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THE Group Managing Director/Chief Executive of First City Monument Bank Plc (FCMB) Ladi Balogun has called for more funding of the Information and Communications Technology (ICT) sector of the economy, in order for it to grow significantly.
Specifically, Balogun said at $250,000 per tower location site, over $2.5 billion would be required on attaining 10,000 additional sites in the next five years ($500 million per annum) if the sector is to grow significantly.
Delivering a paper titled: "Co-Location-the next big thing" in Lagos recently at a forum organised by the Nigerian Communications Commission (NCC) and the Telecom Announcer Associates (TAA) with the theme: "Co-location and sharing of telecommunications infrastructure", Ladi said Information and Communications Technology sector is one of Nigeria's most vibrant and successful sector that has contributed greatly to the development of the economy.
However, attaining the 10000 additional sites, Balogun opined that a sale-lease-back option might be cheaper upfront, where the acquired sites may require significant retrofitting sites to accommodate up to four tenants.
On the contribution of the bank to the sector, the FCMB boss said the bank has had deep understanding of telecoms and towers sector, having arranged over N20 billion of financing for the Towers sector in the last 24 months through syndication and bi-lateral loans. Provided start up/early stage financing to four leading wireless operators (in the GSM, CDMA and Wimax spaces).
He added that as a leading issuing house and investment banking adviser having advised on telecoms M&A and successfully raised over $500 million of capital for the sector.
Ladi explained that opportunity exists for Nigerian companies to expand across the region and become continental champions in ICT, stressing that as the sector grows, infrastructure requirements will equally grow.
He reaffirmed that they are a leading provider of technology-based transaction and have a banking solution to handle payment collections and liquidity management for the sector.
To him, the financing challenges in the sector included tenancy ratios; corporate governance; market position (market leaders will have significant cost advantage with lower financing costs); performance against Service Level Agreements can affect cash flows and debt service; management depth and experience enhances credit quality;
Deep-pocketed equity sponsors and that the current financing climate doesn't support highly leveraged new entrants - significant equity is required.
Furthermore, he said trends supporting co-location would include significant population growth, considerable GDP and Disposable Income growth, increased wireless penetration, significant subscriber growth, competitive mobile market, increased regulatory pressures and favourable unit economics.