1.
EPIPHANY
FORBES
ALEX OKOSI
12 | FORBES AFRICA MARCH 2014
PHOTOBYXXX

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MARCH 2014 FORBES AFRICA | 13
Bus Or Food?
The First Crossroad On The
Path To Being A Millionaire
He spent $1 billion last year and is going to invest
$850 million more this year. These are the high
stakes of $200 million-man Issam Darwish who is
swooping on the lucrative African telecom market
and thinks more about Lagos than Lebanon.
ISSAM DARWISH
FORBES/FOCUS
BY ABISOLA OWOLAWI
PHOTOSBYKELECHIAMADI-OBIFORFORBESAFRICA
I
f you are somewhere in Africa
with a cell phone signal right
now, one man’s job is done.
If you’re without one, the
same man promises to hook
you up .This is at the heart
of the business of Issam Darwish, the
Lebanese-Nigerian who grew up in war
and rose from a desk job to become one
of Africa’s powerful telecom tycoons.
When he got his first job, he was
so poor, that his boss had to lend him
$8,000 to buy a car so he could get to
work. From creating billing systems for
a handful of dollars a week to leading
a telecommunications infrastructure
company in Africa—Darwish is now a
man with a wealth of $200 million as
valued by the FORBES wealth unit in
the United States. He has walked a long
road and you believe him when he says
he has a lot longer to walk yet.
Ambitious, maybe, but this is the
hallmark of a driven, self-taught
entrepreneur who once dreamt about
winning the Nobel Prize for physics in
Oslo when he was a teenager.
Darwish is a bubble of energy, one
who hates the rigidity of business suits,
yet wears one well. As he goes down
memory lane while in his corner office
in Lagos, he is as sharp and eloquent as
a business man, yet as relaxed and witty
as a next door neighbor.
It’s a story that began in Beirut in
Lebanon. This is where Darwish was
born on the cusp of the brutal civil war
that was to tear the country apart. He
was born to a fairly wealthy family, but
with no silver spoon in his mouth.
In the turmoil of civil war, Darwish’s
father lost everything. The family
believed education was the way out. His
father took two jobs and his mother did
embroidery work to keep their children
in private schools in Lebanon. Darwish
senior encouraged his children to read
and rewarded them for finishing books.
Luckily, young Darwish was an
inquisitive bright spark. He nurtured
an interest in electromagnetic fields,
quantum mechanics and relativity.
“I was always the best in my school.
I graduated from the best university—
The American University of Beirut in
Lebanon—and I wanted to do physics, I

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FORBES FOCUS — ISSAM DARWISH
FORBES
“As a young person growing up in a war-torn area,
our minds were cultured, but not our existence.”

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MARCH 2014 FORBES AFRICA | 15
loved the sciences. When I did my SATs (the standardized
tests for college admission in the United States), my
grades were so high the dean of engineering called and
encouraged me to do engineering instead. So, I opted for
computer and communications engineering. I was among
the first set of engineers who graduated from that program
with distinction, barely aged 21,” says Darwish.
“I also understood the value of money at an early stage
in life. During the war, I remember my father would give
me some money before I left for school [and] I’d have to
decide whether I would use that money to eat at school
or to take the bus back home. I had to make a decision
between the two every day.”
Darwish is thankful for these realities.
“As a young person growing up in a war-torn area, our
minds were cultured, but not our existence. You’d hear
the fighting, see people
die, you can’t go to school
for weeks because fights
have broken out, you
experience the effects of
war firsthand and you begin to appreciate the basic things
in life, like electricity, water, fresh air and ultimately life,”
he says.
By 1992, he was armed with an engineering qualification
and a desire for more. Darwish toyed with the idea of
furthering his studies with a Master’s degree in the United
States (US). As he applied, he looked for ways to occupy
himself.
As luck would have it, a group of Lebanese businessmen
returned to Beirut with a partnership with MCI—one
of the largest telecoms carriers in the world back then.
They wanted to set up a network in Lebanon and offered
Darwish the job of creating a billing system.
“I joined the team. While I was there, there was also a
satellite station present and I was fascinated with this. I’d
work on the billing system during the day and come back
at night, with the permission of the CEO, just to learn more
about how it works. That was my first hands-on experience
in telecoms. In a short space of time, I could now operate
the station by myself.”
Soon, Darwish was managing the satellite systems at
MCI. He played an instrumental role in setting up the first
Lebanese mobile network, after a GSM licence was won,
in his role as network manager for Libancell—now called
MTC Touch.
Darwish may be Lebanese by birth, but he is a true
Lagosian at heart. His Nigerian citizenship is expected to
come through this year and has already been awarded a
chieftaincy title, ‘The Adimula of Erin Ile’ by the traditional
king, in Kwara State, northern Nigeria. He knows how to
navigate the streets, from Victoria Island to Lekki, with
his eyes closed; he can even hold his own in pidgin—the
informal lingua franca spoken in Nigeria and parts of West
Africa.
“Lebanon is where I come from but Lagos is home.
When I’m away, anywhere in the world, I think about
Lagos more than I think about Lebanon. This is where I
became a man; this is where I’ve lost money, made money,
made friends. Most of my friends are Nigerians. This is
home for me.”
The call of Lagos came many years ago. Following a
streak of successful network set-ups in his region, investors
approached Darwish to set up a mobile network up in
Nigeria; things weren’t going too well with the license
holders and they needed someone to sort it out. This
coincided with another offer from Britain, but Darwish
plumped for Nigeria.
In 1998, he brought in
around 40 expatriates and
trained at least 500 Nigerians
in technical, billing, sales and
marketing in his role as deputy
managing director of Motophone, Nigeria’s first GSM
operator.
“We created a network in six cities, together with
Motorola and Ericsson. We started selling, we had
thousands of people coming to our points of sale, people
started buying… the license was soon revoked however,
due to transitions in political structure that affected the
financial commitments made by the license holders. This
lasted five or six months. We settled our liabilities and left
things there.”
This was an unpleasant setback in a difficult market. In
those days, infrastructure was thin on the ground. It had
400,000 fixed telephone lines and a mere 2,000 to 3,000
cell phones. Telecommunications was mostly for the rich;
power supply was sporadic, security was a problem, the
ports were in chaos and diesel shortages could go on for
weeks.
“Every logistical aspect was a nightmare but we found
a way to set things up. We had to import generators, there
was also a lack of skilled manpower—most of the skilled
Nigerians were out of the country working overseas,” he
says.
In 2001, the Nigerian government privatized
telecommunications and auctioned the licenses. There was
then a need to build sites to power these networks. This
was a big break for Darwish and gave birth to the leading
telecoms infrastructure company, which he co-founded—
IHS.
“We had built some sites in the past. My partner, brother
and I decided to invest some money in this and build a
few sites. In the beginning, I had to borrow money from
“This is not a sexy business.”

