision Fund (USPF) has intervened to solve the problem.

He also said lack of equipment is a factor as technology transits from 2G, 3G and 4G, adding that studies have shown that there is a deficit of some 20,000 BTS in the country which, adding that investment is still needed to bridge existing gaps in the industry.

Speaking on why the firm sponsored the study, he said the power sector continues to pull back Africa from attaining its full potential accounting for between 15 and 20 per cent of operating cost of the manufacturing sector, adding that for IHS Towers that has power at the centre of its operation, it is fit for it to think about alternative source of green power.

He said the key findings showed that renewables must play a greater role in Africa's energy mix. The case for building renewable energy infrastructure in sub-Saharan Africa is stronger than ever and positive experiences in lead markets such as South Africa and Kenya highlight successful strategies and best practices. However, Africa requires up to $90 billion of investment annually to meet its current energy shortfall, it added.

According to the report, the African renewables sector resembles the mobile phone sector of a decade ago. "It has the capacity to leapfrog heavy infrastructure with a larger-than-assumed market, the emergence of smart business models and improved technology. However, long-term renewable procurement programmes are needed to build the greenfield infrastructure necessary," it said.

"There has been huge growth in technology sales and financing innovation. The market for pico-solar units has grown from almost zero in 2009, to 4.5 million in 2014 and, in January 2016, Africa saw its first solar bonds, a securitisation financial product for small scale off-grid solar projects.

"Ambitious energy targets are not enough. Investors are carefully assessing the technical capacity of host governments, the country's infrastructure track record and the connection between renewable targets and economic needs," the report further showed.

The report finds that a 680 per cent increase in net renewables capacity deployment is needed if Africa is to achieve the African Renewable Energy Initiative's ambitious goal of 300 GW of renewable capacity by 2030, agreed by the Africa Union and member governments at the recent Paris climate talks. Innovative tools and projects are helping to bring green energy to people beyond the traditional grid. However, there is no substitute for larger infrastructure programmes such as wind and solar farms.

"This report reaffirms that Sub-Saharan Africa has the raw ingredients for a vibrant renewables energy market: resource abundance, falling costs of wind turbines and solar panels, smart innovations in end-user equipment and political commitment – by governments and international donors alike," Darwish said.

IHS operates three business models: building its own tower sites and leasing them to operators; acquiring existing MNO sites and leasing tower space back; taking over the management of operators networks with an agreement to lease the sites to other operators.

Some of the MNOs that IHS works with include: MTN, Orange , Airtel , Etisalat and Millicom.

IHS is heavily involved in bringing broadband internet to the whole of Africa. IHS partners with startup telecom companies such as Spectranet and Smile to help finance the deployment of their network into urban areas.

Aside from its founding partners, UBC, IHS is supported by a group of international shareholders including Emerging Capital Partners, the International Finance Corporation (IFC), Wendel, Goldman Sachs, African Infrastructure Investment Managers, Investec, the IFC's Global Infrastructure Fund (GIF), the Dutch development finance institution (FMO) and the Singapore sovereign wealth fund, GIC.

IHS has also launched a variety of green energy projects in the five countries in which it operates. It currently employs approximately 40,000 people directly and indirectly through its exclusive subcontractors; two thirds of whom are from Africa and 80 percent of whom are trained engineers.

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