IHS Holding Limited Ordinary Shares

Good day, and welcome to the IHS Holding Limited 4Q and 4-Year Earnings Results Conference Call. Please note that today's conference is being webcast and recorded. If you would like to ask a question, please press star and then 1 on your telephone keypad at any time. At this time, I'd like to turn the conference over to Colby Sinasel. Please go ahead, sir.

Thank you, Operator. Thanks also to everyone for joining the call today. I'm Colby Sinasel, the EVP of Communications here at IHS. With me today are Sam Darwish, our chairman and CEO, and Steve Howden, our CFO. This morning, we filed our annual report on Form 20F for the full year ended December 31st, 2023 with the SEC, which can also be found 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 is listed on the New York Stock Exchange under the ticker symbol IHS, and which comprises the entirety of the group's operations. Before we discuss the results, I would like to draw your attention to the disclaimer set out at the beginning of the presentation on slide 2, which should be read in full along with the cautionary statement regarding forward-looking statements set out in our earnings release and 20F file as well today. In particular, the information to be discussed may contain forward-looking statements which, by their nature, involve known and unknown risks and uncertainties, And other important factors, some of which are beyond our control, that are difficult to predict, and other factors which may cause actual results, performance, or achievements, or industry results to be materially different from any future results, performance, or achievements, or industry results expressed or implied by such forward-looking statements, including those discussed in the risk factors section of our Form 20F, filed today with the Securities and Exchange Commission, and our other filings with the SEC. We'll also refer to non-IFRS measures, including adjusted EBITDA, that we view as important in assessing the performance of our business, and ALFCF, that we view as important in assessing the liquidity of our business. A reconciliation of non-IFRS metrics to the nearest IFRS metrics 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, Koldi, and welcome everyone to our fourth quarter and year-end 2023 earnings results call. We're reporting a strong quarter of performance across our key metrics with revenue, adjusted EBITDA, and ALFCF in line or ahead of our expectations. Despite the meaningful Nigerian currency devaluation that began in June, while CapEx was meaningfully below expectations, our results reflect the continued strong secular trends we are seeing across our business including growth in lease amendments, new tenants, new sites, or built-to-suit, and targeted fiber rollout. For 2023 as a whole, we are reporting 8% revenue growth, 10% adjusted EBITDA growth, 19% ALFCF growth, and an 8% reduction in CAPEX. Organic growth was 37%. Group-wide, we added 1,041 co-locations and 4,929 lease amendments, And we surpassed our expectations for new sites, having built 1,329 new towers, mostly in Brazil with 812 in the country. As we continue to prioritize organically growing our asset base in that market. These strong growth trends should continue in 2024 as evidenced by our recently announced deal with Airtel in Nigeria that extended Airtel's contract to 2031 and included a commitment to add 3,950 new tenancies over the next five years, much of it front-loaded to 2024 and 2025. Which takes me to an important point. These strong fundamental trends are occurring against a challenging backdrop. The Naira continues to devalue at levels that sadly are offsetting much of these strong secular trends. From January to December 2023, the Naira suffered a 98% unfavorable movement. And from January 2024 to date, we have seen a further 75% unfavorable movement. This means a total unfavorable movement of 246% since January 23. Most of this negative movement came as a result of positively viewed government actions of unifying multiple exchange rates, removing the expensive petrol subsidies, and trying to contain the soaring inflation, which hit 28.9% in December 2023. While these actions were generally viewed positively by market observers and us, other supporting measures are required to contain the Naira devaluation. Some of these required changes began to occur recently in Q1, as the Nigerian Monetary Policy Committee hiked the main policy interest rate by 400 basis points and are adding much needed forex to the daily market. This has helped stabilize the currency over the past few weeks. Some analysts, including Goldman Sachs, among others, are even predicting a strengthening Naira by end of this year. market observers expect the monetary policy committee