IHS Holding Limited Ordinary Shares

Hi everyone and welcome to the IHS Holding Limited results call for the unaudited interim condensed consolidated financial statements for the three month and nine month periods ending September 30th 2021. Please note that today's conference is being recorded. If you would like to ask a question please press star followed by one on your telephone keypad at any time. At this time I'd like to turn the conference over to Matt Sperling at IHS Towers Please go ahead, sir.

Thank you, operator. Thanks also to everyone for joining the call today. I'm Matt Sperling, the IHS VP of Capital Markets. With me today are Sam Darwish, the Chairman and CEO of IHS Towers, Adam Walker, EVP and CFO, and Steve Howden, SVP and Deputy CFO. This morning, we published unaudited financial statements for the three-month and nine-month periods ended September 30, 2021. on the investor relations section of our website and issued a related earnings release and presentation. These are the consolidated results of IHS Holding Limited, which was recently listed on the New York Stock Exchange under the ticker symbol IHS and which comprises the entirety of the group's operations and is the parent company of IHS Netherlands Holdco BV, the issuer of our outstanding bonds. Before we discuss this quarter's results, I'd like to remind you that all statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements and information within the meeting of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 that relate to our current expectations and our views of future events. These include statements regarding our current expectations for the business and our financial performance. These statements are neither promises nor guarantees. They involve known and unknown risks, uncertainties, and other important factors, some of which are beyond our control that may cause our actual results, performance, or achievements to be materially different from any future results. Factors discussed in the risk factors section of our final prospectus filed pursuant to Rule 424 with the Securities and Exchange Commission on October 15, 2021 in connection with our initial public offering. and our other filings with the SEC could cause actual results to differ materially from those indicated by the forward-looking statements on this call. We'll also refer to non-IFRS measures that we view as important in assessing the performance of our business. A reconciliation of non-IFRS metrics to the nearest IFRS metric can be found on our earnings presentation, which is available on the investor relations section of our website. And with that, I'd like to turn the call over to Sam Darwish, our chairman and CEO. Thanks, Matt.

Welcome, everyone. Thanks for joining our Q3 2021 earnings result call. This is the first following the listing of IHS on the New York Stock Exchange a month ago. Before discussing some of the highlights of Q3, I would like to address several topics, after which Adam and Steve will take you through the results and the associated presentation. Then we will, of course, open the line for Q&A. So first, I want to thank our 2,000 plus employees actually for their hard work and dedication, which have enabled us to reach this day. When Mo, William, and myself founded IHS 20 years ago to build cell phone towers in Nigeria, just as mobile communications were taking off, we never could have dreamed that one day IHS would become a leading global company listed on the New York Stock Exchange. Second, I want to thank our customers who trust us as partners, regarding the infrastructure that is critical to their businesses and who rely on ISS to deliver 24-7 the performance levels their networks and their customers require. And finally, I want to thank our long-time investors, our bondholders, and of course our new shareholders for believing and sharing in our vision and strategy as we continue working to create the leading emerging markets-focused telecommunications infrastructure provider globally. So slide five of the presentation shows our key highlights before we dig into the detail of our results. Our October IPO marks the beginning of a new chapter at IHS in our 20th year of operations. For those of you who may be new to our story, IHS is the fourth largest independent multinational tower company globally by tower count, with over 30,500 towers across nine countries spread across Africa, Middle East, and Latam. We focus on the global emerging markets of the world and are the market-leading tower core in six out of our nine countries. Africa is where the group started and remains at the core of the group, but we are also excited about the results and opportunities of our newer business segments in Latin America and MENA. We are fundamentally a tower business, but we are looking to provide wider telecommunications infrastructure in certain markets where it makes sense to us and to our customers. Q321 was another positive quarter for us, as Adam and Steve will discuss shortly. Demand for communications continued to grow globally, and our two principal customers in Nigeria recently announced very strong results driven by data