CONSOLIDATED HIGHLIGHTS – FIRST QUARTER 2023
- Revenue of $602.5 million increased 35.1% (or 38.0%
organically)
- Adjusted EBITDA of $335.4 million (55.7% Adjusted EBITDA
Margin) increased 37.0%
- Profit for the period was $7.7 million
- Cash from operations was $251.9 million
- Recurring Levered Free Cash Flow (“RLFCF”) was $149.7
million
- Total Capex was $152.6 million
- During the quarter, certain of our Nigerian subsidiaries
entered into an up to NGN 165.0 billion (approximately $357.9
million) five-year term loan and an up to NGN 55.0 billion
(approximately $119.3 million) three-year revolving credit
facility
- Reiterating 2023 guidance for revenue of $2,190-2,220 million,
Adjusted EBITDA of $1,200-1,220 million, RLFCF of $430-450 million,
Total Capex of $610-650 million and net leverage ratio target
remains 3.0x-4.0x
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, 2023.
Sam Darwish, IHS Towers Chairman and Chief Executive Officer,
stated, “We had another strong quarter with growth primarily driven
by a sequential step-up from new Lease Amendments, escalations, and
FX resets, while growth from power moderated – all as expected.
Results also included a $48 million one-time benefit to revenue and
Adjusted EBITDA from our smallest Key Customer in Nigeria,
inclusive of $5 million additional withholding tax gross up, and a
$43 million one-time benefit to RLFCF. Lastly, Q1 results included
a $9 million FX tailwind vs. rates previously assumed in
guidance.
We are reiterating our 2023 guidance for all our key metrics
including revenue, Adjusted EBITDA, RLFCF, and capex that we issued
in March. While we recognize the modest upside from the $5 million
withholding tax benefit in Q1, and that our updated FX rates now
assumed in guidance imply $14 million upside vs. rates previously
assumed in guidance, given FX rates in emerging markets can be
volatile, and that a notable risk of Naira devaluation this year
exists, we think it’s important we remain prudent in our approach
and not increase our guidance. Overall, we remain on track to
achieve our goals for 2023.”
RESULTS FOR THE FIRST QUARTER 2023
The table below sets forth select unaudited financial results
for the quarters ended March 31, 2023 and March 31, 2022:
Three months ended
March 31,
March 31,
Y on Y
2023
2022
Growth
$’000
$’000
%
Revenue
602,528
446,132
35.1
Adjusted EBITDA(1)
335,382
244,872
37.0
Profit for the period
7,662
15,120
(49.3
)
Cash from operations
251,859
166,607
51.2
RLFCF(1)
149,657
87,060
71.9
(1)
Adjusted EBITDA and RLFCF are non-IFRS
financial measures. See “Use of Non-IFRS Financial Measures” for
additional information, definitions and a reconciliation to the
most comparable IFRS measures.
Results for the three months ended March 31, 2023 versus
2022
During the first quarter of 2023, revenue was $602.5 million
compared to $446.1 million for the first quarter of 2022, an
increase of $156.4 million, or 35.1%. Organic growth was $169.6
million, or 38.0%, driven primarily by escalations, foreign
exchange resets, Lease Amendments and power indexation. Revenue for
the first quarter of 2023 included $48.1 million of non-recurring
revenue as adjusted for withholding tax from our smallest Key
Customer in Nigeria for services previously provided but for which
revenue had not been recognized. Aggregate inorganic revenue growth
was $37.2 million, or 8.3%, for the first quarter of 2023 driven by
the MTN SA Acquisition, GTS SP5 Acquisition and the fifth stage of
the Kuwait Acquisition. The increase in the period was partially
offset by the non-core impact of negative movements in foreign
exchange rates of $50.4 million, or 11.3%.
Adjusted EBITDA was $335.4 million for the first quarter of 2023
compared to $244.9 million for the first quarter of 2022. Adjusted
EBITDA margin for the first quarter of 2023 was 55.7% (first
quarter of 2022: 54.9%). The increase in Adjusted EBITDA primarily
reflects the increase in revenue discussed above including the
non-recurring revenue, partially offset by an increase in cost of
sales resulting from higher diesel costs in 2023 largely due to the
current conflict between Russia and Ukraine, and an increase in
maintenance and repair costs alongside an increase in
administrative expenses, resulting from employee costs related to
the acquisitions listed above and increases in loss allowance on
trade receivables, computer and maintenance cost and professional
fees.
Profit for the period was $7.7 million for the first quarter of
2023 compared to a profit of $15.1 million for the first quarter of
2022. The decrease in profit for the period reflects the impact of
an increase in cost of sales including higher power generation
cost, which includes diesel costs, and increased administrative
expenses associated with the acquisitions listed above. In
addition, the decrease is due to the increase in net finance costs
mainly due to an increase in realized and unrealized foreign
exchange losses on financing and an increase in interest expense.
These unfavorable movements were partially offset by an increase in
revenue including the non-recurring revenue discussed above and a
decrease in the fair value loss on embedded options.
Cash from operations and RLFCF for the first quarter of 2023
were $251.9 million and $149.7 million, respectively, compared to
$166.6 million and $87.1 million, respectively, for the first
quarter of 2022. The increase in cash from operations primarily
reflects the aggregate impact of the increase in revenue discussed
above including the non-recurring revenue as adjusted for
withholding tax, partially offset by an increase in cost of sales
and administrative expenses. The increase in RLFCF is due to the
increase in cash from operations, partially offset by the increase
in net interest paid, lease and rent payment made, loss allowance
on trade receivables and withholding tax.
