IHS Holding Limited Reports First Quarter 2025 Financial Results

SOLID FIRST QUARTER ORGANIC GROWTH AND CASH FLOW GENERATION

FIRST QUARTER IN LINE WITH EXPECTATIONS, FULL YEAR 2025 OUTLOOK REITERATED

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 first quarter ended March 31, 2025.

CONSOLIDATED HIGHLIGHTS – FIRST QUARTER 2025

The table below sets forth the select financial results for the three months ended March 31, 2025 and 2024:

Financial Highlights

• Revenue of $439.6 million increased 5.2% year-on-year, with organic growth of 25.6% more than offsetting the impact of the 13.8% depreciation of the Nigerian Naira (“NGN” or “Naira”) versus the U.S. dollar (“USD”) and the disposal of the company’s Kuwait operations in December 2024
• Organic growth of 25.6% was driven by 7.9% Constant Currency⁽¹⁾ growth as a result of increased revenue from Colocation, Lease Amendments, New Sites and escalators, with the remainder a result of foreign exchange (“FX”) resets and power indexation
• Adjusted EBITDA of $252.6 million (up 36.4% year-on-year) resulted in an Adjusted EBITDA Margin of 57.5%, an increase of 1,320 basis points year-on-year, driven by continued financial discipline, and with the first quarter of 2024 negatively impacted by NGN devaluation in that period. Income for the current period was $30.7 million
• Adjusted Levered Free Cash Flow (“ALFCF”) of $149.9 million, with 247.7% growth driven by improved profitability and a re-phasing of interest payments between quarters following the November bond refinancing. Cash from operations was $216.3 million
• Capital expenditure (“Total Capex”) of $43.6 million, down 17.8% year-on-year, reflecting actions taken to improve cash flow generation
• Consolidated net leverage ratio⁽²⁾ of 3.4x, down 0.3x from the fourth quarter of 2024, within the target of 3.0x-4.0x
• First quarter 2025 financial results in line with expectations; full year 2025 outlook reiterated

Strategic and Operational Highlights

• Announced, in May 2025, an agreement to dispose 100% of IHS Rwanda to Paradigm Tower Ventures at an enterprise value⁽³⁾ of $274.5 million as part of the strategic initiatives targeted at shareholder value creation options
• Renewed MLA with Airtel Zambia covering approximately 1,100 tenancies until August 2035
• Continued reduction in volatility of the NGN with 0.5% appreciation versus the USD during the quarter. USD availability remains in line with business requirements
• Continued year-on-year organic growth in Towers (39,212) and Tenants (59,606) reaching a Colocation Rate of 1.52x at the end of the first quarter. Lease Amendments increased during the period to 39,705

Sam Darwish, IHS Towers Chairman and Chief Executive Officer, stated, “This has been a strong start to 2025, with solid growth across our key metrics of revenue, Adjusted EBITDA and ALFCF, and a reduction in Total Capex, all in line with our expectations, and we are pleased to reiterate our full year 2025 outlook as a result. Our strong performance is a continuation of the trends we have seen in recent quarters as we benefit from the commercial and financial progress that was made during 2024 and into 2025. Our focus on financial discipline and capital allocation is delivering sustained improvements in our profitability and cash flow generation, and this, supplemented by select asset disposals, has resulted in a further reduction in our consolidated net leverage ratio to 3.4x, down from 3.7x at the end of 2024. The agreement to sell our Rwanda operations, announced today, for an enterprise value of $274.5 million, forms part of our strategic initiatives targeted at shareholder value-creation options and highlights the value contained within our wider portfolio.

Looking ahead, we remain excited by the strong growth opportunities across our footprint, underpinned by continued 5G deployment across our markets. Our confidence in the outlook is further supported by the improving backdrop within Nigeria, our largest market with over 16,000 towers, with positive momentum driven by greater stability in the Naira and recent carrier tariff rate increases for our customers. Following this strong start to the year, we will continue to implement our strategy to further improve profitability and cash flow generation while strengthening our balance sheet, with the goal of maximizing 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 May 20, 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
• Full year contribution from Rwanda. 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⁽¹⁾ target of 3.0x-4.0x

RESULTS OF OPERATIONS

Impact of Naira devaluation

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 that the platform will enhance the integrity and operational efficiency of the foreign exchange market by providing greater price discovery. During the period to March 31, 2025, the Naira exchange rate to the U.S. dollar was relatively stable compared to 2023 and 2024 as shown below:

Due to the Naira devaluation, Revenue and segment Adjusted EBITDA in the first quarter of 2025 were negatively impacted by $60.9 million and $40.6 million, respectively, compared to the same period in 2024. In the first quarter of 2025, the foreign exchange resets in some of our contracts partially offset these impacts. The appreciation of the Naira in the first quarter of 2025 resulted in unrealized foreign exchange gains of $11.9 million on U.S. dollar denominated intercompany loans advanced to our Nigerian operations. The unrealized gains and losses are recorded in finance costs, although 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).

