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Bus Or Food? The First Crossroad On The Path To Being A Millionaire

Published 8 years ago
By Forbes Africa

If 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 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.

Lagos Nigeria, July 2012: IHS tower sites
Photograph by Mike Goldwater

“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 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 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.

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Related Topics: #Infrastructure, #Issam Darwish, #March 2014, #Nigeria, #Telecommunications.