Segment results
(i) Revenue and Segment Adjusted
EBITDA:
Revenue and Segment Adjusted EBITDA, our key profitability
measures used to assess the performance of our reportable segments,
were as follows:
Revenue
Segment Adjusted
EBITDA
Three months ended
Three months ended
March 31,
March 31,
March 31,
March 31,
2023
2022
Change
2023
2022
Change
$'000
$'000
%
$'000
$'000
%
Nigeria
424,978
320,656
32.5
271,879
203,019
33.9
SSA
122,160
85,628
42.7
65,319
46,999
39.0
Latam
45,649
31,233
46.2
31,172
22,113
41.0
MENA
9,741
8,615
13.1
3,666
3,618
1.3
Other
—
—
—
(36,654
)
(30,877
)
(18.7
)
Total
602,528
446,132
35.1
335,382
244,872
37.0
Nigeria
Revenue for our Nigeria segment increased by $104.3 million, or
32.5%, to $425.0 million for the first quarter of 2023, compared to
$320.7 million for the first quarter of 2022. Revenue increased
organically by $149.5 million, or 46.6%, driven primarily by an
increase in power indexation and escalations, as well as foreign
exchange resets and Lease Amendments. Revenue for the first quarter
of 2023 included $48.1 million of non-recurring revenue as adjusted
for withholding tax from our smallest Key Customer for services
previously provided but for which revenue had not been recognized.
The increase in revenue was partially offset by the non-core impact
of negative movements in the Naira to U.S. dollar foreign exchange
rate of $45.2 million, or 14.1%. Year-on-year, within our Nigeria
segment, Tenants decreased by 40, including 1,152 Churned (which
includes, for the first quarter of 2023, 727 towers occupied by our
smallest Key Customer on which we were not recognizing revenue),
partially offset by 576 from New Sites and 536 from Colocation,
while Lease Amendments increased by 3,717.
Segment Adjusted EBITDA for our Nigeria segment was $271.9
million for the first quarter of 2023 compared to $203.0 million
for the first quarter of 2022, an increase of $68.9 million, or
33.9%. The increase in Segment Adjusted EBITDA primarily reflects
the increase in revenue discussed above, partially offset by an
increase in cost of sales resulting from higher power generation
cost of $21.3 million and increase in administrative expenses of
$9.3 million, of which $4.4 million is due to an increase in
computer maintenance and software and $3.1 million due to an
increase in allowance of bad debt provision.
SSA
Revenue for our SSA segment increased by $36.5 million, or
42.7%, to $122.2 million for the first quarter of 2023, compared to
$85.6 million for the first quarter of 2022. Revenue increased
organically by $13.4 million, or 15.6%, driven primarily by
escalations and New Sites. Revenue for our SSA segment also grew
inorganically in the period by $28.5 million, or 33.3%, due to the
impact of the MTN SA Acquisition. The increase in revenue was
partially offset by the non-core impact of negative movements in
foreign exchange rates of $5.3 million, or 6.2%. Year-on-year,
within our SSA segment, Tenants increased by 7,613 including 293
from New Sites, 443 from Colocation and 7,017 from the MTN SA
Acquisition in the second quarter of 2022, partially offset by 140
Churned, while Lease Amendments increased by 749.
Segment Adjusted EBITDA for our SSA segment was $65.3 million
for the first quarter of 2023 compared to $47.0 million for the
first quarter of 2022, an increase of $18.3 million, or 39.0%. The
increase in Segment Adjusted EBITDA primarily reflects the increase
in revenue discussed above, partially offset by an increase in cost
of sales resulting from higher power generation cost, maintenance
and security costs of $5.9 million, $4.0 million and $3.7 million
respectively, due to the increase in asset base and an increase in
administrative expenses of $1.9 million, of which $1.2 million are
staff costs.
Latam
Revenue for our Latam segment increased by $14.4 million, or
46.2%, to $45.6 million for the first quarter of 2023, compared to
$31.2 million for the first quarter of 2022. Revenue increased
organically by $5.7 million, or 18.4%, driven primarily by an
increase in growth from fiber and escalations. Revenue for our
Latam segment also grew inorganically in the period by $8.5
million, or 27.2%, due to the impact of the GTS SP5 Acquisition.
Revenue also increased by $0.2 million, or 0.6%, due to the
non-core impact of positive movements in foreign exchange rates.
Year-on-year, within our Latam segment, Tenants increased by 815,
including 240 from New Sites and 109 from Colocation.
Segment Adjusted EBITDA for our Latam segment was $31.2 million
for the first quarter of 2023 compared to $22.1 million for the
first quarter of 2022, an increase of $9.1 million, or 41.0%. The
increase in Segment Adjusted EBITDA primarily reflects the increase
in revenue discussed above, partially offset by an increase in
administrative expenses of $5.7 million, of which $2.2 million is
staff costs and $2.7 million is increase of allowance of bad debt
provision.
MENA
Revenue for our MENA segment increased by $1.1 million, or
13.1%, to $9.7 million for the first quarter of 2023, compared to
$8.6 million for the first quarter of 2022. Revenue increased
organically by $1.0 million, or 11.2%, and grew inorganically in
the period by $0.3 million, or 3.0%. Year-on-year, within our MENA
segment, Tenants increased by 115, including 70 from New Sites, and
43 from the closings of the fifth stage of the Kuwait
Acquisition.
Segment Adjusted EBITDA for our MENA segment was $3.7 million
for the first quarter of 2023 compared to $3.6 million for the
first quarter of 2022, an increase of $0.1 million, or 1.3%. The
increase in Segment Adjusted EBITDA primarily reflects the increase
in revenue discussed above, partially offset by an increase in cost
of sales of $0.2 million and an increase in administrative expenses
of $0.9 million, of which $0.6 million is due to loss in foreign
exchange within Segment Adjusted EBITDA.
INVESTING ACTIVITIES
During the first quarter of 2023, capital expenditures (“Total
Capex”) were $152.6 million compared to $117.0 million for the
first quarter of 2022. The increase is primarily driven by
increases in capital expenditures for our SSA, Latam and Nigeria
segments of $16.1 million, $12.2 million and $8.2 million,
respectively. The increase in SSA was primarily driven by an
increase of $16.0 million from South Africa due to refurbishment
capital expenditures associated with the MTN SA Acquisition and a
$1.2 million increase in maintenance capital expenditures. The
increase in Latam is primarily driven by increases of $6.3 million
related to fiber capital expenditures and $3.5 million from
corporate capital expenditures. The increase in Nigeria was
primarily driven by increases of $28.7 million related to Project
Green and $1.6 million from maintenance capital expenditures,
partially offset by a decrease of $13.4 million in other capital
expenditures and fiber capital expenditures of $9.1 million. Our
spending for Project Green was $33.8 million during the first
quarter of 2023 and total spend to March 31, 2023 was $137.4
million.