uptake. In Q321, we delivered 8.7% consolidated revenue growth in dollar terms, and 11.8% underlying organic growth versus Q320. Furthermore, these growth rates are actually higher when taking into account a positive revenue adjustment in Q320 in connection with amending our contract with MTN last year. So overall, we are pleased regarding our financial position and the significant opportunities ahead of us. In terms of recent key developments, we have progressed a number of initiatives in the quarter and since quarter end. Today, we announced the potential refinance of our 2025 senior notes with a new bond issuance, subject to market conditions, of course. The aim of this transaction is to term out some of our debt and also hopefully reduce overall cost of debt. On the growth side, we will cover the organic growth in more detail with the Q3 results. But on the inorganic growth side, we are progressing on three fronts. Firstly, we continue to progress our Egypt entry as we disclosed during the IPO in October. World continues to explore commercial opportunities for building and potentially acquiring sites with the key carriers in the market. having been the only TowerCo of scale in that country at the moment. Secondly, the anticipated closing of our previously announced TIM fiber transaction in Brazil is now imminent this month, and we look forward to announcing more on that very, very soon, hopefully. That transaction continues our resonance for 5G offering in Brazil and continues developing our customer relationship with TIM in Brazil. On the COVID front, it appears that in our markets, we will all be living with the pandemic for quite some time. While we have experienced no material financing impact from COVID, we remain vigilant regarding its potential impact and, of course, hope that the ongoing vaccine rollout can reach as many people as quickly as possible. Finally, as a leading global emerging market tower core, our focus is not just on financial performance, but also on sustainability, which is at the core of our business. And in Q3, we have continued to advance our sustainability efforts on multiple fronts across our markets. Importantly, in September, we launched the Frontline Worker Initiative, a program through which we will pay for the entirety of a college education at a top school for the qualifying children of those of our employees, frontline worker employees, who have worked so hard during the pandemic to maintain the towers and network performance in such difficult periods. Applications to the program are commencing now, and we are excited for our employees. This program also covers the vendors, by the way, which is roughly a 40,000-people universe. So we are excited for our employees. We are excited for the employees of our vendor who can take advantage of this. Also exciting is that we have continued evolving the analysis of our Scope 1 and Scope 2 greenhouse gas emissions in connection with developing a carbon emission reduction strategy. another topic that is near and dear to me. During Q3, we delivered numerous other initiatives devoted to education, healthcare infrastructure, and combating COVID-19 as we have been doing across our markets. Turning to slide six, given this is our first earnings call as a publicly listed company, we wanted to provide a reminder of who is our chef. There are several key points that I would like you to keep in mind about us. First, we believe we are a unique investment proposition and company. In my view, there is no other TowerCo of this scale and experience that solely targets the emerging markets on a global level and has our growth prospects. We have grown significantly from our starting point 20 years ago, delivering year-on-year strong organic growth. Our emerging market footprint provides us access to secular growth going forward as the markets in which we operate rely on wireless telephony as we saw through the recent COVID period. Our markets, which are still growing from a population perspective, are behind the developed world in terms of wireless technology, with the majority of our markets still rolling out 4G, let alone considering the future of 5G. Nigeria today, for example, is about 40% 3G, 4G penetrated only. In Brazil, we have just seen the 5G spectrum allocation take place earlier in November, and are looking forward to significant carrier rollout over the coming years. These wireless technology trends drive our organic growth prospects as we provide co-location, lease amendments, and new sites for the carriers. Moreover, solutions that we develop in one country, like our rural telephony product, for example, which runs on solar with satellite back wall that we are rolling out in Africa, we believe can be deployed in new markets like Brazil and elsewhere. So we have cross-sell opportunities between markets as well. Secondly, our growth has also come inorganically from 19 transactions we have successfully completed for over 24,000 towers. Our plans to become a global consolidator of emerging towers are, in our view, real and are based on our experience, knowledge, and track record. Our diversification plans are part of an