IHS Towers, the operating unit of London-based IHS Holding Limited (NYSE: IHS), reported 3Q23 organic revenue growth of 31 percent year-over-year across the four global markets in which it operates. When local currencies were normalized in U.S. dollars, however, the company showed a sharp decline in YoY revenues and Adjusted EBITDA due to a 78 percent currency devaluation of the Nigerian Naira against the U.S. dollar. Nigeria is IHS’s biggest market, accounting for 58 percent of the $467 million in total revenues for the quarter, a 10 percent decline from $524 million in 3Q22. Adjusted EBITDA of $232 million was down nearly 16 percent compared to $274 million in 3Q22.
The company ended the quarter with a total of 39,739 towers in 11 countries across its Africa, Middle East, and Latin America regions. Nigeria is its leading market with 16,400 towers followed by Brazil with 7,388 towers. In the quarter, the company built 415 new sites, up sequentially from 278 in 2Q23 and up YoY from 385 in 3Q22. Year-to-date, IHS has constructed 891 new sites, with 498 in Latin America. IHS Towers is projecting approximately 1,250 total new sites in 2023, of which roughly 200 will be in Nigeria and 750 in Brazil. IHS grew its tenant base by over two percent YoY to 59,196, giving it a colocation rate of 1.49 per tower. Lease amendments were up 17 percent YoY to 35,254.
IHS spent $105 million in capex in the quarter, down nearly 40 percent compared to $174 million in 3Q22. The capex decrease was driven largely by reduced maintenance capex in Nigeria and fewer new sites built in sub-Saharan Africa. Those declines were partially offset by an increase in new site builds in Latin America, primarily in Brazil.
Despite the soft quarter, the company maintained its full-year 2023 midpoint guidance for revenues of $2,095 million, Adjusted EBITDA of $1,140 million, Adjusted Levered Free Cash Flow of $395 million and total capex of $630 million.
Year-to-date, IHS Towers spent $83 million on Project Green which aims to reduce the greenhouse gas emissions intensity of its tower portfolio by 50 percent by 2030, from a 2021 baseline. Project Green initiatives include greater use of renewable solar and wind energy sources at its towers, deploying batteries and fuel cells to reduce the reliance on diesel generators, and improving the energy efficiency of its equipment and operations using LED lighting and smart cooling systems. The company expects to spend $90-100 million on Project Green in 2023.
“We are reporting a solid quarter of performance across our KPI’s driven by growth across each of our segments that reflects robust secular demand and the quality of our contract structures,” comments Sam Darwish, IHS Towers Chairman and CEO. “The reduction in capex in the quarter reflects an increasingly more balanced approach we are taking to growth and cash generation in light of what remains a challenging macroeconomic environment across the world but particularly in Nigeria. [W]e now expect to be towards the low-end of our capex guidance range for the year.”
He says the company is well-positioned to benefit from the strong, long-term secular growth trends across all its markets, supported by developments in Nigeria, and improving macroeconomic conditions in Brazil and South Africa.
Darwish addressed the shareholder dissatisfaction issues raised in July by two of its major shareholders, Wendel SE and MTN Group, regarding board representation and voting power, Inside Towers reported. He said the company continues to engage in constructive dialogue with both parties while making progress toward their mutual goals.
By John Celentano, Inside Towers Business Editor
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