to further increase the main policy interest rate throughout 2024 as they aim to lower inflation and further stabilize the forex market from a 2023 results perspective the forex protection mechanisms in our revenue contracts helps us offset the majority of this pressure in the year and was evident in our q4 23 results however We expect the additional devaluation that began in January to further impact our results in 2024. While Steve will discuss this further when he discusses guidance, to give you some context, our guidance for 2024 assumes an average rate of 1,610 naira to the dollar, whereas the average rate in 2023 was 638. and that the devaluation in the Naira will have a negative $535 million impact on revenue year on year, even after adjusting for the impact of the Forex resets. Given the macro environment we're operating in, particularly in Nigeria, which represented 63% of revenue in Q4-23, we continue to take what we believe is a more balanced approach to growth and cash generation, We also expect the significant reduction in capex that started in the second half of 2023 to continue in 2024, along with a continued focus on improving operating efficiencies through productivity enhancements and cost reductions. is excitingly this also includes an increased focus on innovation including the deepening usage of ai in how we utilize maintain and operate on our towers and it's something i'm very passionate about and personally spearheading A dedicated team has been working for a while on developing use cases that can help us improve our efficiencies using the massive amounts of data we have due to our extensive operations over decades. Skipping to slide seven, I want to discuss some of our key highlights, starting with commercial progress. As of year end 2023, we had $11 billion of revenue under contract with an average remaining tenant term of 7.5 years. I think it's important to highlight these metrics as they point to the durability we believe inherent in our business model, despite what the perception may be. We continue to make progress on the commercial front across the business as we have signed contracts with MTN in Cameroon and in Cote d'Ivoire for a further 10 years. In Nigeria, as MTN highlighted in their most recent earnings announcement earlier this month, we continue to engage constructively with them to find ways to alleviate some of the operating pressure they are under, given our key role in running the majority of their network in the country, while also maintaining appropriate economic results for ourselves. Also, as previously mentioned, we signed an extended contract with Airtel in Nigeria this past February, taking the term into the next decade in an agreement that includes a commitment by Airtel Nigeria to add 3,950 new tenancies over the next five years and is front-loaded over the next two. We are very excited about the potential of this mutually beneficial partnership. Shifting to governance progress, in January of this year, we announced a settlement agreement with Vandel in relation to the public dispute, which you are aware of, reflecting a commitment to strong corporate governance and constructive shareholder engagement. The text of the proposed amendments to the Articles of Association will be made available to shareholders before the next AGM. On stock liquidity, more progress here. we have removed all lockups on the pre-IPO shareholders. We also estimate approximately 14% of our shares are now owned by post-IPO shareholders compared to just 5% at the time of the IPO, an almost 300% improvement in float size. This is also evident in our average daily trading volume, which is now 574,000 shares, almost five times higher than what it was in May 2022. During the quarter, we continued to buy shares under our two-year buyback program with a total of $10 million worth of shares bought over the past two quarters. I'd like now to provide an update on Project Green. For 2023, we spent $103 million of capex versus our guidance of $90 to $100 million. and achieved ALFCF savings of approximately $24 million versus guidance of $22 million. Overall, the project remains on target, as you can see by our results. We will provide a more comprehensive update on the impact Project Glean and our carbon reduction roadmap is having when we publish our annual sustainability report, which we expect to be next quarter. Moving on to our balance sheet, we continue to feel comfortable with our liquidity position, but also continue to increase our focus on cash generation and continue to evaluate and execute various ways to do such. As of year end, we had $724 million of available liquidity, including our undrawn group RCF and the remaining undrawn portion of our group term loan. We continue to actively pursue