FINANCING ACTIVITIES AND LIQUIDITY
Below is a summary of facilities we have entered into, repaid or
amended during the first quarter of 2023. Approximate U.S. dollar
equivalent values for non-USD denominated facilities stated below
are translated from the currency of the debt at the relevant
exchange rates on March 31, 2023.
Nigeria (2023) Term Loan
IHS Netherlands Holdco B.V., IHS Nigeria, IHS Towers NG Limited,
INT Towers and IHS Holding Limited entered into an up to NGN 165.0
billion (approximately $357.9 million) term loan agreement on
January 3, 2023 (as amended and/or restated from time to time the
“Nigeria 2023 Term Loan”), and between, amongst others, IHS
Netherlands Holdco B.V. as holdco and guarantor; IHS Nigeria, IHS
Towers NG Limited and INT Towers as borrowers and guarantors; each
of IHS Holding Limited, IHS Netherlands NG1 B.V., IHS Nigeria, IHS
Netherlands NG2 B.V., IHS Towers NG Limited, Nigeria Tower Interco
B.V. and INT Towers as guarantors; Ecobank Nigeria Limited as agent
and certain financial institutions listed therein as original
lenders.
The interest rate per annum is equal to 20% in the first year
moving to a floating rate for the remainder of the term. This
floating rate is defined by the Nigerian MPR plus a margin of 2.5%
and is subject to a cap of 24% and floor of 18%. IHS Netherlands
Holdco B.V. also pays certain other fees and costs, including agent
fees.
The Nigeria 2023 Term Loan was drawn down for an original
principal amount of NGN 124.5 billion (approximately $270.1
million), and funds borrowed under the loan were applied towards,
inter alia, refinancing certain indebtedness of INT Towers, IHS
Nigeria, and general corporate and working capital purposes.
As of January 3, 2023, the total commitments available under the
Nigeria 2023 Term Loan were NGN 124.5 billion (approximately $270.1
million), which were further increased on February 9, 2023, by NGN
29.0 billion (approximately $62.8 million) pursuant to the facility
increase clause contained within the loan agreement.
As of March 31, 2023, NGN 138.5 billion (approximately $300.4
million) had been drawn down under this facility. The proceeds from
the drawdown were applied towards, inter alia, refinancing certain
indebtedness of INT Towers, IHS Nigeria, general corporate and
working capital purposes.
The Nigeria 2023 Term Loan is denominated in Naira and is
governed by English law.
Nigeria (2023) Revolving Credit Facility
IHS Netherlands Holdco B.V., IHS Nigeria, IHS Towers NG Limited,
INT Towers and IHS Holding Limited entered into an up to NGN 55.0
billion (approximately $119.3 million) revolving credit facility
agreement on January 3, 2023 (as amended and/or restated from time
to time the “Nigeria 2023 RCF”), and between, amongst others, IHS
Netherlands Holdco B.V. as holdco and guarantor; IHS Nigeria, IHS
Towers NG Limited and INT Towers as borrowers and guarantors; each
of IHS Holding Limited, IHS Netherlands NG1 B.V., IHS Nigeria, IHS
Netherlands NG2 B.V., IHS Towers NG Limited, Nigeria Tower Interco
B.V. and INT Towers as guarantors; Ecobank Nigeria Limited as agent
and certain financial institutions listed therein as original
lenders.
The interest rate per annum is equal to 20% in the first year
moving to a floating rate for the remainder of the term. This
floating rate is defined by the Nigerian MPR plus a margin of 2.5%
and is subject to a cap of 24% and floor of 18%. IHS Netherlands
Holdco B.V. also pays certain other fees and costs, including agent
fees.
As of January 3, 2023, the total commitments available under the
Nigeria 2023 RCF were NGN 44.0 billion (approximately $95.3
million), which were further increased on February 9, 2023, by NGN
11.0 billion (approximately $23.9 million) to NGN 55.0 billion
(approximately $119.3 million), pursuant to the facility increase
clause contained within the loan agreement.
As of March 31, 2023, there are no amounts drawn and outstanding
under the Nigeria 2023 RCF.
The Nigeria 2023 RCF is denominated in Naira and is governed by
English law.
Repayment of the Nigeria (2019) term loan
On January 11, 2023, the full remaining principal amount of the
Naira tranche of the Nigeria 2019 Facility of NGN 88.3 billion
(approximately $191.6 million) (plus accrued interest) was
repaid.
IHS (Nigeria) Local Facilities
On January 11, 2023, the following IHS (Nigeria) Limited
Facilities were fully repaid,
(i) IHSN NG1, for NGN 16.1 billion
(approximately $34.9 million) entered into in March 2022 (ii) IHSN
NG2, for NGN 10.0 billion (approximately $21.7 million) entered
into in May 2022
I-Systems Facility drawdown
On February 3, 2023, I-Systems Soluções de Infraestrutura S.A.
drew down a tranche of BRL 80.0 million (approximately $15.7
million) pursuant to the I-Systems Facility. The interest rate
applicable on this tranche is CDI plus 2.45% (assuming a 252-day
calculation basis).
On March 31, 2023, I-Systems Soluções de Infraestrutura S.A.
drew down a tranche of BRL 120.0 million (approximately $23.6
million) pursuant to the I-Systems Facility. The interest rate
applicable on this tranche is CDI plus 2.50% (assuming a 252-day
calculation basis).
IHS Kuwait Facility drawdown
On February 22, 2023, IHS Kuwait Limited drew down a further KWD
0.3 million (approximately $1.0 million) under the facility.
