IHS Towers, one of the world's largest independent telecom tower operators, has published its full year results this morning, reporting for Q4 and FY 2024.
The earning release highlights that revenue, adjusted EBITDA and ALFCF (Adjusted Levered Free Cash Flow) were all ahead of guidance, reflecting “continued strong secular trends across the business, a more stable macroeconomic environment, strong operational focused and the significant commercial and financing progress” made during the company’s strategic review last year.
Revenue was US$1.71bn with a 48% increase on organic basis year-on-year, and adjusted EBITDA of US$928.4mn, with a margin of 54.3%, which reflects continued cost control. Total CAPEX was down 56.3% year-on-year to US$255.9mn as part of increasing focus on capital allocation.
The extension on maturities, shifting debt into local currency and disposal proceedings all improved net leverage to 3.7x over Q3 2024's 3.9x.
IHS Towers highlighted progress against strategic priorities, notably on commercial developments having extended its contracts on 72% of revenue, renewing key MLAs with MTN on 25,000+ tenancies out to 2032+ and extending a contact with Airtel Nigeria. This increased weighted average tenant term to 7.8 years and increasing contracted revenues to US$11.9bn.
The group also reduced their power exposure, de-risking the operating model by reducing exposure to power metrics, shifting a majority of business to pass-through or index to reduce earnings volatility. Brazil, South Africa and Colombia have power as a pass-through, while in all other markets power is indexed.
For the past few years IHS Towers has been investing heavily in adding on-site hybrid power solutions, and the total group portfolio now sources 41% of their total energy from on-site generation. 33% comes from grid connectivity and backup generators, with 18% on pure generators.
As part of the strategic review to focus on core markets, IHS Towers began asset disposals with the sale of IHS Kuwait to Zain and IHS Peru to SBA Communications, using the capital to pay down debt. TowerXchange understands that further potential markets may also be exited, including a sale of both its Rwandan and Zambian portfolios, although this was not mentioned in the earnings brief.
These sales have reduced the total portfolio from 40,075 from FY23 to 39,229 in FY24, although tenancy rates have increased from 1.49x to 1.51x. IHS Towers also added 929 built-to-suit sites across the financial year, which they state came at a cost of US$54mn, or around US$58,000 per tower.
IHS Towers revenue comes overwhelmingly from MTN (63%) as their core customer, followed by Airtel (14%), TIM (6%) and Orange (6%). 59% of total revenue also comes from their core Nigerian market.
In Nigeria, IHS Towers had been left to the mercy of the Naira, which devaluated significantly over 2023 due to steps taken by the Central Bank of Nigeria. By Q4 24, this trend had stabilised, but the result has been a 19.3% decrease in Q4 revenue from IHS Towers’ Nigerian operations.
In South Africa, where IHS Towers operates their next-largest African portfolio, growth has been broadly flat with a 3.1% growth in organic revenue from some new tenancies, colocations and lease amendments.
Brazil, another core tower market for IHS Towers, saw Q4 revenue decrease 17.8% to US$44.6mn primarily due to negative FX rates, as well as some declining organic revenue due to Oi’s judicial recovery proceedings.
2025 guidance shows that the group expects to see organic growth of around 12% and an estimated 500 new sites (although 400 of these expected to come from Brazil). 2025 guidance metrics suggests that total revenue is expected to decrease as a result of exiting some markets, but adjusted EBIDTA to increase, as well as total CAPEX which has a guidance of $260-$290mn, increasing from FY 2024.
Looking to 2025, Sam Darwish, Chairman and CEO, commented "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.”