initiatives to shift more debt into local currency, extend maturities, and manage interest expense. This was evident in our recent local currency $116 million equivalent facility in Cote d'Ivoire. The proceeds of this local OPCO loan will refinance U.S. dollar obligations at the holding company level. Also, as previously announced in November, we extended the maturity of our $300 million group RCF to October 2026. Leverage ended the year at 3.4 times, and as we had previously commented, was impacted by the Naira devaluation in June. We expect leverage to further increase in 2024 given the additional narrow devaluation, but expect to remain within our target three to four times and continue to have an adequate liquidity position, which Steve will cover further in his section. And finally, on shareholder return, I would like to make the following statement. Despite the currency headwinds in Nigeria, we believe in the underlying strength of our business and believe our equity is undervalued, given Africa's perceived place in the global markets. For example, Nigeria. When I moved to Nigeria 25 years ago, the country had approximately 120 million people. Today, it has approximately 225 million people. added a total population higher than Germany, France, or the UK, and is growing by 2.4% a year. That's 5 million people a year. To put into perspective, that's almost the size of Colorado a year. Nigeria also has a young energetic population with the majority of the population younger than the age of 20 as compared to aging developed markets. Hundreds of millions of people with no landlines, poor roads, poor transport infrastructure depend on their mobile phone for almost every aspect of their life. It has become as important as food or water or education. The trend in mobile phone adaptability and usage is irreversible and is showing through our growth and also through the massive growth in the underlying numbers of our key customers in Nigeria despite the forex headwinds. Macro conditions will tighten and loosen in cycles but the growth in mobile usage is one way to the sky and thus why we believe Nigeria's value is still significantly underestimated especially in our sector. The value and long-term growth prospects of the Latin America business are also very strong. When we moved to Latin during the COVID year, we had zero base. Today, we have almost 8,000 towers and one of the largest fiber networks in Brazil with a business that generated $146 million in EBITDA, in adjusted EBITDA in 2023. More than 800 new towers and 1.3 million more homes passed in 2023 alone. South Africa is growing. Sub-Saharan Africa is growing. We own and operate 40,000 towers across 11 markets covering approximately 800 million people who need their phones for almost every basic aspect of their life. And IHS sits at the heart of enabling such connectivity as a leader of its domain. It is for these reasons that we believe IHS Towers is underappreciated at our current valuation, and that we have to consider ways of unlocking value for our shareholders. Under the guidance of our board of directors, we have commenced work with our advisors, including JP Morgan, to evaluate strategic alternatives for the business across our portfolio and our capital allocation priorities. This exercise is intended to generate the best value for investors. We will provide an update on this as appropriate, including any potential actions. And with that, I will turn the call over to Steve.

Thanks, Sam, and hello, everyone. Turning to slide nine, as Sam mentioned, we're pleased to show our FY23 and fourth quarter 23 results were in line or better than expected against a challenging macro backdrop in Nigeria throughout the year. The business has shown its resilience in FY23, posting good results, but it's clearly not immune to such significant FX headwinds as we've seen in 2023 and continue to see in Nigeria in the early part of 2024. On slide nine, towers and tenants are up by 1% and 2% respectively year over year, while lease amendments increased by double digit percentage. On a reported basis, in the quarter, revenue declined and adjusted EBITDA increased modestly, both metrics impacted by the devaluation in the NIRA in 2023. Specifically in Q4, revenue declined by 3.1%, but adjusted EBITDA increased by 0.6%, while ALFCF increased 22%. For the full year, our revenue grew by 8%, adjusted EBITDA by 10%, and ALFCF by 19%, all on a reported basis. Our level of CapEx investment decreased by 33% in the fourth quarter and 7.5% for the year, largely due to lower capital expenditure for our Nigeria and SSA segments, partially offset by an increase in LATAM, all of which I'll discuss shortly. And finally, our consolidated net leverage ratio increased to 3.4 times, following the NARA