FINANCING ACTIVITIES AND LIQUIDITY AFTER REPORTING
PERIOD
Below is a summary of facilities we have entered into, repaid or
amended after the first quarter of 2023.
Nigeria (2023) Term Loan
On April 4, 2023 an additional NGN 15.0 billion (approximately
$33.0 million) was drawn down under the Nigeria 2023 Term Loan. The
total commitments available under the Nigeria 2023 Term Loan were
further increased on May 18, 2023, by NGN 11.5 billion
(approximately $24.9 million) pursuant to the facility increase
clause contained within the loan agreement.
As of May 22, 2023, NGN 153.5 billion (approximately $333.0
million) has been drawn down under this facility.
IHS South Africa Facility
On May 4, 2023 an additional ZAR 70.0 million (approximately
$3.9 million) was drawn under the IHS SA Facility. As of May 22,
2023, ZAR 3,470.0 million (approximately $194.7 million) has been
drawn down under this facility.
Full Year 2023 Outlook Guidance
The following full year 2023 guidance is based on a number of
assumptions that management believes to be reasonable and reflect
the Company’s expectations as of May 23, 2023. 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
includes 1) $48.1 million of non-recurring revenue as adjusted for
withholding tax in 1Q23 from our smallest Key Customer in Nigeria
for services previously provided but for which revenue had not been
recognized, and 2) approximately $25.0 million of power pass
through revenue versus $2.0 million in 2022 in South Africa.
Guidance does not include revenue from the Egypt operations.
The Company’s outlook is based on the following assumptions:
- Organic revenue Y/Y growth of approximately 23% (approximately
21% excluding the $48.1 million non-recurring cash receipt)
- Average foreign currency exchange rates to 1.00 U.S. Dollar for
January 1, 2023 through December 31, 2023 for key currencies: (a)
497.0 Nigerian Naira; (b) 5.27 Brazilian Real (c) 0.92 Euros (d)
17.56 South African Rand
- Project Green capex $90.0-100.0 million
- Build-to-suit of circa 1,200 sites of which ~150 sites in
Nigeria and ~750 sites in Brazil (triple what we built in Brazil in
2022)
- Net leverage ratio target of 3.0x-4.0x
Metric
Current Range
Revenue
$2,190M - $2,220M
Adjusted EBITDA (1)
$1,200M - $1,220M
Recurring Levered Free Cash Flow (1)
$430M - $450M
Total Capex
$610M - $650M
(1) Adjusted EBITDA and RLFCF are non-IFRS
financial measures. See “Use of Non-IFRS Financial Measures” for
additional information and a reconciliation to the most comparable
IFRS measures. We are unable to provide a reconciliation of
Adjusted EBITDA and RLFCF to (loss)/profit and cash from
operations, respectively, for the periods presented above without
an unreasonable effort, due to the uncertainty regarding, and the
potential variability, of these costs and expenses that may be
incurred in the future, including, in the case of Adjusted EBITDA,
share-based payment expense, finance costs, and insurance claims,
and in the case of RLFCF net movement in working capital, other
non-operating expenses, and impairment of inventory, each of which
adjustments may have a significant impact on these non-IFRS
measures.
Conference Call
IHS Towers will host a conference call on May 23, 2023 at 8:30am
ET to review its financial and operating results. Supplemental
materials will be available on the Company’s website,
www.ihstowers.com. The conference call can be accessed by calling
+1 646 307 1963 (U.S./Canada) or +44 20 3481 4247
(UK/International). The call passcode is 8940410.
A simultaneous webcast and replay will be available in the
Investor Relations section of the Company’s website,
www.ihstowers.com, on the Earnings Materials page.
Upcoming Conferences and Events
IHS Towers management is expected to participate in the upcoming
conferences outlined below:
- J.P. Morgan 51st Annual Global Technology, Media and
Communications Conference (Boston) – May 24, 2023
- Cowen 51st Annual TMT Conference (New York) – May 31, 2023
- GS Digital Infrastructure Conference (London) – June 1,
2023
- 6th Avior Corporate Summit 2023 (Johannesburg) – June 14,
2023
- Barclays Emerging Markets ESG Corporate Days (Virtual) – June
21, 2023
About IHS Towers
IHS Towers is one of the largest independent owners, operators
and developers of shared communications infrastructure in the world
by tower count and is one of the largest independent multinational
towerco solely focused on emerging markets. The Company has nearly
40,000 towers across its 11 markets, including Brazil, Cameroon,
Colombia, Côte d’Ivoire, Egypt, Kuwait, Nigeria, Peru, Rwanda,
South Africa and Zambia. For more information, please email:
communications@ihstowers.com or visit: www.ihstowers.com
Cautionary statement regarding forward-looking
Information
This press release contains forward-looking statements. We
intend such forward-looking statements to be covered by relevant
safe harbor provisions for forward-looking statements (or their
equivalent) of any applicable jurisdiction, including those
contained in Section 27A of the Securities Act of 1933, as amended
(the “Securities Act”), and Section 21E of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”). All statements other
than statements of historical facts contained in this press release
may be forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “intends,”
“targets,” “projects,” “contemplates," “believes,” “estimates,”
“forecast,” “predicts,” “potential” or “continue” or the negative
of these terms or other similar expressions. Forward-looking
statements contained in this press release include, but are not
limited to statements regarding our future results of operations
and financial position, including our anticipated results for the
fiscal year 2023, industry and business trends, business strategy,
plans, market growth and our objectives for future operations.
