IHS Holding Limited Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Financial Performance: 2024 saw strong financial results with revenue, adjusted EBITDA, and ALFCF ahead of guidance. CapEx was below expectations, and net leverage ratio decreased.
• Strategic Review Progress: Achieved elements of strategic review, including extending commercial contracts, reducing CapEx, and portfolio review targeting $500M-$1B in proceeds. Capital allocation focused on debt reduction and potential share buybacks/dividends.
• Refinancings and Upstreaming: Significant refinancings extended debt maturities and shifted debt to local currency. Naira strengthening aided upstreaming of $271 million from Nigeria in 2024. Disposal of Kuwait operations at 14.2x adjusted EBITDA.
• 2025 Outlook: Guidance implies continuation of trends with organic revenue growth, improved adjusted EBITDA margin, and ALFCF generation, excluding Kuwait disposal.

Segment Performance

• Nigeria: Fourth quarter 2024 revenue grew ~62% organically, driven by FX resets. Full year 2024 saw upstreaming of $271 million from Nigeria. Adjusted EBITDA in Nigeria decreased 22.5% year-on-year, with margin down 250 basis points.
• Sub-Saharan African segment: Revenue was broadly flat, while segment adjusted EBITDA increased 29.6% year-on-year, with margin up 1,480 basis points to 65.1%.
• LatAm segment: Towers and tenants grew 7.9% and 7.2% respectively, but revenue declined 18% due to FX movements and Oi's judicial recovery. Segment adjusted EBITDA decreased 10%, but margin increased 750 basis points.
• MENA segment: Completed disposal of Kuwait operations in December 2024, deconsolidated from Q1 2025, with MENA segment revenue in 2024 at $45 million.

Guidance

• Revenue: Expected $1.68B-$1.71B in 2025, implying 12% organic growth midpoint.
• Adjusted EBITDA: Expected $960M-$980M, implying 4% growth midpoint.
• ALFCF: Expected $350M-$370M, implying 18% growth midpoint.
• CapEx: Range $260M-$290M, focusing on capital deployment and cash flow generation.
• Leverage: Net leverage target 3x-4x, expecting to be in the bottom half of the range by year end due to adjusted EBITDA growth and cash flow generation.

Risks

• Geopolitical: No material impact from DRC's geopolitical situation on Rwanda operations.
• FX Volatility: Moderated assumptions in 2025 guidance, but continued monitoring of naira devaluation.
• Dollar Availability: Uncertainty around sustained dollar availability in Nigeria affecting upstreaming.

Question and Answer

• Q: Update on Airtel new tenancies in Nigeria and timing of stock buybacks/dividends? A: Airtel contract flowing nicely with colocation and 5G lease amendments, no specific guidance on numbers. Stock buybacks/dividends under evaluation, with focus on asset disposals first for debt reduction.
• Q: Portfolio optimization progress and appetite for acquisitions? A: Target $500M-$1B in asset disposals, not currently focused on acquisitions. Progress made with Kuwait disposal, still work to do on portfolio optimization.
• Q: CapEx breakdown and working capital expectations? A: ~1/3 of CapEx is maintenance, with midpoint of CapEx range having ~$85M-$90M maintenance CapEx. Working capital expected flat to positive in 2025, with Q4 2024 showing improvement reversing prior outflows.
• Q: Risk monitoring in Rwanda? A: No material impact on business from Rwanda's geopolitical situation, with no operational, financial, or FX impact noted.