Release Date: May 20, 2025
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 strong start to 2025 with solid growth across key metrics such as revenue, adjusted EBITDA, and ALFCF, while reducing total CapEx.
- The company achieved 26% organic revenue growth, driven by increased revenues from co-location, lease amendments, new sites, and CPI escalators.
- Adjusted EBITDA reached $253 million with a margin of 57.5%, marking a significant improvement compared to the previous year.
- IHS Holding Ltd (IHS) successfully reduced its consolidated net leverage ratio to 3.4 times, down from 3.7 times at the end of 2024.
- The company announced the sale of IHS Rwanda for an enterprise value of $274.5 million, achieving a transaction multiple of 8.3 times adjusted EBITDA, which is higher than the IHS Group multiple.
Negative Points
- The company faced a decline in both towers and tenants by approximately 3% and 1% respectively, year over year, primarily due to the divestitures of towers in Kuwait and Peru.
- The impact of the renewed and extended contracts with MTN Nigeria, including associated site churn, continues to affect comparisons.
- Revenue growth was partially offset by the 14% depreciation of the Nigerian Naira against the Dollar.
- The company anticipates a step down in ALFCF in the second quarter due to the timing of interest payments and maintenance CapEx plans.
- The sale of IHS Rwanda, while beneficial, indicates a strategic shift that may reduce future growth opportunities in that market.
Q & A Highlights
Q: Can you confirm if the Q1 performance was in line with your expectations, and what are the risks for the remainder of 2025?
A: Yes, the Q1 performance was in line with our expectations, with a strong start to the year. We benefited from a favorable FX tailwind in Nigeria and slower-than-expected churn from MTN Nigeria. Looking ahead, while the macroeconomic environment is uncertain, our business fundamentals remain strong. We are monitoring global macroeconomic factors but remain confident in our guidance for 2025. - Steve Howden, CFO
Q: Regarding the asset sale program, does the sale of IHS Rwanda indicate a shift in strategy?
A: We have made significant progress towards our strategic goals, including asset disposals. While we have completed initial targets, we will continue to evaluate opportunities to unlock shareholder value, including potential disposals. Our focus remains on profitability and cash flow generation. - Sam Darwish, CEO
Q: Can you provide details on the organic growth and financial outlook for the Rwanda portfolio compared to the rest of your portfolio?
A: The Rwanda business has a lease-up rate of about 2.05, with growth potential in digitalization and 4G/5G rollout. Compared to other SSA segments, Rwanda and similar markets are expected to see double-digit growth, while South Africa is slower. Overall, we aim for double-digit organic revenue growth, with higher growth in EBITDA and ALFCF. - Steve Howden, CFO
Q: What is the plan for capital returns to shareholders, and how do you prioritize debt reduction versus buybacks or dividends?
A: Our immediate focus is on increasing profitability, cash flow, and reducing debt. We recently paid down a high-interest term loan in Nigeria. As we progress, we will evaluate capital allocation options, including buybacks and dividends, likely towards the end of this year or early next year. - Steve Howden, CFO
Q: Regarding the FX resets in Nigeria, is there a catch-up effect expected from previous quarters?
A: Our contracts in Nigeria reset quarterly based on currency movements, so there is no catch-up effect from previous quarters. The resets are current and reflect the latest currency rates. - Steve Howden, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
