IHS Holding Limited Reports Fourth Quarter and Full Year 2024 Financial Results

FULL YEAR 2024 FINANCIAL RESULTS AHEAD OF GUIDANCE

SIGNIFICANT PROGRESS MADE DELIVERING STRATEGIC REVIEW

LONDON–(BUSINESS WIRE)–IHS Holding Limited (NYSE: IHS) (“IHS Towers” or the “Company”), one of the largest independent owners, operators, and developers of shared communications infrastructure in the world by tower count, today reported financial results for the fourth quarter and full year ended December 31, 2024.

CONSOLIDATED HIGHLIGHTS – FOURTH QUARTER AND FULL YEAR 2024

The table below sets forth the select financial results for the three months and twelve months ended December 31, 2024 and December 31, 2023:

FOURTH QUARTER 2024

Financial Highlights

• Revenue of $437.8 million increased 4.2% compared to the third quarter of 2024 with continued growth in revenue from Colocation, Lease Amendments and New Sites, more than offsetting the slight depreciation of the Nigerian Naira (“NGN”) versus the U.S. dollar (“USD”)
• Revenue decreased 14.1% year-on-year and increased 39.3% on an organic basis. Organic growth was driven by 9.2% Constant Currency⁽¹⁾ growth with the remainder a result of foreign exchange (“FX”) resets and power indexation, which helped to mitigate the non-core decline of 53.1% primarily driven by the 50.0% NGN devaluation, the majority of which occurred during the first quarter of 2024
• Adjusted EBITDA of $246.4 million (down 10.1% year-on-year) reached an Adjusted EBITDA Margin of 56.3%, an increase of 250 basis points year-on-year, driven by continued financial discipline
• Income for the period was $243.1 million of which $169.9 million related to unrealized FX gains
• Adjusted Levered Free Cash Flow (“ALFCF”) of $107.1 million with cash from operations of $348.8 million
• Capital expenditure (“Total Capex”) of $82.6 million, down 36.8% year-on-year, reflecting actions being taken to improve cash generation
• Full year 2024 financial results ahead of guidance across all metrics
• Consolidated net leverage ratio⁽²⁾ of 3.7x, down 0.2x from the third quarter of 2024, within the target of 3.0x-4.0x

Strategic and Operational Highlights

• Completed the disposal of IHS Towers’ 70% interest in IHS Kuwait Limited at an Enterprise Value⁽³⁾ of $230 million as part of the ongoing strategic review targeted at shareholder value-creation options
• Extended maturity profile and shifted more debt into local currency through a $439 million equivalent dual-tranche term loan with proceeds used to repay existing $430 million term loan due to mature in October 2025
• Raised $1.2 billion from the issuance of dual tranche senior notes, with proceeds used to refinance in part the Group’s shorter maturity notes, reducing shorter term maturities due in 2026 and 2027
• Reduced volatility of the NGN compared to earlier in the year, with 8.0% appreciation versus the USD during the quarter. Continued USD availability, with $153 million upstreamed from Nigeria alone in the quarter
• Continued organic growth in Towers (39,229) and Tenants (59,343) reaching a Colocation Rate of 1.51x at the end of the fourth quarter. Lease Amendments increased to 39,671 during the period

(1) “Constant Currency” combines the impact from CPI escalation, New Sites, new Colocation, new Lease Amendments, fiber and other revenues, as captured in organic revenue. Refer to “Item 5. Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024 for the definition of organic revenue and additional information.

(2) Refer to note 4(e) in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024 for further information on the calculation of this figure.

(3) Enterprise Value” is defined as anticipated cash consideration to be received (as of December 2, 2024, the date of transaction announcement) plus borrowings less cash in the business and stated for a 100% shareholding. Refer to note 31.2 in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024 for further information on the disposal of the Kuwait business.

FULL YEAR 2024

Financial Highlights

• Revenue of $1,711.2 million decreased by 19.5% (and increased by 48.1% on an organic basis) year-on-year, primarily driven by the non-core impact of the 57% devaluation of the Nigerian Naira
• Organic revenue growth was driven by 6.5% Constant Currency growth, with continued growth in revenue from Colocation, Lease Amendments and New Sites, with the remainder a result of FX resets and power indexation
• Adjusted EBITDA of $928.4 million reached an Adjusted EBITDA Margin of 54.3%, an increase of 100 basis points year-on-year, reflecting continued cost control
• Loss for the period was $1,644.2 million of which $1,610.7 million related to unrealized FX losses
• ALFCF was $304.2 million with cash from operations of $775.9 million
• Total Capex of $255.9 million was down 56.3% year-on-year, reflecting a narrowed focus on capital allocation