We have based these forward-looking statements largely on our
current expectations and projections about future events and
financial trends that we believe may affect our business, financial
condition and results of operations. Forward-looking statements
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including, but not limited to:
- non-performance under or termination, non-renewal or material
modification of our customer agreements;
- volatility in terms of timing for settlement of invoices or our
inability to collect amounts due under invoices;
- a reduction in the creditworthiness and financial strength of
our customers;
- the business, legal and political risks in the countries in
which we operate;
- general macroeconomic conditions in the countries in which we
operate;
- changes to existing or new tax laws, rates or fees;
- foreign exchange risks and/or ability to access U.S. Dollars in
our markets;
- regional or global health pandemics, including COVID 19, and
geopolitical conflicts and wars, including the current conflict
between Russia and Ukraine;
- our inability to successfully execute our business strategy and
operating plans, including our ability to increase the number of
Colocations and Lease Amendments on our Towers and construct New
Sites or develop business related to adjacent telecommunications
verticals (including, for example, relating to our fiber businesses
in Latin America and elsewhere) or deliver on our sustainability or
environmental, social and governance (ESG) strategy and initiatives
under anticipated costs, timelines, and complexity, such as our
Carbon Reduction Roadmap (Project Green), including plans to reduce
diesel consumption, integrate solar panel and battery storage
solutions on tower sites and connect more sites to the electricity
grid;
- reliance on third-party contractors or suppliers, including
failure or underperformance or inability to provide products or
services to us (in a timely manner or at all) due to sanctions
regulations, due to supply chain issues or other reasons;
- our estimates and assumptions and estimated operating results
may differ materially from actual results;
- increases in operating expenses, including increased costs for
diesel;
- failure to renew or extend our ground leases, or protect our
rights to access and operate our Towers or other telecommunications
infrastructure assets;
- loss of customers;
- risks related to our indebtedness;
- changes to the network deployment plans of mobile operators in
the countries in which we operate;
- a reduction in demand for our services;
- the introduction of new technology reducing the need for tower
infrastructure and/or adjacent telecommunication verticals;
- an increase in competition in the telecommunications tower
infrastructure industry and/or adjacent telecommunication
verticals;
- our failure to integrate recent or future acquisitions;
- the identification by management of material weaknesses in our
internal control over financial reporting, which could affect our
ability to produce accurate financial statements on a timely basis
or cause us to fail to meet our future reporting obligations;
- increased costs, harm to reputation, or other adverse impacts
related to increased intention to and evolving expectations for
environmental, social and governance initiatives;
- reliance on our senior management team and/or key
employees;
- failure to obtain required approvals and licenses for some of
our sites or businesses or comply with applicable regulations;
- inability to raise financing to fund future growth
opportunities or operating expense reduction strategies;
- environmental liability;
- inadequate insurance coverage, property loss and unforeseen
business interruption;
- compliance with or violations (or alleged violations) of laws,
regulations and sanctions, including but not limited to those
relating to telecommunications regulatory systems, tax, labor,
employment (including new minimum wage regulations), unions, health
and safety, antitrust and competition, environmental protection,
consumer protection, data privacy and protection, import/export,
foreign exchange or currency, and of anti-bribery, anti-corruption
and/or money laundering laws, sanctions and regulations;
- fluctuations in global prices for diesel or other
materials;
- disruptions in our supply of diesel or other materials;
- legal and arbitration proceedings;
- reliance on shareholder support (including to invest in growth
opportunities) and related party transaction risks;
- risks related to the markets in which we operate, including but
not limited to local community opposition to some of our sites or
infrastructure, and the risks from our investments into emerging
and other less developed markets;
- injury, illness or death of employees, contractors or third
parties arising from health and safety incidents;
- loss or damage of assets due to security issues or civil
commotion;
- loss or damage resulting from attacks on any information
technology system or software;
- loss or damage of assets due to extreme weather events whether
or not due to climate change;
- failure to meet the requirements of accurate and timely
financial reporting and/or meet the standards of internal control
over financial reporting that support a clean certification under
the Sarbanes Oxley Act;
- risks related to our status as a foreign private issuer;
and
- the important factors discussed in the section titled “Risk
Factors” in our Annual Report on Form 20-F for the fiscal year
ended December 31, 2022.
The forward-looking statements in this press release are based
upon information available to us as of the date of this press
release, and while we believe such information forms a reasonable
basis for such statements, such information may be limited or
incomplete, and our statements should not be read to indicate that
we have conducted an exhaustive inquiry into, or review of, all
potentially available relevant information. These statements are
inherently uncertain and investors are cautioned not to unduly rely
upon these statements. You should read this press release and the
documents that we reference in this press release with the
understanding that our actual future results, performance and
achievements may be materially different from what we expect. We
qualify all of our forward-looking statements by these cautionary
statements. Additionally, we may provide information herein that is
not necessarily “material” under the federal securities laws for
SEC reporting purposes, but that is informed by various ESG
standards and frameworks (including standards for the measurement
of underlying data), and the interests of various stakeholders.
Much of this information is subject to assumptions, estimates or
third-party information that is still evolving and subject to
change. For example, our disclosures based on any standards may
change due to revisions in framework requirements, availability of
information, changes in our business or applicable government
policies, or other factors, some of which may be beyond our
control. These forward-looking statements speak only as of the date
of this press release. Except as required by applicable law, we do
not assume, and expressly disclaim, any obligation to publicly
update or revise any forward-looking statements contained in this
press release, whether as a result of any new information, future
events or otherwise.
