Release Date: August 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- IHS Holding Ltd (IHS, Financial) reported a significant increase in adjusted EBITDA by 35% from Q1 2024, indicating strong operational performance.
- The company successfully renewed and extended all tower contracts with MTN in Nigeria through 2032, securing long-term revenue streams.
- IHS Holding Ltd (IHS) achieved a 69% organic growth in revenue compared to Q2 2023, driven by FX resets, CPI escalations, and power adjustments.
- The company reduced its CapEx by 73% year-on-year, reflecting strategic focus on cash generation and high-return projects.
- IHS Holding Ltd (IHS) has approximately $12.3 billion of contracted revenues with an average remaining tenant term of more than eight years, providing financial stability.
Negative Points
- The Naira devaluation significantly impacted reported revenue and adjusted EBITDA, with a 20% decline in revenue year-over-year.
- Despite strong organic growth, the devaluation of the Naira led to a 22% decrease in segment adjusted EBITDA in Nigeria.
- The company anticipates a negative impact of $30 million to $35 million on fiscal year 2024 results due to the new MTN Nigeria contract terms.
- IHS Holding Ltd (IHS) faces challenges in upstreaming US dollars from Nigeria, with uncertainties about sustained dollar availability.
- The judicial recovery proceedings around Oi in LatAm could potentially impact organic growth aspirations in the region.
Q & A Highlights
Q: Can you characterize the overall new lease activity in Nigeria and your broader African profile? Do you expect leasing activity to accelerate this year?
A: Steve Howden, CFO: The quarter demonstrates that fundamental growth characteristics continue. We built 207 new sites, with a significant portion in LatAm. Colocation and lease amendments are primarily driven by the African portfolio, with notable activity in Rwanda and Nigeria. We see steady growth in key markets, although carriers are rationalizing CapEx due to global macro impacts.
Q: Can you provide an update on asset sale discussions? Are there any major deals nearing completion?
A: Steve Howden, CFO: We aim to raise $500 million to $1 billion within a 12-month timeline set in May. Discussions are ongoing, but we will update when there's something concrete to discuss.
Q: Regarding the strategic review, what potential outcomes are you considering for increasing shareholder value?
A: Steve Howden, CFO: We are exploring various opportunities for shareholder value creation, including governance improvements and MTN contract renewals. We are also considering disposals and other shareholder return methods. Sam Darwish, CEO, emphasized the focus on unlocking shareholder value, noting the company's intrinsic value exceeds current market valuation.
Q: What is driving the increase in lease amendments in LatAm?
A: Steve Howden, CFO: The increase is due to customers taking more space on towers. While there was a year-on-year increase, it remains a small part of our overall portfolio.
Q: How are the Oi judicial recovery proceedings affecting your organic growth aspirations in LatAm?
A: Steve Howden, CFO: We've removed Oi from our numbers, resulting in a 1% growth rate. However, without Oi, organic growth is around 12-13%. Any realizations from Oi's recovery would be upside.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
