IHS Towers have released their carbon reduction roadmap including a commitment of US$214mn by 2024 under Project Green. Long an investor in green solutions, the 10th largest towerco in the world's Project Green formalises its place on the list of international towercos that have committed to tackling their carbon emissions footprint as ESG becomes a core part of the tower industry.
About the Carbon Reduction Roadmap
IHS Towers has announced its carbon reduction roadmap, a comprehensive strategy for decreasing Scope 1 and 2 emissions by 50% by 2030. The towerco expects to spend US$214mn by 2024 under Project Green, the next significant step its roadmap, and to deliver annual Recurring Levered Free Cash Flow (FLFCF) savings of US$77mn in 2025. This is expected to generate an implied return of 30% as a result of cost-savings. Profit, people and planet all benefiting.
IHS Towers have also taken the opportunity to incorporate a new fifth sustainability value focusing on health and safety, security and the environment to further embed these goals throughout the business. Sam Darwish, Chairman & CEO of IHS Towers, commented “we believe that our business model is inherently sustainable in that we deliver shared infrastructure solutions in emerging markets that promote digital connectivity and inclusion and improve the lives of the communities we serve. However, I believe that the true benefits of mobile connectivity can only be realized if we and our sector continue to develop in a socially and environmentally responsible manner. Our Carbon Reduction Roadmap is the next step in our journey to reduce our carbon footprint by setting tangible emissions targets.”
IHS Towers started in 2001 as a Nigerian engineering firm building and then maintaining towers for MNOs before launching colocation services in 2009. Over the last 20 years IHS has made a series of acquisitions which propelled the firm to become one of the world’s largest emerging markets-focused telecom infrastructure providers and listed on the NYSE. IHS Towers now manage 30,694 towers across 6 African markets; Nigeria, South Africa, Ivory Coast, Zambia, Cameroon and Rwanda. While still the largest in Africa, IHS Towers are also a global towerco with 1,508 towers in Kuwait and 7,195 towers across South America including Brazil, Colombia and Peru.
Sustainability in the tower industry
ESG has made staggering progress in the telecom industry, moving from a fringe issue a few years ago to becoming a core strategic focus for operators, towercos and investors. MNOs are demanding sustainability metrics and initiatives from their towerco partners while investors start to greenify their portfolios. In response, many of the major towercos have released GHG emissions reductions and renewable energy targets including American Tower, Cellnex, China Tower, Crown Castle, DigitalBridge, edotco, Helios Towers, INWIT, Phoenix Tower International, Protelindo, Summit Digitel and Vantage Towers. IHS Towers has joined this growing list, helping to drive sustainability and investment in renewable energy to tackle the tower industry’s rising carbon footprint.
Tackling growing emissions in African telecoms
Carbon emissions are particularly high for Sub-Saharan African towercos, where power provision is a staple of the tower industry. Poor energy grids, off-grid sites and rural networks mean towercos operate a massive network of on-site power generators and fuel logistics, often providing power-as-a-service to MNOs. IHS Towers’ most recent acquisition of MTN South Africa’s portfolio back in June for 5,701 towers included a Power-as-a-Service arrangement for all 13,000 sites where MTN South Africa is a tenant. The post-COVID surge in data demand combined with the ongoing energy crisis has led fuel prices to surge up to 140% in some markets. Energy management now tops the priority list for towercos as high oil prices and challenging diesel supply chains have pushed the industry to explore battery, solar and electrification options.
IHS Towers’ Project Green is one of numerous initiatives from African towercos to tackle rising energy opex as well as reduce their carbon emissions footprint. Airtel recently partnered with American Tower to implement new green site specifications to future new builds and the towerco has invested around US$300mn in energy efficiency improvements over the last few years. Helios Towers launched Project 100, a US$100mn investment in green energy solutions between 2022-30, as part of their carbon reduction roadmap. Smaller independent towercos are also heavily investing in renewable energy; Atlas Towers are deploying solar and battery solutions on their rural sites in Kenya while rural specialist AMN is exploring mini-grid solutions to bring clean energy to telecom sites and surrounding villages.
With capex needs to reduce carbon emissions rising, ESCOs may become a popular alternative for towercos to hit their emissions targets. ESCOs bring investment in green solutions and as a result have received substantial financial backing from investors who are starting to recognise their value in providing the renewable energy needed. Orange would have been unable to meet its target to source 50% of its energy from renewables by 2025 had it not been for investments made by ESCOs. IHS Towers itself works with ESCOs in Nigeria to deliver on new energy investments.
Africa will be a core market for ESCO expansion as the tower industry moves into the off-grid rural space where logistics and maintenance will be more challenging than ever. Towercos are caught between their ambitious carbon emissions roadmaps on one hand, and aggressive portfolio expansion on the other. ESCOs bring investment in green solutions so that towercos don’t have to decide whether to deploy capex in carbon reduction solutions or drive network rollout.
Next steps for ESG
The towerco model has always been inherently sustainable by encouraging MNOs to share passive infrastructure and improve the efficiency of telecom networks. With governments, investors and MNOs all implementing their own targets and sustainability agendas towercos will need to adapt to the demands of their customers, shareholders and partners. IHS Towers’ US$214mn Project Green and carbon reduction roadmap is part of a broader industry trend.
With towercos around the world implementing emissions reduction targets and goals, the next step will be to standardise reporting across the ecosystem. Towercos now have dozens of environmental KPIs, IHS Towers alone having over 60, but these are not yet coordinated with other towercos in the region or within the broader ecosystem. This will become more important as carbon emissions targets shift from Scope 1 to Scopes 2 and 3 which will require more coordination and standardised reporting with suppliers and throughout the supply chain.