IHS HOLDING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
INCOME AND OTHER COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
2023 AND 2022
Three months period
ended
March 31,
March 31,
2023
2022
$’000
$’000
Revenue
602,528
446,132
Cost of sales
(306,889
)
(250,589
)
Administrative expenses
(97,321
)
(90,562
)
(Loss allowance)/reversal of loss
allowance on trade receivables
(3,560
)
2,468
Other income
175
1,170
Operating profit
194,933
108,619
Finance income
6,828
114,967
Finance costs
(178,881
)
(192,212
)
Profit before income tax
22,880
31,374
Income tax expense
(15,218
)
(16,254
)
Profit for the period
7,662
15,120
Profit attributable to:
Owners of the Company
10,468
16,518
Non‑controlling interests
(2,806
)
(1,398
)
Profit for the period
7,662
15,120
Income per share—basic $
0.03
0.05
Income per share—diluted $
0.03
0.05
Other comprehensive income:
Items that may be reclassified to profit
or loss
Exchange differences on translation of
foreign operations
44,192
131,790
Other comprehensive income for the
period, net of taxes
44,192
131,790
Total comprehensive income for the
period
51,854
146,910
Total comprehensive income attributable
to:
Owners of the Company
49,458
113,788
Non‑controlling interests
2,396
33,122
Total comprehensive income for the
period
51,854
146,910
IHS HOLDING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
FINANCIAL POSITION (UNAUDITED)
AT MARCH 31, 2023 AND DECEMBER 31,
2022
March 31,
December 31,
2023
2022
$’000
$’000
ASSETS
Non‑current assets
Property, plant and equipment
2,116,820
2,075,441
Right of use assets
964,621
963,993
Goodwill
758,571
760,328
Other intangible assets
1,047,835
1,053,296
Fair value through other comprehensive
income financial assets
10
10
Deferred income tax assets
89,116
78,394
Derivative financial instrument assets
4,409
6,121
Trade and other receivables
152,642
130,347
5,134,024
5,067,930
Current assets
Inventories
66,183
74,216
Income tax receivable
1,464
1,174
Trade and other receivables
776,509
663,467
Cash and cash equivalents
515,589
514,078
1,359,745
1,252,935
Total assets
6,493,769
6,320,865
LIABILITIES
Current liabilities
Trade and other payables
687,287
669,149
Provisions for other liabilities and
charges
492
483
Derivative financial instrument
liabilities
1,067
1,393
Income tax payable
71,749
70,008
Borrowings
351,582
438,114
Lease liabilities
88,469
87,240
1,200,646
1,266,387
Non‑current liabilities
Trade and other payables
2,237
1,459
Borrowings
3,104,401
2,906,288
Lease liabilities
513,534
517,289
Provisions for other liabilities and
charges
86,296
84,533
Deferred income tax liabilities
173,024
186,261
3,879,492
3,695,830
Total liabilities
5,080,138
4,962,217
EQUITY
Stated capital
5,385,325
5,311,953
Accumulated losses
(3,308,615
)
(3,319,083
)
Other reserves
(892,675
)
(861,422
)
Equity attributable to owners of the
Company
1,184,035
1,131,448
Non‑controlling interest
229,596
227,200
Total equity
1,413,631
1,358,648
Total liabilities and equity
6,493,769
6,320,865
IHS HOLDING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
2023 AND 2022
Attributable to owners of the
Company
Non‑
Stated
Accumulated
Other
controlling
Total
capital
losses
reserves
Total
interest
equity
$’000
$’000
$’000
$’000
$’000
$’000
Balance at January 1, 2022
5,223,484
(2,860,205
)
(842,911
)
1,520,368
223,188
1,743,556
Options converted to shares
86,470
—
(86,470
)
—
—
—
Share‑based payment expense
—
—
4,024
4,024
—
4,024
Other reclassifications related to
share-based payment
—
1,560
(2,835
)
(1,275
)
—
(1,275
)
Total transactions with owners of the
company
86,470
1,560
(85,281
)
2,749
—
2,749
Profit/(loss) for the period
—
16,518
—
16,518
(1,398
)
15,120
Other comprehensive income
—
—
97,270
97,270
34,520
131,790
Total comprehensive income
—
16,518
97,270
113,788
33,122
146,910
Balance at March 31, 2022
5,309,954
(2,842,127
)
(830,922
)
1,636,905
256,310
1,893,215
Balance at January 1, 2023
5,311,953
(3,319,083
)
(861,422
)
1,131,448
227,200
1,358,648
Share‑based payment expense
—
—
3,129
3,129
—
3,129
Options converted to shares
73,372
—
(73,372
)
—
—
—
Total transactions with owners of the
company
73,372
—
(70,243
)
3,129
—
3,129
Profit/(loss) for the period
—
10,468
—
10,468
(2,806
)
7,662
Other comprehensive income
—
—
38,990
38,990
5,202
44,192
Total comprehensive profit
—
10,468
38,990
49,458
2,396
51,854
Balance at March 31, 2023
5,385,325
(3,308,615
)
(892,675
)
1,184,035
229,596
1,413,631
IHS HOLDING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31,
2023 AND 2022
Three months ended
March 31,
March 31,
2023
2022
$’000
$’000
Cash flows from operating
activities
Cash from operations
251,859
166,607
Income taxes paid
(14,443
)
(16,099
)
Payment for rent
(2,285
)
(2,543
)
(Payment)/refund for tower and tower
equipment decommissioning
(4
)
138
Net cash generated from operating
activities
235,127
148,103
Cash flow from investing
activities
Purchase of property, plant and
equipment
(105,417
)
(65,876
)
Payment in advance for property, plant and
equipment
(35,802
)
(50,839
)
Purchase of software and licenses
(7,252
)
(288
)
Consideration paid on business
combinations, net of cash acquired
—
(317,379
)
Proceeds from disposal of property, plant
and equipment
561
93
Insurance claims received
144
1,150
Interest income received
6,498
3,128
Deposit of short term deposits
(63,710
)
(121,599
)
Refund of short term deposits
16,729
51,460
Net cash used in investing activities
(188,249
)
(500,150
)
Cash flows from financing
activities
Transactions with non-controlling
interest
Bank loans received
368,096
54,679
Bank loans repaid
(264,345
)
(36,667
)
Fees on loans and derivative
instruments
(6,508
)
(2,860
)
Interest paid
(68,503
)
(54,098
)
Payment for the principal of lease
liabilities
(20,059
)
(15,350
)
Interest paid for lease liabilities
(12,120
)
(6,694
)
Initial margin received on non‑deliverable
forwards/non-deliverable swaps
—
5,844
Losses received on non‑deliverable
forwards/non-deliverable swaps
—
(2,741
)
Net cash used in financing
activities
(3,439
)
(57,887
)
Net increase/(decrease) in cash and cash
equivalents
43,439
(409,934
)
Cash and cash equivalents at beginning of
period
514,078
916,488
Effect of movements in exchange rates on
cash
(41,928
)
2,055
Cash and cash equivalents at end of
period
515,589
508,609
Use of Non-IFRS financial measures
Certain parts of this press release contain non-IFRS financial
measures, including Adjusted EBITDA, Adjusted EBITDA Margin and
Recurring Levered Free Cash Flow (“RLFCF”). The non-IFRS financial
information is presented for supplemental informational purposes
only and should not be considered a substitute for financial
information presented in accordance with IFRS, and may be different
from similarly titled non-IFRS measures used by other
companies.