devaluation, albeit still within our target three to four times range. Slide 10 shows the components of our 8.4% reported consolidated revenue growth for the full year 2023. Organic revenue growth of 36.9% for the year was driven primarily by FX resets, CPI escalations and new lease amendments. Power-related revenue, fibre, new co-location and new sites also contributed to our organic growth in 2023. On the right, you can see the organic growth rates of each of our segments for the year, with Nigeria delivering 47% organic growth, including a large impact from FX resets. Inorganic growth for FY 2023 was 2.9%, primarily driven by the full-year benefit of the MTNSA and GTS SP5 acquisitions and the fifth and sixth stages of the Kuwait acquisition. Inorganic growth will be immaterial in 2024, given we are now beyond the 12-month anniversary of the most meaningful recent acquisitions we did in South Africa and Brazil in 2022. Turning to our consolidated revenue growth for the quarter, you can see how the continued devaluation turned a quarter of strong organic growth into a 3.1% decline. The Naira devalued 15% in Q4 from 776 Naira to the dollar at the beginning of the quarter, to 912 naira to the dollar at the end of the fourth quarter. Yet organic revenue growth of 48.4% was driven primarily by FX resets that reflects a full quarter reset impact after the original June devaluation, CPI escalations and new lease amendments. Fibre, power-related revenue, new co-location and new sites also contributed to the organic growth in the quarter. The right side again shows the organic growth rates of each of our segments, where our Nigeria segment grew approximately 66%, including a large impact from FX resets. On slide 12, you can see our consolidated revenue adjusted EBITDA and adjusted EBITDA margins for the fourth quarter 23 and the full year 23. In fourth quarter 23, IHS generated $510 million in reported revenue, a 3.1% decline versus the prior year. While the Naira devaluation drove the decline, organic revenue growth of 48% reflects the contribution from our FX resets and CPI escalators, as well as the strong secular growth trends of the business. Fourth quarter 23 reported revenue includes a $25 million FX headwind versus FX rates of last quarter and a $16 million headwind when including all FX assumptions that were assumed in our guidance. For full year 2023, we delivered over $2.1 billion of revenue, an 8% increase, while organic revenue increased by almost 37%. Aggregate inorganic revenue was $57 million, equating to 2.9%, again reflecting the acquisitions previously discussed. Non-recurring items also made up $48 million this year compared to $18 million the year before and partially distorts the comparisons. Regarding adjusted EBITDA and adjusted EBITDA margins, in Q4-23, adjusted EBITDA of $274 million increased by approximately 1% versus Q4-22, and adjusted EBITDA margin was 53.8%, up 200 basis points from the prior year. For the full year, adjusted EBITDA was $1.1 billion, a 9.9% increase versus the prior year. An adjusted EBITDA margin was 53.3%, up 70 basis points from full year 2022. The year-on-year changes in adjusted EBITDA and adjusted EBITDA margin primarily reflect the increase in revenue we've already discussed, whilst the cost base was positively impacted by reducing power costs, but negatively impacted by FX-related impacts. As previously highlighted through Project Green, we continue to prioritise alternative sources of power, to reduce our dependency on diesel. On slide 13, we first review our adjusted levered free cash flow, or ALFCF. In Q4 23, we generated ALFCF of $118 million, a 22% increase versus Q4 22, primarily due to a reduction in maintenance capex, lease and rent payments made, and withholding tax, partially offset by the increase in net interest paid. Our ALFCF cash conversion rate increased to 43.1% versus 35.6% in the prior year's quarter. For the full year, we generated ALFCF of $433 million, a 19.2% increase versus FY22. And our ALFCF conversion rate was 38.2% up from 35.2% in FY22. One-time items in each year impacted that comparison. However, the year-on-year increase in ALFCF is primarily due to underlying business growth we've already discussed, as well as a reduction in maintenance capex. Turning to capex, in Q4-23, total capex was $131 million, which decreased 33% year-on-year, and full-year 2023 capex of $586 million decreased 7.5% year-on-year. The decrease in full-year 2023 was primarily due to a lower capex spend in Nigeria related to new site capex. and SSA related to refurbishment, but that was offset by higher capex in LATAM related to new site builds. In the latter part of the year, we started to pull back our capital allocation for growth capex in certain markets like Nigeria, which