Strategic and Operational Highlights

• Initiated strategic review in March 2024 targeted at shareholder value-creation options with significant progress made:

• Material commercial progress including the renewal and extension of all MTN tower MLAs and extension of Airtel Nigeria MLA, covering approximately 72% of group revenue
• Reduced risk in operating model by materially reducing exposure to power prices, with expectation to result in reduced earnings volatility. Included introducing power indexation to use fees with MTN in Nigeria, and unbundling the power Managed Services contract with MTN in South Africa
• Significant advances made on balance sheet strategy through extending maturity profile and shifting more debt into local currency
• Disposal of IHS Towers’ 70% interest in IHS Kuwait Limited at an Enterprise Value of $230 million, highlighting the value within the Group’s wider portfolio of assets

• Amended articles of association to better align governance framework with that of mature US listed companies
• Continued USD availability, allowing us to source and upstream $271 million from Nigeria alone during the year

Sam Darwish, IHS Towers Chairman and Chief Executive Officer, stated, “We’re reporting a strong performance in the fourth quarter, with our key metrics revenue, Adjusted EBITDA and ALFCF all ahead of our guidance, while Total Capex was below expectations, and we saw a drop in our consolidated net leverage ratio. We believe our positive momentum reflects both the continued strong secular trends we are seeing across our business, a more stable macroeconomic environment, as well as the significant commercial and financial progress we have made during 2024 as part of our ongoing strategic review. We have de-risked our business through extending commercial contracts with Key Customers into the next decade, reduced our exposure to power prices, extended our debt maturities and completed some of our disposals target.

Looking to 2025 and beyond, we remain excited by the strong structural growth opportunities across our footprint. We believe we are well placed to leverage our market leading positions and support growing demand for our critical communications infrastructure, with growth underpinned by continued 5G deployment across our markets and an improving backdrop within our largest market Nigeria after recent carrier tariff rate increases. As we enter 2025, we remain focused on further enhancing our profitability and cash flow generation, as can be seen in our FY25 guidance, and are committed to further strengthening our balance sheet, supported by potential further select asset disposals, allowing us to deliver increasing returns for all our stakeholders.”

Full Year 2025 Outlook Guidance

The following full year 2025 guidance is based on a number of assumptions that management believes to be reasonable and reflects the Company’s expectations as of March 18, 2025. Actual results may differ materially from these estimates as a result of various factors, and the Company refers you to the cautionary language regarding “forward-looking” statements included in this press release when considering this information.

The Company’s outlook is based on the following:

• Organic revenue Y/Y growth of approximately 12% (at the mid-point)
• Average foreign currency exchange rates to 1.00 U.S. dollar for January 1, 2025, through December 31, 2025, for key currencies: (a) 1,640 Nigerian Naira; (b) 5.90 Brazilian Real (c) 0.96 Euros (d) 18.50 South African Rand
• No contribution from Kuwait and Peru operations sold during 2024
• Revenue withholding tax in Nigeria reduced from 10% to 2% effective January 1, 2025
• Approximately 500 Build-to-suit sites, of which approximately 400 sites in Brazil
• Consolidated net leverage ratio target of 3.0x-4.0x

RESULTS OF OPERATIONS FOR THE FOURTH QUARTER AND FULL YEAR 2024

Impact of Nigerian Naira devaluation

Following the steps taken by the Central Bank of Nigeria, the Naira devalued between the period immediately prior to the announcement and the month end rate as of June 30, 2023. The Naira continued to devalue in the second half of 2023 and in January 2024, there was a further significant devaluation. During the second and third quarters of 2024, the Naira continued to devalue but at a significantly slower rate as compared to the first quarter of 2024. During the fourth quarter of 2024, this trend reversed resulting in an appreciation of the Naira closing rate at the end of the fourth quarter compared to the end of third quarter of 2024.

In November 2024, the Central Bank of Nigeria directed authorized dealers to use a new trading platform – Bloomberg BMatch as the Electronic Foreign Exchange Matching System (“EFEMS”) for foreign exchange related activities. It is expected the platform would enhance the integrity and operational efficiency of the foreign exchange market by providing greater price discovery.

