IHS Holding Ltd. Reports Strong Earnings Amid Challenges

Ihs Holding Ltd. ((IHS)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for IHS Holding Ltd. was marked by a positive sentiment, underscored by robust revenue and EBITDA growth, strategic initiatives, and effective debt management. These positive aspects managed to overshadow challenges such as currency volatility and regional difficulties, painting an optimistic picture for the company’s future.

Strong Revenue and EBITDA Performance

IHS Holding Limited showcased impressive financial results with a 48% organic revenue growth for 2024 and a 6.5% constant currency growth. The company’s adjusted EBITDA reached $928 million, boasting a margin of 54.3%, which is an increase of 100 basis points compared to the previous year. This performance highlights the company’s strong operational efficiency and market position.

CapEx Optimization and Cash Flow Improvement

The company achieved significant CapEx optimization, reducing it by 56% year-over-year. This reduction contributed to an adjusted levered free cash flow (ALFCF) of $304 million, surpassing the company’s guidance. This improvement in cash flow underscores the company’s effective financial management strategies.

Leverage Reduction and Strategic Refinancing

IHS successfully reduced its net leverage ratio to 3.7 times from 3.9 times, thanks to strategic refinancing efforts. The company refinanced $1.6 billion of debt to extend maturities and shift debt into local currencies, which is expected to provide greater financial stability and flexibility.

Successful Asset Disposal

The sale of IHS Kuwait operations at 14.2 times adjusted EBITDA after leases highlights the potential undervaluation of IHS assets. This strategic move not only provided immediate financial benefits but also underscored the company’s ability to capitalize on asset value.

Contract Renewals and Revenue Visibility

IHS extended commercial contracts with key customers MTN and Airtel, covering over 25,000 tenancies. With 72% of group revenue renewed or extended, the company has improved its financial visibility, ensuring a steady revenue stream for the future.

Negative Revenue Impact from FX Volatility

Despite strong organic growth, IHS reported a 14% year-on-year revenue decline in Q4 2024 due to significant naira depreciation and new financial terms with MTN Nigeria. This highlights the challenges posed by currency volatility on the company’s financial performance.

Decreased Colocation Rate in Nigeria

The colocation rate in Nigeria decreased to 1.56 times from 1.59 times in Q4 2023, attributed to reintegrated towers and tenant churn. This decline indicates potential challenges in maintaining tenant occupancy rates in the region.

Higher Interest Costs

The adjusted levered free cash flow was negatively impacted by increased interest costs following the November bond refinancing. This increase in interest expenses highlights the cost implications of the company’s refinancing activities.

Partial Revenue Decline in LatAm

The LatAm segment experienced an 18% revenue decline due to foreign exchange movements and reduced revenue recognition from Oi. This decline underscores the impact of external factors on regional performance.

Forward-Looking Guidance

Looking ahead, IHS Holding Limited expects continued organic revenue growth, increased adjusted EBITDA, and ALFCF for 2025. The company aims for further deleveraging through asset disposals and has highlighted strategic initiatives such as contract extensions with key customers, which are expected to bolster cash flow generation and financial stability.

In conclusion, the earnings call for IHS Holding Ltd. painted a positive picture of the company’s financial health and strategic direction. Despite challenges such as currency volatility and regional revenue declines, the company’s strong revenue growth, effective debt management, and strategic initiatives provide a solid foundation for future success.