We define Adjusted EBITDA as profit/(loss) for the period,
before income tax expense/(benefit), finance costs and income,
depreciation and amortization, impairment of withholding tax
receivables, business combination transaction costs, impairment of
property, plant and equipment and related prepaid land rent on the
decommissioning of sites, net (profit)/loss on sale of assets,
share-based payment (credit)/expense, insurance claims, listing
costs and certain other items that management believes are not
indicative of the core performance of our business. The most
directly comparable IFRS measure to Adjusted EBITDA is our
profit/(loss) for the period.
Segment Adjusted EBITDA (defined as profit/(loss) for the
period, before income tax expense/(benefit), finance costs and
income, depreciation and amortization, impairment of withholding
tax receivables, business combination transaction costs, impairment
of property, plant and equipment and related prepaid land rent on
the decommissioning of sites, net (profit)/loss on sale of assets,
share-based payment (credit)/expense, insurance claims, costs
relating to this offering and certain other items that management
believes are not indicative of the core performance of its
business)) to assess the performance of the business.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by
revenue for the applicable period, expressed as a percentage.
We believe that Adjusted EBITDA is an indicator of the operating
performance of our core business. We believe Adjusted EBITDA and
Adjusted EBITDA Margin, as defined above, are useful to investors
and are used by our management for measuring profitability and
allocating resources, because they exclude the impact of certain
items which have less bearing on our core operating performance. We
believe that utilizing Adjusted EBITDA and Adjusted EBITDA Margin
allows for a more meaningful comparison of operating fundamentals
between companies within our industry by eliminating the impact of
capital structure and taxation differences between the
companies.
Adjusted EBITDA measures are frequently used by securities
analysts, investors and other interested parties in their
evaluation of companies comparable to us, many of which present an
Adjusted EBITDA-related performance measure when reporting their
results.
Adjusted EBITDA and Adjusted EBITDA Margin are used by different
companies for differing purposes and are often calculated in ways
that reflect the circumstances of those companies. You should
exercise caution in comparing Adjusted EBITDA and Adjusted EBITDA
Margin as reported by us to Adjusted EBITDA and Adjusted EBITDA
Margin as reported by other companies. Adjusted EBITDA and Adjusted
EBITDA Margin are unaudited and have not been prepared in
accordance with IFRS.
Adjusted EBITDA and Adjusted EBITDA Margin are not measures of
performance under IFRS and you should not consider Adjusted EBITDA
or Adjusted EBITDA Margin as an alternative to profit/(loss) for
the period or other financial measures determined in accordance
with IFRS.
Adjusted EBITDA and Adjusted EBITDA Margin have limitations as
analytical tools, and you should not consider them in isolation.
Some of these limitations are:
- they do not reflect interest expense, or the cash requirements
necessary to service interest or principal payments, on our
indebtedness;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often need to be
replaced in the future and Adjusted EBITDA and Adjusted EBITDA
Margin do not reflect any cash requirements that would be required
for such replacements;
- some of the items we eliminate in calculating Adjusted EBITDA
and Adjusted EBITDA Margin reflect cash payments that have less
bearing on our core operating performance, but that impact our
operating results for the applicable period; and
- the fact that other companies in our industry may calculate
Adjusted EBITDA and Adjusted EBITDA Margin differently than we do,
which limits their usefulness as comparative measures.
Accordingly, prospective investors should not place undue
reliance on Adjusted EBITDA or Adjusted EBITDA Margin.
We believe that it is important to measure the free cash flows
we have generated from operations, after accounting for the cash
cost of funding and recurring capital expenditure required to
generate those cash flows. In this respect, we monitor RLFCF which
we define as cash from operations, before certain items of income
or expenditure that management believes are not indicative of the
core performance of our business (to the extent that these items of
income and expenditure are included within cash flow from operating
activities), and after taking into account loss allowances on trade
receivables, impairment of inventory, net working capital
movements, net interest paid or received, withholding tax, income
taxes paid, lease payments made, maintenance capital expenditures,
and routine corporate capital expenditures.
We believe RLFCF is useful to investors because it is also used
by our management for measuring our operating performance,
profitability and allocating resources. While Adjusted EBITDA
provides management with a basis for assessing its current
operating performance, in order to assess the long-term,
sustainable operating performance of our business through an
understanding of the funds generated from operations, we also take
into account our capital structure and the taxation environment
(including withholding tax implications), as well as the impact of
non- discretionary maintenance capital expenditures and routine
corporate capital expenditures, to derive RLFCF. RLFCF provides
management with a metric through which to measure how the
underlying cash generation of the business by further adjusting for
expenditures that are non-discretionary in nature (such as interest
paid and income taxes paid), as well as certain non-cash items that
impact profit/(loss) in any particular period.
RLFCF measure is frequently used by securities analysts,
investors and other interested parties in their evaluation of
companies comparable to us, many of which present an RLFCF-related
performance measure when reporting their results. Such measures are
used in the telecommunications infrastructure sector as they are
seen to be important in assessing the long-term, sustainable
operating performance of a business. We present RLFCF to provide
investors with a meaningful measure for comparing our cash
generation performance to those of other companies, particularly
those in our industry.
RLFCF, however, is used by different companies for differing
purposes and is often calculated in ways that reflect the
circumstances of those companies. You should exercise caution in
comparing RLFCF as reported by us to RLFCF or similar measures as
reported by other companies. RLFCF is unaudited and has not been
prepared in accordance with IFRS.
