IHS Holding Limited Q3 FY2024 earnings call

Management Statement and Operational Highlights

• Strategic Review: Progressing on unlocking shareholder value, assessing Group-wide costs, CapEx structures, and integrating AI for efficiencies. Examining portfolio markets to achieve $500 million to $1 billion in capital raises for debt reduction, share buybacks, or dividends.
• MTN Nigeria: Renewed and extended all tower contracts through 2032, covering ~13,500 tenancies, lengthened average tenant term to 8.1 years, contracted revenues to $12.3 billion, and reduced power price exposure.
• Financial Performance: Strong adjusted EBITDA grew over 3% y-o-y to $246 million (58.5% margin), ALFCF generated, CapEx optimized. Revised 2024 CapEx guidance down to $270 million to $300 million, confident in achieving 2024 revenue, adjusted EBITDA, and ALFCF guidance.

Segment Performance

• Nigeria: Reported revenue of $242 million in Q3 2024, down 11% y-o-y; organic growth was 87% driven by FX resets and power. Segment adjusted EBITDA was $159 million, a 3.2% decrease from the prior year, but margin increased to 65.6% (up 510 basis points). Lease amendments grew 4.8% y-o-y.
• Sub-Saharan Africa: Towers and tenants increased by 0.9% and 3.4% respectively y-o-y. Revenue decreased 10% due to unwinding power managed services in South Africa, but segment adjusted EBITDA increased 22.3%, with margin rising to 67.5% (up 1780 basis points).
• LatAm: Towers and tenants grew by 8.9% and 6.5% respectively y-o-y. Revenue decreased 13% due to FX movements and OI recovery proceedings. Segment adjusted EBITDA decreased 11%, but margin increased 130 basis points.
• MENA: Towers and tenants grew ~1%; revenue increased 23.8% (19% organic). Segment adjusted EBITDA increased 55.5%, with margin at 63.1%.

Guidance

• Revised full-year 2024 CapEx guidance range down to $270 million to $300 million.
• Confident in achieving 2024 revenue, adjusted EBITDA, and ALFCF guidance, trending towards upper end of ranges.
• Reiterate net leverage target of 3 times to 4 times, expect leverage to start dropping in 2025 driven by adjusted EBITDA growth and cash flow, with disposals supplementing deleveraging. FY 2025 guidance to be announced on next earnings call.

Risks

• Currency Fluctuations: Significant Naira devaluation impact on revenue, though Naira volatility reduced in Q3.
• Power Price Volatility: Efforts made to derisk, but ongoing exposure to power price movements.
• Disposal Uncertainty: Uncertainty in timing and proceeds of strategic asset disposals for capital allocation.

Question and Answer

Q: Update on carriers in Nigeria and CapEx A: Carriers in Nigeria slowed CapEx in 2024 due to Naira devaluation, aligning with IHS's CapEx slowdown; similar trends expected in 2025 with operators planning reinvestment in 2025.

Q: Strategic review progress on $500M to $1B proceeds A: Progressing well, no change in range or timing of disposals; will announce when announceable items are ready.

Q: Asset mix and investor interests A: Diversification goal remains, Nigeria is a fast growth market, assessing various options for shareholder value creation while considering long-term asset mix objectives.

Q: Tenancy growth and CapEx per tower A: Lease amendments and new tenants drive growth; CapEx per tower down 50% in Brazil by changing tower structure, sourcing, and assembly methods to be smarter in building.