overall growth strategy. as well as a strategy aimed at reducing our group cost of capital. More on that strategy shortly. Third, our business model is very similar to the US Tower 2 model that you may be familiar with. We respect what those companies have achieved and look to replicate many aspects of their model. So we didn't reinvent the wheel here, but because we have executed the model in tough emerging market environments, we have gained a specific skill set that allows us to keep executing it on a global emerging market scale. Finally, we believe that our business model is inherently sustainable and that we deliver shared infrastructure solutions that promote digital connectivity and inclusion. This improves the lives of communities we serve by providing greater access to education, healthcare, and financial and government services, while the infrastructure sharing reduces the environmental footprint of the telecom landscape in our geographies. In the emerging markets, I believe that there is no way you can become of scale unless you operate as a long-term sustainable business. You need to be accretive to the environment as the resources around are very limited. So this is not a tick-the-box exercise for us. It is something that I'm very, very passionate about. The current footprint of IHS shown on slide six highlights that we are on our way to becoming a truly globally diversified power core with assets in Africa, Latam, and MENA. Over the past eight years, we have added 40,000 tenants and lease amendments, built thousands of towers, and acquired over 24,000 towers. Today, we own over 30,000 towers that serve 600 million people, and very soon, thousands of kilometers of fiber in Brazil. Egypt, of course, will add a market of 100 million people, making our market covering roughly 700 million people. So globally, we are now approximately the 11th largest tower in the world by tower count. But if you look closer, we are the fourth largest independent multinational. In Africa, we are the largest by far. On slide number seven, I wanted to highlight our historical growth and summarize our strategy. As you can see, our long-term revenue through 2020 is over 11%, and our results so far in 2021 have improved. We also have the scale with $1.4 billion of revenue and $819 million of adjusted EBITDA in 2020, and $1.6 billion of revenue and $710 million of adjusted EBITDA, $1.16 billion of revenue and $710 million of adjusted EBITDA in the nine months ended September 30th, 2021. And we have reached the scale while maintaining a conservative net leverage ratio within or below our target range of three to four net leverage. In terms of our strategy, we are fundamentally a growth company at the core, combining both organic and inorganic growth. There are two critical elements of this strategy. First, we will continue to grow organically, focusing on leasing up our existing towers and improving margin through lease amendments as our customers add new technologies to support their offerings, among other things. We also plan to continue to enhance our revenue through other services such as fiber, data centers, small cells, DAS, rural. In other words, an silly telecom infrastructure that fits our business model and our return expectations and helps further embed us with the customers by providing solutions they need. In Brazil, for example, we have 30,000 options on locations at the moment, and soon we'll have thousands of kilometers of fiber ready for the 5G rollout as we close the 10 Brazil transactions. which has just commenced with the initial 5G spectrum option. Second, we continue to look to diversify our asset base through new portfolios of towers, whether acquiring them from the carriers, as we have done successfully in the past, or buying existing tower codes, as we have done several times. Telecommunications infrastructure is a huge landscape of opportunity, and we believe that there are very few other companies that are doing this across the globe like we are. And as I said before, our advantage is our 20 years of experience operating in the emerging markets. We know how to identify, execute, integrate, and deliver strong returns from these acquisitions. I mean, we've done 19 transactions in a period of eight years, are closing the 20th shortly, and that's our track record. Our diversification strategy is aimed at growth, but also lowering our group cost of capital. So finally, we believe that there is an attractive opportunity out there for us. Africa is expected to double its population before 2050. LATAM, Middle East, Asia are all fast-growing young markets that need to deliver the broadband pipelines to their citizens. We expect that hundreds of thousands of POPs will need to be built or shared in the future. And we believe that we at IHS sit in this unique place to benefit from these trends the most. IHS at the moment is the only tower of scale solely focused on the emerging markets, and we believe we are very well-placed as anyone else to work in these complex environments. So the sky is the limit for us. And with that, I will turn things over to Adam and Steve to walk you through the results.