RLFCF is not intended to replace profit/(loss) for the period or
any other measures of performance under IFRS, and you should not
consider RLFCF as an alternative to cash from operations for the
period or other financial measures as determined in accordance with
IFRS. RLFCF has limitations as an analytical tool, and you should
not consider it in isolation. Some of these limitations are:
- not all cash changes are reflected, for example, changes in
working capital are not included and discretionary capital
expenditures are not included;
- some of the items that we eliminate in calculating RLFCF
reflect cash payments that have less bearing on our core operating
performance, but that impact our operating results for the
applicable period;
- the fact that certain cash charges, such as lease payments
made, can include payments for multiple future years that are not
reflective of operating results for the applicable period, which
may result in lower lease payments for subsequent periods;
- the fact that other companies in our industry may have
different capital structures and applicable tax regimes, which
limits its usefulness as a comparative measure; and
- the fact that other companies in our industry may calculate
RLFCF differently than we do, which limits their usefulness as
comparative measures.
Accordingly, you should not place undue reliance on RLFCF.
Reconciliation from profit for the period to Adjusted
EBITDA
The following is a reconciliation of Adjusted EBITDA to the most
directly comparable IFRS measure, which is profit for the three
months ended March 31, 2023 and 2022:
Three months ended
March 31,
March 31,
2023
2022
$'000
$'000
Profit
7,662
15,120
Adjustments:
Income tax expense
15,218
16,254
Finance costs(a)
178,881
192,212
Finance income(a)
(6,828
)
(114,967
)
Depreciation and amortization
119,034
107,840
Impairment of withholding tax
receivables(b)
11,255
14,787
Business combination transaction costs
1,459
8,360
Net impairment of property, plant and
equipment and prepaid land rent (c)
4,146
2,183
Net (gain)/loss on disposal of property,
plant and equipment
(734
)
167
Share-based payment expense(d)
3,289
3,574
Insurance claims(e)
(145
)
(1,150
)
Other costs(f)
2,175
512
Other income
(30
)
(20
)
Adjusted EBITDA
335,382
244,872
Divided by total revenue
602,528
446,132
Adjusted EBITDA Margin
55.7
%
54.9
%
(a)
Finance costs consist of interest expense and loan facility fees
on borrowings, the unwinding of the discount on our decommissioning
liability and lease liability, realized and unrealized net foreign
exchange losses arising from financing arrangements and net
realized and unrealized losses from valuations of financial
instruments. Finance income consists of interest income from bank
deposits, realized and unrealized net foreign exchange gains
arising from financing arrangements and net realized and unrealized
gains from valuations of financial instruments.
(b)
Revenue withholding tax primarily represents amounts withheld by
customers in Nigeria and paid to the local tax authority. The
amounts withheld may be recoverable through an offset against
future corporate income tax liabilities in the relevant operating
company. Revenue withholding tax receivables are reviewed for
recoverability at each reporting period end and impaired if not
forecast to be recoverable.
(c)
Represents non-cash charges related to the impairment of
property, plant and equipment and related prepaid land rent on the
decommissioning of sites.
(d)
Represents credits and expense related to share-based
compensation, which vary from period to period depending on timing
of awards and changes to valuation inputs assumptions.
(e)
Represents insurance claims included as non-operating
income.
(f)
Other costs for the three months ended March 31, 2023 included
one off consulting fees related to corporate structures and
operating systems of $1.6 million and non-recurring professional
fees related to financing of $0.2 million. Other costs for the
three months ended March 31, 2022 included professional costs
related to SOX implementation.
Reconciliation from cash from operations to RLFCF
The following is a reconciliation of RLFCF to the most directly
comparable IFRS measure, which is cash from operations for the
three months March 31, 2023 and 2022:
Three months ended
March 31,
March 31,
2023
2022
$'000
$'000
Cash from operations
251,859
166,607
Net movement in working capital
86,346
68,951
(Loss)/reversal of loss allowance on trade
receivables
(3,560
)
2,468
Impairment of inventory
—
(138
)
Income taxes paid
(14,443
)
(16,099
)
Withholding tax(a)
(33,432
)
(28,144
)
Lease and rent payments made
(34,464
)
(24,587
)
Net interest paid(b)
(62,005
)
(50,970
)
Business combination transaction costs
1,459
8,360
Other costs(c)
2,175
512
Other income
(30
)
(20
)
Maintenance capital expenditure(d)
(43,758
)
(39,592
)
Corporate capital expenditures(e)
(490
)
(288
)
RLFCF
149,657
87,060
Non-controlling interest
(3,068
)
(3,019
)
RLFCF excluding non-controlling
interest
146,589
84,041
(a)
Withholding tax primarily represents amounts withheld by
customers and amounts paid on bond interest in Nigeria which is
paid to the local tax authority. The amounts withheld by customers
may be recoverable through an offset against future corporate
income tax liabilities in the relevant operating company.
(b)
Represents the aggregate value of interest paid and interest
income received.
(c)
Other costs for the three months ended March 31, 2023 included
one off consulting fees related to corporate structures and
operating systems of $1.6 million and non-recurring professional
fees related to financing of $0.2 million. Other costs for the
three months ended March 31, 2022 included professional costs
related to SOX implementation.
(d)
We incur capital expenditures in relation to the maintenance of
our towers and fiber equipment, which is non- discretionary in
nature and required in order for us to optimally run our portfolio
and to perform in line with our service level agreements with
customers. Maintenance capital expenditures includes the periodic
repair, refurbishment and replacement of tower, fiber equipment and
power equipment at existing sites to keep such assets in
service.
(e)
Corporate capital expenditures, which are non-discretionary in
nature, consist primarily of routine spending on information
technology infrastructure.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230523005645/en/
Media: Giles Bethule/ Akash Lodh FGS Global
Giles.Bethule@fgsglobal.com / Akash.Lodh@fgsglobal.com +44 207 251
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