IHS Towers, one of the largest independent owners, operators and developers of shared telecommunications infrastructure in the world, is likely to become the first company with real investment in Nigeria to be listed on the Wall Street if its New York listing goes as planned within the week.
IHS Towers provides a wide range of services across emerging markets, having operations across Africa, Latin America and the Middle East
MTN holds a 29 per cent stake in the company whose market value is estimated at up to $8 billion.
IHS Towers is offering 22.5 million shares, of which 18 million is new stock and 4.5 million are being sold by existing shareholders. The underwriters of the initial public offering also have an option to purchase an additional 2.7 million new shares and 675,000 shares from existing investors. The shares will be priced between $21 and $24 each.
Turbulence in the markets had discouraged the listing of IHS and regional rival Helios Towers in 2018. Helios, a relatively smaller company, completed an IPO in London in 2019, leaving shareholders who subscribed satisfied, with an annualized return of 18 per cent, including dividends.
Including debt, US and European operators like American Tower and Cellnex Telecom are worth over 20 times their forward Earnings before Interest, Taxes, Depreciation, and Amortization (EBITDA), a market report said. This makes IHS quite optimistic about its offering.
Operating towers in the Kalahari Desert or East African savannah, by Helios, also involves the additional hassle of installing power generators and solar panels.
“IHS transmits similar risks. More than half its 30,000 towers are in Nigeria, the continent’s most populous nation but also one of its most turbulent. Oil accounts for around 80 per cent of Nigerian exports, making its currency prone to devaluations. Its government also has a habit of shaking down foreign-owned companies, as South African mobile phone giant MTN – IHS’s main shareholder – can attest.
“This fuzzy signal is reflected in IHS’s valuation. If its adjusted EBITDA keeps growing at the same 21 per cent compound annual growth rate of the past four years, it should reach around $1 billion this year. At $24 per share – the top end of the published price range – its enterprise value would be nearly $10 billion, after factoring in nearly $2 billion of net debt.
“That suggests a modest 10 times multiple and a discount to both Helios and Cellnex, even though all three firms generate about $30,000 of EBITDA per tower,” it added.