DPI and Verod plan to triple Pan African Towers’ footprint

PAT has opportunity to grow thanks to a deficit of towers in Nigeria as well as the country’s growing use of mobile data, says DPI’s Adefolarin Ogunsanya and Verod’s Daniel Adeoye.

Adefolarin Ogunsanya of DPI and Daniel_Adeoye of Verod Capital
Adefolarin Ogunsanya of DPI and Daniel Adeoye of Verod Capital

Development Partners International and Verod Capital plan to triple the footprint of Pan African Towers, PE Hub Europe can reveal. The private equity firms announced this morning that they were buying 100 percent of the Nigerian digital infrastructure company, which operates and leases towers to mobile network operators (MNOs).

A need for towers to meet Nigeria’s growing mobile phone usage and the adoption of newer mobile phone operating standards are set to aid the company’s growth, while a programme of decarbonisation will also come into play, said DPI partner Adefolarin Ogunsanya, and Verod Capital principal and head of investments Daniel Adeoye.

“Ideally we want to triple our footprint over the next three-to-five years,” said Ogunsanya at London-based DPI. “If we can do more, that would be great. And if there are opportunities to do other consolidations in the market, we’ll look into it.”

Organic growth will be the focus. Nigeria has over 220 million mobile phone subscriptions, according to the country’s Communications Commission, and the United Nations expects its population to grow from 224 million to nearly 375 million by 2050.

But the infrastructure has struggled to keep up.

“There’s a significant deficit of towers that need to be built in Nigeria,” said Ogunsanya. “To adequately serve the existing number of subscribers, we need an additional 30,000 towers. Given the number of towers that need to be built just to meet existing demand, we think that over the next few years we can ramp up the number of towers that we operate and add value to the ecosystem.”

Of the roughly 40,000 towers in Nigeria, IHS Towers is the leader with more than 16,700 sites, according to its website, while number two player American Tower Corporation’s website lists around 7,700. Pan African Towers has around 800, having been established in 2017.

Although IHS was founded in Nigeria and still counts the country as its largest market, its headquarters are now in London and it listed on the New York Stock Exchange in 2021. It has also sought to diversify in recent years, including acquisitions in South America and South Africa, while in September Africa’s biggest mobile firm, MTN Group, said ATC would take over its Nigerian tower operations from IHS. ATC is headquartered in Boston, Massachusetts and operates in several markets where it has more towers than in Nigeria.

That PAT is, like Verod, headquartered in Lagos and predominately Nigerian-led and operated should play to its favour, said Adeoye.

“Unlike the larger TowerCos in Nigeria, PAT, as the number three player is solely focused on Nigeria. We’re going to be in a unique position where we can tell the MNOs and the regulator that we’re here, we’re on the ground, we continue to believe in this market, we now have the capital required and we want to hit the ground running.”

Tower renewal

DPI and Verod’s decarbonisation plan will involve adding solar panels and lithium batteries. The companies will also seek to connect as many towers as possible to the grid. When the mobile industry began in the early 2000s, the MNOs tended to build towers with generators to avoid having to use Nigeria’s unreliable electricity grid. Today, although the grid still does not produce sufficient power to meet all the country’s needs, around 20 percent comes from hydro sources, according to the US International Trade Administration, making it a potential contributor to decarbonisation.

PAT will also contract companies to manage power in the sites, while DPI and Verod plan to invest in technology to track power consumption, ensuring that the sites using generators use generators with the correct capacity.


Further tailwinds are likely from government. In 2019 it launched the National Broadband Plan 2020-25, which aims to deliver data download speeds of about 25Mbps in urban areas and 10Mbps in rural areas and cover at least 90 percent of the population.

There is still plenty of work to be done on that front.

“The last administration spent billions of dollars improving the rail network,” said Adeoye. “But if you get a train to a city an hour away from Lagos, half the time your calls are going to drop. The regulator has made it very clear that we need to build a lot more towers across those transportation routes. We also have points around the northern part of the country where, even though there are challenges around security, the economies and demand for voice and data continue to grow.

“If the broadband policy of the government is going to work, a lot of it is going to lean on the MNOs and the digital infrastructure they rely on.”

Even in the more urban areas of the country there is strong growth, with voice revenue for the MNOs growing by about 10 percent year on year and data growing by about 50 percent, he added.

As Nigerians move onto newer mobile standards more towers will need to be built – while existing ones will grow in value. Today, the country is predominantly on 2G and 3G and is slowly transitioning into 4G, said Ogunsanya. “As you move to the next generation of antennas, your area of coverage decreases. So, the transition from 2G to 3G to 4G has actually increased the need for more towers and in-build solutions which aligns with our investment thesis and creates an attractive growth opportunity for PAT.”

Adeoye added: “If you move from 4G to 5G, you just add 5G antennas. So, colocation goes up and unit economics continue to improve, you have higher EBITDA margins, and a better exit for DPI and Verod.”

That better exit will likely be via IPO, said Ogunsanya. “We would want the optionality to list the company on a local exchange, probably in a dual listing in Nigeria and somewhere else. But if a strategic sees us as an attractive target we’ll consider it.”

DPI has experience on that. It had been looking to list Eaton Towers, another African towers business, in 2019 but instead sold the company to ATC for an enterprise value of around $1.85 billion.