Results for the three months ended March 31, 2025 versus 2024

Revenue

Revenue for the three month period ended March 31, 2025 (“first quarter”) of $439.6 million increased 5.2% year-on-year, driven primarily by organic revenue⁽¹⁾ which increased by $107.2 million (25.6%) as a result of 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 financial terms in the renewed and extended contracts with MTN Nigeria signed during the third quarter of 2024, including the initial Churn as part of the approximately 1,050 sites MTN Nigeria will vacate from January 1, 2025 onwards. Inorganic revenue⁽¹⁾ decreased by $11.2 million, primarily due to the disposal of operations in Kuwait in December 2024. The increase in organic revenue was partially offset by the non-core⁽¹⁾ impact of adverse movements in foreign exchange rates used to translate the results of foreign operations of $74.1 million, or 17.7%, of which $60.9 million was due to the devaluation of the Naira.

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

For the first quarter, there was a year-on-year net decrease in Towers of 1,066 (or a year-on-year net increase of 676 Towers when excluding the impact of the Kuwait and Peru disposals), resulting in total Towers of 39,212 at the end of the period. The decrease primarily resulted from the divestiture of 1,678 Towers in Kuwait and 64 Towers in Peru. The addition of 800 New Sites year-on-year, was partially offset by 111 Churned and 13 decommissioned. Tenants declined 391 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 59,606 and a Colocation Rate of 1.52x at the end of the first quarter. Excluding the impact of the Kuwait and Peru disposals, we added 1,375 net new tenants year-on-year. Year-on-year, we added 2,579 Lease Amendments, driven primarily by 5G and fiber upgrades resulting in total Lease Amendments of 39,705 at the end of the first quarter.

Adjusted EBITDA

Adjusted EBITDA for the first quarter was $252.6 million, resulting in an Adjusted EBITDA Margin of 57.5%. Adjusted EBITDA increased 36.4% year-on-year in the first quarter reflecting the increase in revenue described above, in combination with a $41.6 million decrease in cost of sales included within Adjusted EBITDA. The reduction in cost of sales was primarily driven by a reduction in net FX losses on cost of sales of $32.1 million within other cost of sales, a decrease in power generation costs ($3.2 million), tower repairs and maintenance costs ($2.6 million), security services costs ($2.1 million), and staff costs ($0.6 million). The $3.9 million reduction in administrative expenses included within Adjusted EBITDA was 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 first quarter of 2025 was $30.7 million, compared to a loss of $1,557.3 million for the first quarter of 2024. This was primarily driven by a $1,458.4 million decrease in net finance costs. The decrease in net finance costs resulted from the impact of changes in the Naira exchange rate in the respective quarters on USD denominated intercompany loans advanced to our Nigerian operations. In the first quarter of 2024, the Naira devaluation led to a foreign exchange loss, whereas in the current quarter, the Naira appreciated resulting in a gain. Administrative expenses also decreased by $103.6 million, due to the recognition of an $87.9 million impairment in the IHS Latam tower businesses group as of March 31, 2024. These are coupled with the increase in revenue and decrease in costs of sales as discussed above.

Cash from operations

Cash from operations for the first quarter of 2025 was $216.3 million, compared to $93.0 million for the first quarter of 2024. The increase reflected a decreased outflow in working capital of $63.0 million (inclusive of a withholding tax receivable decrease of $8.3 million) and an increase in operating income before working capital changes of $60.3 million.

ALFCF

ALFCF for the first quarter of 2025 was $149.9 million, compared to $43.1 million for the first quarter of 2024. The increase in ALFCF was primarily due to an increase in operating income before working capital movements of $60.3 million described above, a $28.0 million reduction in net interest paid (driven by a re-phasing of interest payments between quarters as a result of the November 2024 bond refinancing), a $9.9 million reduction in lease and rent payments and an $8.3 million decrease in withholding tax. These were partially offset by an increase in maintenance capex of $3.4 million and income taxes paid of $2.9 million.

SEGMENT RESULTS

Revenue and Adjusted EBITDA by segment

Set out below are Revenue and segment Adjusted EBITDA for each of our reportable segments, for the three month periods ended March 31, 2025 and 2024:

Nigeria

First quarter revenue increased 19.1% year-on-year to $271.4 million, primarily driven by organic growth which more than offset the impact from the devaluation of the NGN versus the U.S. dollar. Organic revenue increased by $104.5 million (45.9%) year-on-year driven primarily by foreign exchange resets, diesel prices and escalations, as well as continued growth in revenue from Colocation and Lease Amendments. This growth was partially offset by the initial impact of the financial terms in the renewed and extended contracts with MTN Nigeria signed during the third quarter of 2024, including the initial Churn as part of the approximately 1,050 sites MTN Nigeria will vacate from January 1, 2025 onwards. The increase in organic growth was partly offset by the impact of negative movements in foreign exchange rates used to translate the results of foreign operations, with an average Naira rate of ₦1,527 to $1.00 in the first quarter of 2025 compared to the average rate of ₦1,316 to $1.00 in the first quarter of 2024. This led to a non-core decline of $60.9 million, or 26.7% year-on-year.