Set out below are the closing and average rates for the Naira currency relevant to these financial statements:

Due to the Naira devaluation, Revenue and segment Adjusted EBITDA in the fourth quarter of 2024 were negatively impacted by $259.0 million and $155.2 million, respectively, compared to the same period in 2023. In the fourth quarter of 2024, the foreign exchange resets in some of our contracts partially offset these impacts. However, the appreciation of the Naira in the fourth quarter of 2024 resulted in unrealized foreign exchange gains of $166.9 million on USD denominated intercompany loans advanced to our Nigerian operations (partially offsetting the unrealized losses in the previous quarters of 2024). The unrealized gains and losses are recorded in finance costs, however Group net assets are not impacted since equal and opposite gains and losses are recorded in equity on the retranslation of the Nigerian operations’ assets and liabilities (which include these loans). The assets included property, plant and equipment and the devaluation of the Naira from December 31, 2023 to December 31, 2024 resulted in a $261.5 million reduction in their carrying value.

Results for the three months ended December 31, 2024 versus 2023

Revenue

Revenue for the three months ended December 31, 2024 of $437.8 million declined 14.1% year-on-year, driven primarily by the devaluation of the Naira versus the U.S. dollar. Organic revenue⁽¹⁾ increased by $200.5 million (increased 39.3%) year-on-year during the fourth quarter driven primarily by foreign exchange resets, power indexation, escalations, and continued growth in revenues from Tenants, Lease Amendments and New Sites. This growth was partially offset by the initial impact of the new financial terms in the renewed and extended contracts with MTN Nigeria, signed during the third quarter of 2024. Aggregate inorganic revenue declined $1.7 million, which primarily related to the disposal of operations in Kuwait in December 2024. The increase in organic revenue was more than offset by the non-core impact of adverse movements in foreign exchange rates used to translate the results of foreign operations of $270.7 million, or 53.1%, of which $259.0 million was due to the devaluation of the Naira.

In December, 2024, the Company completed the disposal of its 70% interest in IHS Kuwait Limited, resulting in 12 fewer trading days for this operation in both the three month and full year periods ended December 31, 2024 when compared to the equivalent periods ended December 31, 2023. The revenue from the equivalent 12 day comparative period after December 19, 2023 is captured within inorganic revenue. Given the disposal date of December 19, 2024, as of December 31, 2024 the entire Tower portfolio, Tenants and Lease Amendments in Kuwait had been deconsolidated. Refer to note 31.2 in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024 for further information on the disposal of the Kuwait business.

Refer to the revenue component of the segment results section of this discussion and analysis for further details.

For the fourth quarter, the net decrease in Towers was 846 year-on-year (or a net increase of 896 year-on-year when excluding the impact of the Kuwait and Peru disposals), resulting in total Towers of 39,229 at the end of the period. The decrease primarily resulted from the divestiture of 1,678 Towers from Kuwait and 64 Towers from Peru. The addition of 929 New Sites, was partially offset by 250 Churned and 15 decommissioned. Tenants declined 384 year-on-year (including the net divestiture of 1,700 and 66 from Kuwait and Peru, respectively, and a reduction of 529 Tenants, in the third quarter of 2024, occupied by our smallest Key Customer on which we were not recognizing revenue), resulting in total Tenants of 59,343 and a Colocation Rate of 1.51x at the end of the fourth quarter. Excluding the impact of the Kuwait and Peru disposals, we added 1,382 net new tenants year-on-year. Year-on-year, we added 3,068 Lease Amendments, driven primarily by 5G and fiber upgrades, partially offset by the net divestiture of 272 from Kuwait, resulting in total Lease Amendments of 39,671 at the end of the fourth quarter.

(1) Refer to “Item 5. Operating and Financial Review and Prospects” in our Annual Report on Form 20-F for the fiscal year ended December 31, 2024 for the definition of organic revenue and additional information.

Adjusted EBITDA

Adjusted EBITDA for the fourth quarter was $246.4 million, resulting in an Adjusted EBITDA margin of 56.3%. Adjusted EBITDA decreased 10.1% year-on-year in the fourth quarter reflecting the decrease in revenue described above, partially offset by a decrease in cost of sales included within Adjusted EBITDA. The reduction in cost of sales was primarily driven by a decrease in regulatory fees of $10.6 million, mostly relating to a non-recurring review of the current and historical license obligations in the SSA segment, and a decrease in power generation costs ($7.9 million), security services costs ($3.9 million), tower repairs and maintenance costs ($2.6 million), and staff costs ($1.9 million). The $4.0 million increase in other cost of sales was primarily driven by a non-recurring write-down of inventory in the period. The $21.5 million reduction in administrative costs included within Adjusted EBITDA was largely driven by a devaluation of the Naira against the U.S. dollar, supported by cost saving initiatives implemented during the period.

