IHS one of the world’s leading owners and operators of shared communications infrastructure, announced its financial results for the third quarter of 2024. Despite the challenges posed by currency devaluation, especially in Nigeria, the company reported solid performance with key metrics remaining strong.
Financial Highlights for Q3 2024
Revenue: IHS reported revenue of $420.3 million, which, although a 3.5% decline from the previous quarter, reflected resilience. Revenue decreased by 10% year-on-year, but adjusted for organic growth, revenue surged by 49%. This was achieved through FX resets and escalations, offsetting the 52% devaluation of the Nigerian Naira.
Adjusted EBITDA: The company posted an adjusted EBITDA of $246.0 million, reflecting a 3.3% increase year-on-year. This corresponds to a strong adjusted EBITDA margin of 58.5%, demonstrating the company’s focus on cost control and efficient operations.
Net loss: IHS recorded a loss of $205.7 million, primarily due to unrealised foreign exchange losses amounting to $236.0 million.
Cash generation: Cash from operations amounted to $182.4 million, with an Adjusted Levered Free Cash Flow (ALFCF) of $87.1 million.
Capital expenditure: The company reduced its capital expenditure to $66.5 million and announced further capex savings for the remainder of the year, revising full-year guidance down to $270-300 million from an earlier estimate of $330-370 million.
Outlook for 2024
IHS reiterated its full-year 2024 guidance, projecting revenue between $1,670 million and $1,700 million, adjusted EBITDA of $900-920 million, and ALFCF between $250 million and $270 million. Despite currency volatility in key markets like Nigeria, the company remains confident of reaching the upper end of these ranges.
Key commercial developments
During Q3, IHS renewed and extended key contracts, notably with MTN Nigeria, which covers 72% of its revenue. These agreements have lengthened the average tenant term to 8.1 years, with contracted revenues now at $12.3 billion. A significant milestone was the renewal and extension of tower contracts with MTN Nigeria, securing nearly 13,500 tenancies through to 2032.
IHS Market Data
FX and debt strategy
IHS noted reduced volatility in the Nigerian Naira compared to earlier in 2024. However, the company highlighted a $265 million year-on-year revenue headwind due to currency depreciation. To manage debt better, IHS has shifted more debt into local currencies, including a $439 million dual-tranche term loan to refinance a previous loan due in 2025.
Conclusion
IHS continues to focus on increasing EBITDA and reducing capital expenditure to enhance cash flow generation. With the renewal of key contracts and strategic adjustments in its balance sheet, the company remains committed to delivering value to shareholders.