Tenants decreased by 420 year-on-year, with growth of 594 from Colocation and 87 from New Sites, more than offset by 1,101 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 477 primarily due to 3G and fiber upgrades.

Segment Adjusted EBITDA for the first quarter increased 74.1% year-on-year to $179.2 million, resulting in an Adjusted EBITDA Margin of 66.0%. The year-on-year increase in segment Adjusted EBITDA for the first quarter primarily reflects the increase in revenue described above, in combination with 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 first quarter the decrease in costs of sales was primarily driven by a $31.6 million reduction in net FX losses. There was a year-on-year increase in the cost of diesel and electricity ($3.8 million) and a reduction in staff costs ($1.8 million) and tower repairs and maintenance costs ($0.2 million).

SSA

First quarter revenue declined 8.1% year-on-year at $120.7 million, primarily driven by movements in organic revenue, which decreased by $6.0 million, or 4.6%, due to factors including lower power pass-through revenues of $6.3 million 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 impact revenue but have no impact on segment Adjusted EBITDA. Other factors impacting organic revenue include growth in new Tenants, Colocations and Lease Amendments, together with escalations and foreign exchange resets. The overall decrease in revenue was also impacted by the reduction in non-core revenues as a result of negative movements in foreign exchange rates of $4.6 million, or 3.5%.

Tenants increased by 868 year-on-year, including 916 from Colocation and 98 from New Sites, partially offset by 146 from Churn, while Lease Amendments increased by 1,688.

Segment Adjusted EBITDA for the first quarter grew 2.9% year-on-year to $71.7 million, resulting in an Adjusted EBITDA Margin of 59.4%. The year-on-year increase in segment Adjusted EBITDA for the first quarter primarily reflected an $11.3 million decrease in costs included within Adjusted EBITDA, which more than offset the reduction in revenue. The reduction in costs was driven by reduced power generation costs ($6.5 million), security services costs ($2.7 million) and tower repairs and maintenance costs ($2.2 million), largely as a result of the changes in our agreements with MTN South Africa described above.

Latam

First quarter revenue decreased 0.5% year-on-year to $47.5 million and was primarily driven by the non-core impact of adverse movements in foreign exchange rates of $8.6 million, or 18.1%. Organic revenue increased 18.1% in the quarter, or $8.7 million, driven by a one-off increase in revenues from our customer Oi S.A. (“Oi Brazil”) of $3.6 million after their judicial recovery proceedings, and continued growth in Tenants, Lease Amendments and New Sites.

Tenants increased by 855 year-on-year, including 610 from New Sites and 350 from Colocation, partially offset by 39 Churned and net divestiture of 66 due to the disposal of Peru, while Lease Amendments increased by 414.

First quarter segment Adjusted EBITDA increased 5.3% to $35.6 million for a segment Adjusted EBITDA Margin of 75.0%, and primarily reflected a $2.0 million reduction in costs, which more than offset the decrease in revenue described above. The reduction in costs was driven by a decrease in staff costs ($2.7 million) and site rental costs ($0.5 million), more than offsetting an increase in tower repairs and maintenance costs ($0.5 million) and security services costs ($0.4 million).

MENA

On December 19, 2024, the Company completed the disposal of its 70% interest in IHS Kuwait Limited, resulting in a year-on-year reduction to revenue and segment Adjusted EBITDA of $10.9 million and $6.1 million, respectively, in the first quarter of 2025 when compared to the first quarter of 2024. The revenue from the first quarter of 2024 is captured within inorganic revenue.

As of the end of the first quarter of 2024, the MENA segment had 1,672 Towers and 1,694 Tenants. Following completion of the Kuwait Disposal in December 2024, these Towers and Tenants were deconsolidated in December 2024.

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.

CAPITAL EXPENDITURE

Set out below is the capital expenditure for the three month periods ended March 31, 2025 and 2024 for each of our reporting segments:

During the first quarter of 2025, Total Capex was $43.6 million, compared to $53.1 million for the first quarter of 2024. The decrease is primarily driven by lower capital expenditure in our Latam segment reflecting the actions we are taking to improve cash generation and to narrow our focus on capital allocation.

Nigeria

The 5.5% year-on-year decrease for the first quarter was primarily driven by decreases related to fiber ($4.2 million), augmentation ($3.4 million) and New Sites ($0.6 million), partially offset by increases in other capital expenditure ($4.6 million) and maintenance ($2.9 million).

SSA

The 28.0% year-on-year increase for the first quarter was primarily driven by increases in augmentation ($2.6 million) and maintenance ($1.6 million), partially offset by a decrease related to New Sites ($1.4 million) and other capital expenditure ($1.0 million).

Latam

The 30.9% year-on-year decrease for the first quarter was primarily driven by decreases related to New Sites ($4.8 million), fiber business ($4.4 million), maintenance ($0.9 million) and other capital expenditure ($0.7 million).

FINANCING ACTIVITIES FOR PERIOD JANUARY 01, 2025 TO MARCH 31, 2025

There were no significant financing activities during the first quarter of 2025.

ihstowers@teneo.com