Income for the period

Income for the period in the fourth quarter of 2024 was $243.1 million, compared to a loss of $456.8 million for the fourth quarter of 2023. This equates to an increase of income of $699.9 million year-on-year, driven primarily by a $636.7 million decrease in net finance costs. The decrease in net finance costs was mainly due to the impact of the movement in the Naira rate in the respective quarters on USD denominated intercompany loans advanced to our Nigerian operations. In the fourth quarter of 2023, the Naira devaluation led to a foreign exchange loss, whereas in the current quarter the Naira appreciated giving rise to a gain. Further, the current quarter included a $83.9 million gain from the disposal of our Kuwait subsidiary. This was partially offset by the decrease in revenue as described above.

Cash from operations

Cash from operations for the fourth quarter of 2024 was $348.8 million, compared to $162.1 million for the fourth quarter of 2023. The increase reflects an improvement in working capital movements of $196.1 million (inclusive of a withholding tax receivable decrease of $20.8 million), partially offset by a decrease in operating income before working capital changes of $9.3 million.

ALFCF

ALFCF for the fourth quarter of 2024 was $107.1 million, compared to $118.2 million for the fourth quarter of 2023. The decrease in ALFCF was primarily due to the decrease in cash from operations before working capital movements of $9.3 million described above, an increase in net interest paid of $9.8 million, partially offset by a reduction in withholding tax of $6.7 million and maintenance and corporate capex of $2.6 million.

SEGMENT RESULTS

Revenue and Adjusted EBITDA by segment

Set out below are Revenue and Adjusted EBITDA for each of our reportable segments for the three months ended December 31, 2024 and 2023:

Nigeria

Fourth quarter revenue decreased 19.3% year-on-year to $258.9 million, primarily driven by devaluation of the NGN versus the U.S. dollar. When compared to the third quarter of 2024, revenue increased 6.8%. Organic revenue increased by $197.2 million (61.5%) year-on-year driven primarily by foreign exchange resets and diesel prices, as well as continued growth in revenue from Colocation and Lease Amendments, partially offset by a reduction in revenues related to the new financial terms in the renewed contracts with MTN Nigeria, signed during the third quarter of 2024. The decrease in reported revenue was primarily driven by the impact of negative movements in foreign exchange rates used to translate the results of foreign operations, with an average Naira rate of ₦1,629 to $1.00 in the fourth quarter of 2024 compared to the average rate of ₦815 to $1.00 in the fourth quarter of 2023. This led to a non-core decline of $259.0 million, or 80.8% year-on-year.

Tenants decreased by 269 year-on-year, with growth of 528 from Colocation and 96 from New Sites, more than offset by 893 Churned (which includes, for the third quarter of 2024, 529 Tenants occupied by our smallest Key Customer on which we were not recognizing revenue), while Lease Amendments increased by 1,035 primarily due to 3G and fiber upgrades.

Segment Adjusted EBITDA for the fourth quarter declined 22.5% year-on-year to $154.9 million, for a margin of 59.8%. When compared to the third quarter of 2024, segment Adjusted EBITDA declined 2.5%. The year-on-year decline in segment Adjusted EBITDA for the fourth quarter primarily reflects the decrease in revenue described above, partially offset by a reduction in cost of sales and administrative expenses included within segment Adjusted EBITDA, primarily due to the devaluation of the Naira which is used to translate the results of our Nigeria operations. During the fourth quarter there was a decrease in costs of sales, including a reduction in the cost of diesel ($3.4 million), tower repairs and maintenance costs ($1.6 million), security services costs ($1.2 million) and staff costs ($1.7 million), even though the underlying Naira-based costs increased during the period. The $4.9 million increase in other cost of sales was primarily driven by a non-recurring write-down of inventory in the period.

SSA

Fourth quarter revenue was broadly flat year-on-year at $124.2 million, primarily driven by movements in organic revenue, which increased by $3.9 million, or 3.1%, due to factors including new Tenants, Colocations, Lease Amendments in addition to CPI escalators, offset by $4.5 million lower power pass-through revenues being recognized after the changes in our agreements with MTN South Africa relating to the provision of power Managed Services. These changes to power pass-through revenue have no impact on segment Adjusted EBITDA. Other factors impacting organic revenue included growth in Tenants, New Sites and Lease Amendments, together with escalations and foreign exchange resets. The growth in organic revenue in the third quarter was offset by the non-core impact of negative movements in foreign exchange rates of $3.7 million, or 3.0%.

Tenants increased by 835 year-on-year, including 814 from Colocation and 127 from New Sites, partially offset by 106 from Churn, while Lease Amendments increased by 1,687.

Segment Adjusted EBITDA for the fourth quarter grew 29.

Contacts

For more information, please email: [email protected]

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