Release Date: November 12, 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 strong organic revenue growth of 49% year-on-year, driven by Forex resets and increased revenue from colocation, lease amendments, and new sites.
- Adjusted EBITDA grew over 3% year-on-year to $246 million, with a margin of 58.5%, highlighting the resilience of IHS's financial model.
- The company successfully renewed and extended all tower contracts with MTN Nigeria through 2032, significantly improving financial visibility and stability.
- IHS Holding Ltd (IHS) has made substantial progress in reducing exposure to power price volatility by moving to power pass-through and power indexation models.
- The company is on track to achieve its 2024 revenue, adjusted EBITDA, and ALFCF guidance, trending towards the upper end of its existing guidance ranges.
Negative Points
- IHS Holding Ltd (IHS) faced significant Forex headwinds, particularly with the Naira devaluing by 52% year-on-year, resulting in a $265 million impact.
- Revenue decreased by 10% year-on-year, reflecting a challenging Forex environment and the impact of the new financial terms with MTN Nigeria.
- The consolidated net leverage ratio increased to 3.9 times, remaining at the higher end of the company's target range.
- The company experienced a slowdown in CapEx investments, mirroring the reduced investment pace of major carriers like MTN and Airtel in Nigeria.
- Despite organic growth, the colocation rate in Nigeria decreased slightly due to tenant churn from a smaller customer.
Q & A Highlights
Q: Have you seen changes in the investments or plans of carriers in Nigeria with the stabilization of the Naira?
A: Sam Darwish, Chairman and CEO, noted that both MTN and Airtel in Nigeria have slowed their CapEx due to currency devaluation but have stabilized as of Q3 2024. They are considering reinvestment in 2025, aligning with IHS's own CapEx slowdown strategy.
Q: How should we think about the new site and discretionary CapEx portions as we end 2024 and move into 2025?
A: Sam Darwish explained that while formal guidance for FY25 is pending, the focus remains on investing in the best projects for maximum returns. Brazil will continue to be a key area for new sites and fiber, with similar trends expected as in 2024.
Q: Can you provide an update on the strategic review process and the progress towards the $500 million to $1 billion proceeds from asset sales?
A: Steve Howden, CFO, stated that while specifics cannot be disclosed, progress is being made, and announcements are expected soon. The range and timing of disposals remain unchanged, with proceeds primarily aimed at debt reduction.
Q: What is the current thinking on the allocation of proceeds from asset sales between debt paydown, buybacks, and dividends?
A: Steve Howden reiterated that the primary use of proceeds will be debt reduction. Share buybacks and dividend policies will be considered, with a focus on extending debt maturities and improving balance sheet flexibility.
Q: What are your thoughts on tenancy growth given the demand for connectivity across core markets?
A: Steve Howden emphasized the importance of considering both tenants and lease amendments, which indicate customer densification. Despite a slight churn in Nigeria, underlying fundamentals remain strong, with continued growth expected.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