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FORBES FOCUS — ISSAM DARWISH
FORBES
my father. My partner invested and we borrowed some
money from the banks with an interest rate of 24%. It was
staggering but that was our seed capital. We, however,
made very good margins because we delivered on time and
delivered quality. Motorola gave us our first contract and
we learnt a lot from these guys. Soon, we started running
the management of the sites as well, the business moved
into site management, which was recurring.”
The cost of setting up these towers back then, was
between $250,000 and $300,000. Today, they range
between $150,000 and
$250,000. To cover itself, a
country like Nigeria requires
around 20,000 of these sites.
Power and security, or the
lack of them, are thorns in
Darwish’s side. Each tower
needs at least two generators, automatic transfer switches,
regulators, a massive supply chain to make sure diesel
is bought at the right price and quality. This alone costs
around $3,000 to $4,000 a month.
IHS currently has around 4,000 towers in Nigeria
and more than 10,000 across Africa, with operations in
Nigeria, Cameroon, Côte
d’Ivoire, Sudan, South
Sudan and recently, Zambia
and Rwanda. It is working
on tripling that number.
The rapid growth in
demand wasn’t expected
in the early years. It
meant, when Nigeria tried
to catch up, there was a
mushrooming of towers.
“In Lebanon for instance,
when we started with the
GSM networks, people
thought we’d have 50,000
subscribers in three years.
We had 350,000 by the end
of the first year. In Nigeria,
people thought about a
million subscribers; by the
time they started selling,
they realized everyone
wanted a phone line. They
started setting the towers
up everywhere without
the right planning. All the
service providers were just
scrambling to have these
towers everywhere, so this
was a good period for us,”
says Darwish.
In the US, the mobile industry was built on the idea of
sharing towers and competitors became partners to lower
their costs. This wasn’t the case in Africa. Darwish’s team
had to convince operators it was the way.
“The idea of sharing didn’t even exist back then. They
all had the capital and the sites, but the management of the
site was a headache. They started pushing the management
aspect to us. We started pushing the idea of sharing. By
2008 and 2009, with the financial crisis, output became
low, capital became scarce
and people started thinking
differently and sharing
became an attractive idea.
It was more innovative and
valuable,” he says.
Darwish is impressed
with the booming growth of the telecommunications sector
in Africa and sees voice calls becoming obsolete.
“The future is the smartphone; this is a fact. Africa has
not caught up yet because the operators need to invest
the capital to ensure that the tablet gets cheaper and
cheaper. Africa won’t progress technologically without
the smartphone and tablet
playing a key role. The
continent has not been
able to build the kind of
infrastructure it requires to
satisfy the penetration levels
in voice and broadband that
it requires. The average age
of the population in Nigeria,
for instance, is about 22 to
23. It is a young population
with a burgeoning middle
class. This massive consumer
market is being created and
growing in size and this
enables us to experience the
great growth pattern and the
need to satisfy and cater for
this group,” says Darwish.
On his work with IHS,
he says: “This is not a sexy
business—it is a hardcore,
roll up your sleeves, be an
engineer, jump into the
mess, see how to fix it, be
patient and connect with the
grassroots type of business
and I love every bit of it.
You’re not going to find a lot
of engineers who are also
“Lebanon is where I come from
but Lagos is home.”
IHS tower
IMAGECOURTESYOFIHS

