IHS Towers has agreed to sell its Kuwaiti business back to Zain Group, more than five years after its pioneering sale and leaseback deal ignited the Middle East's towerco industry. The terms of the transaction value IHS Kuwait at US$230mn, implying a Adjusted EBITDA multiple of 14.2x.The towers were acquired at a valuation of US$165mn in 2019, in which Zain retained a 30% stake in the new operation.
Under the terms of the transaction, Zain has agreed to increase its 30% ownership of IHS Kuwait Limited to 100%, at an equity value for the remaining 70% stake of US$134 million. IHS Kuwait Limited will continue to provide independent tower infrastructure services within the Kuwait market. In addition to the 1,675 sites owned by IHS Kuwait, an additional approximately 700 sites are managed for other owners.
The 14.2x multiple represents a significant premium compared to the current valuation multiple of IHS Towers. The sale is part of IHS Towers' ongoing strategic review targeted at shareholder value-creation options nd the proceeds will primarily be utilised to reduce company debt.
Sam Darwish, Chairman & CEO, IHS Towers, commented, “Today’s announcement forms part of our wider ambition to drive shareholder value and enhance our balance sheet. The transfer of IHS Kuwait to Zain, the largest mobile network operator in Kuwait, not only highlights the significant value contained within our portfolio but will also allow us to further reduce our net leverage.”
Last month Ooredoo published a fresh timeline for their tower transfer to TASC Towers. Ooredoo Kuwait's sites are not due to be transferred to TASC Towers before H2 2025, and Zain may now plan to also incorporate IHS Kuwait's towers into the new pan-region towerco. A combined Kuwaiti entity would own an estimated 3,889 sites.
Commenting on the transaction, Bader Al Kharafi, Zain Vice-Chairman and Group CEO said that this transaction will “complement our ground-breaking deal with Ooredoo to acquire and merge approximately 30,000 towers. The aim of our sustainable and independent operating model is to provide passive infrastructure as a service, supporting the reduction of MENA’s carbon footprint and empowering the region’s digital future.”
However, the Zain towers in Kuwait are not currently part of the plans for TASC Towers and will need to be incorporated into the business. Kuwait joins Iraq as one of the markets where Ooredoo and Zain can create significant synergies by merging their passive telecom infrastructure.
The transaction is subject to customary closing conditions, including government and regulatory approvals, and is expected to close in the first half of 2025.
