ECP makes African telecom towers play

Emerging Capital Partners has invested $32m in Africa’s telecoms sector, hoping to capitalise on a growing population and increasing consumerism in the region.

Africa-focused private equity firm Emerging Capital Partners has invested $32 million in African towers company, IHS, which provides infrastructures for use by mobile phones. The firm has a long-standing interest in the mobile phone industry in Africa.

IHS builds and manages mobile phone towers. The mobile phone industry in the region has experienced a boom in growth over the past decade. Managing director at ECP, Bryce Fort said: “In 2000, there were as many mobile phones in Africa as there were people in Washington DC. Now, there are as many mobile phones as people in the entire USA.” ECP expects a similar growth in revenue and profitability in the towers industry as the mobile market in Africa continues to grow. 

As mobile phone operators tighten spending, renting spaces on towers rather than building their own proves more cost effective. On the back of the increased demand for voice and data services such as 3G, Fort predicts the towers market to surge in the coming years.

IHS has towers in Nigeria, Ghana and South Sudan, and is planning to open offices in Uganda and Kenya early next year. Fort confirmed the business hopes to expand into other areas of Africa that have multiple mobile phone operators, which includes most of sub-Saharan Africa. 

This deal comes a year after ECP secured $613 million for its ECP Africa Fund III. This is the first deal the firm has completed so far in 2011. However a source close to the firm noted that its deal pipeline was very strong. As it stands the fund is approximately 50 percent deployed, the source said. 

South African investment bank Investec also provided capital to the business, bringing this fundraising round to a total of $52 million. To date this year, IHS has received $250 million of equity and debt funding. Other investors include the International Finance Corporation and the Netherland’s development bank FMO.