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MARCH 2014 FORBES AFRICA | 17
Taking Advantage
Of An Opportunity
BY OLUWOLE ABEGUNDE
Access to funds from shareholders has
been vital in ensuring IHS can build
its own infrastructure and successfully
manage infrastructure for its clients. With
the growing pressures on operators to
manage their network traffic and costs, an
opportunity exists for IHS as International
Data Corporation (IDC) expects service
providers to offload their network assets to
third parties like IHS. This allows operators
to focus on their core business—selling
telecoms services—without having to
worry about infrastructure rollout and
maintenance.
The major challenge in the
telecommunications space in Nigeria is the
lack of reliable power supply. An average
cell site is powered by two diesel generators.
The dependence on these generators
increases the operating expenditure for
infrastructure providers and mobile network
operators. The price of diesel cost and
generator maintenance accounts for more
than 70% of the operating expenditure for
a cell site in Nigeria. Security is another
challenge. In the last two years, there have
been cases of persistent vandalism of fiber
cables and theft of diesel generators from
sites.
The downward pressure on tariffs, driven
in part by competitive forces, has seen
operators’ top line revenue year on year
growth rates decrease. This, coupled with
the ever-rising cost of operations has seen
some Nigerian players falling out of the
market or struggling to make investment.
There is also opportunity for growth
in the infrastructure space in Nigeria. As
of October 2013, there were around 121
million active mobile subscribers. Mobile
penetration has reached 87%. These figures,
to a large extent, are made up of multi-SIM
users, meaning that the actual penetration
rate is far less than what is reported. A
sizable market still needs to be addressed
for new cell phones users in Nigeria. The
increase in subscribers is expected to
boost growth in network capacity and
coverage. To capitalize on this opportunity,
more investment in telecommunication
infrastructure is expected in Nigeria in the
long term.
Oluwole Abegunde is a research analyst for
the IDC in West Africa.
good businessmen.”
In 2009, IHS was listed on
the Nigerian Stock Exchange
and over the past year has raised
more than $1 billion of capital
equity from the likes of the IFC,
the sovereign wealth fund of the
South Korean government—the
country’s first deal in Africa—
and Investec in South Africa. In
December, IHS acquired new
towers in Rwanda and Zambia,
through MTN.
Darwish is looking at more
than just telecommunications
and has an eye for investment in
real estate in the US, Beirut and
Dubai.
He is currently involved in
setting up incubator programs
for aspiring tech entrepreneurs
to develop a content platform.
Everything from social
networking, mobile money,
music and fashion using digital
information is his new area of
interest.
“Content is another area
I’m investing in. I’ve created a
team to look into this. The more
power I create on the broadband
side, the more relevant the
content will become.”
Darwish is also engaged in
community upliftment.
“I like to see things being
built. Improving the quality of
people’s lives is what ultimately
drives me. As long as this is your
drive, you’ll always be successful
and this is why anything I invest
in must be something that
involves the transformation of
people’s lives.”
Darwish has founded other
companies in the US and
Middle East, including Vorex—a
software provider for small
enterprises in the US.
Darwish credits a handful
of names that inspired him to
become a successful tycoon.
He says he learnt a great
deal from Raphael Udeogu,
the former managing director
of Motorola in Nigeria, about
proper corporate governance
processes, systems and
operations. Bashir El-Rufai
taught him about having faith
in people and the value of
goodwill. He also refers to his
partner, William Saad, and his
brother, Mo Darwish, as strong
pillars that have been highly
instrumental to the growth and
sustenance of IHS from the
beginning.
“When we started IHS, we
set a goal to be the leading tower
infrastructure service provider
on the continent in 13 years.
We were young and passionate,
and it is due to Issam’s passion,
leadership, wisdom and skills
in all areas of management,
engineering, finance and
relationship management… that
we were able to achieve all we
have,” says Saad.
IHS, with an average monthly
turnover of $28 million and
which now employs people of
19 different nationalities, has
ambitious plans to become the
largest tower leasing operator on
the continent.
“We’ll be investing heavily in
Nigeria this year. We invested
roughly $1 billion last year, in
Nigeria, Cameroon and Ivory
Coast in building our sites and
buying from operators. This
year, we’ll probably invest more
than $850 million and are also
looking at Zambia, Rwanda,
Senegal and Guinea. I want to
drive IHS and content to the
next level.”
Through war, education,
bureaucracy and new terrains,
Darwish has emerged as a
formidable warrior in the
telecommunications industry
and has ambitious plans to push
the envelope even further.