IHS Towers, the operating unit of IHS Holdings (NYSE: IHS), achieved solid 2Q23 top line results. The company grew its tower base to 39,298, up nearly one percent year-over-year from 39,052 in 2Q22. According to Inside Towers Intelligence, IHS Towers is the fifth largest independent multinational tower company globally by tower count behind American Tower, Cellnex, GD Towers and SBA Communications.
The tenant colocation rate grew to 1.49 from 1.47 a year ago. Lease amendments were up 12 percent to 34,234. All that portfolio expansion activity boosted 2Q23 revenues to $546 million, up 17 percent YoY.
Adjusted EBITDA of $304 million grew 27 percent YoY. Recurring Levered Free Cash Flow was $91 million, up 4 percent YoY. However, IHS incurred a big loss in the quarter by accounting for costs associated with tower acquisitions from GTS SP5 in Brazil in March 2022, and MTN in South Africa in May 2022.
Nigeria is IHS Towers’ biggest market accounting for 42 percent of the total towers and 67 percent of total revenues for the quarter. Five countries in its Sub-Saharan Africa region, led by South Africa with 5,691 towers, made up 35 percent of the company’s total towers and accounted for 23 percent of revenues. Latin America accounted for nine percent of revenues but 19 percent of towers. Brazil is IHS’ largest market in Latin America with 7,139 towers. IHS’ tower operations in the Middle East and North Africa in Kuwait and Egypt accounted for two percent of 2Q23 revenue.
Capital expenditures in the quarter were up 41 percent to $207 million from $147 million in 2Q22. The increase is a result of the company’s active build-to-suit program across each of its operating regions and progress with Project Green. Of the 278 new towers that IHS built in the quarter, 175 were in the Latam region and almost all in Brazil.
Project Green is part of the company’s Carbon Reduction Roadmap to reduce the Scope 1 and Scope 2 kilowatt-hour emissions intensity of its tower portfolio by 50 percent by 2030, from a 2021 emissions data baseline. Project Green involves investing in renewable energy sources like solar and wind to power its towers and reduce its reliance on diesel generators along with upgrading site batteries and cooling systems to improve energy efficiency and reduce waste.
IHS revised its FY2023 guidance with midpoint revenues of $2.1 billion from a previous $2.2 billion projection, largely due to foreign exchange headwinds associated with the Nigerian Naira. It lowered its Adjusted EBITDA outlook to $1.1 billion from $1.2 billion, due to tax levies on imported diesel fuel.
Capex midpoint guidance of $630 million is unchanged. The company plans to construct around 1,200 new towers in 2023, with about 150 in Nigeria and approximately 750 in Brazil. IHS expects its Project Green investment in 2023 will be $90-110 million, part of a planned aggregate investment of $214 million between 2022 and 2024.
By John Celentano, Inside Towers Business Editor
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