was one of the reasons that FY23 total capex of $586 million was lower than our $610 to $650 million capex guidance. More of this when we come to the FY24 guidance shortly. Slide 14 looks at our returns and capital allocation. In FY23, we continue to focus on driving returns and delivered a return on invested capital of 14.6% versus 9.9% the prior year. Our improved 2023 ROIC reflects, amongst other things, growth in cash flow, the first full-year contribution from the MTN South Africa and GTS SP5 acquisitions completed in 2022. The first year in numerous years when we have not deployed capital on M&A transactions. and of course the impact of the Naira devaluation. In terms of capital allocation, you can see that a significant portion of our spend in FY23 or $352 million was related to discretionary CapEx that excluded new sites, followed by maintenance or non-discretionary CapEx and new site CapEx, where we are a leading builder of new sites in Brazil. But we also allocated $10 million towards our share repurchase program that was authorized in August 2023. The $352 million discretionary capex, excluding new sites, was largely spent on fibre rollout, Project Green, augmentation for co-location and lease amendments, and other cost-saving initiatives. Turning to the segment review on slide 15, first walk through our Nigeria business. When the new president was sworn in last May, we saw swift action to unify multiple exchange rates and then the petrol subsidy. The Nigerian macro environment, however, remains complex, and while we're still encouraged by the actions taken by the new government, the additional steps taken in January have had a meaningfully negative impact on the Naira, which obviously is not showing in these results today, but you will see it in our 2024 guidance. We remain in close contact with our key customers, regulators, our vendors and our local banking partners to continue to best position IHS. FX reserves decreased to $32.9 billion in Nigeria at the end of 2023, from $37.1 billion in 2022. More recently, the Nigerian Monetary Policy Committee raised interest rates by 400 basis points to 22.75%, a move designed to curb inflationary and FX pressures. Meanwhile, the price of both oil and ice gas oil have decreased recently. Looking at ice gas oil, it was $792 per ton in Q4 of 23, and that's down from $911 per ton in Q3 of 23. Moving to real GDP growth, it expanded by 3.5% in the quarter, bringing the full year 2023 growth rate to 2.7%. Inflation jumped to 28.9% this past December versus 21.3% in December 2022. bringing the full year 23 average CPI rate to 24.7%. For IHS, Q4 23 revenue in Nigeria of $321 million decreased 10% year on year on a reported basis, reflecting the devaluation in the quarter, but increased 66% organically. Organic growth was driven primarily by FX resets and escalations. The negative FX impact was $267 million or 75.3% due to the devaluation. Our tower and tenant count decreased 3.5% and 0.8% respectively versus Q4 2022, which continued to reflect the planned decommissioning that occurred in Q1 2023 with no impact on revenue. Our co-location rate consequently improved to 1.59 times up from 1.54 times in Q4 2022. And lease amendments continue to be a strong driver of growth, increasing 12.5% year-on-year, as our customers added additional equipment to our sites, particularly 5G upgrades. Q4-23 segment-adjusted EBITDA in Nigeria was $200 million, a 3% decrease from a year ago, while segment-adjusted EBITDA margin was up 430 basis points to 62.3%, primarily reflecting a reduction in cost of sales, mostly coming from diesel savings. In our sub-Saharan African segment, towers and tenants increased by 1.5% and 2.6% respectively versus Q4-22, and revenue increased by 5.6%, of which organic revenue grew 12%, driven primarily by escalations and FX resets. Segment-adjusted EBITDA decreased by 6.3%, which primarily reflects an increase in cost of sales, partially offset by the increase in revenue. Segment adjusted EBITDA margin decreased to 50.3% from 56.6% in Q4 2022 as a result of higher power generation costs, permit and fees and diesel costs. We continue to monitor the macro environment in South Africa, particularly the ongoing power load shedding by the national utility, which did moderate versus the previous quarter. We also continue to evaluate our power managed service offerings. In our LATAM segment, towers and tenants grew by 9.3% and 6.6% respectively versus Q4 2022. Revenue increased by 24%, of which organic revenue growth was 17%, driven primarily by an increase in fibre, escalations and those new sites. Segment-adjusted EBITDA increased by 31%, leading to a 75.6% segment-adjusted EBITDA margin, a 400 basis point increase versus Q4 2022. In Brazil, our second largest market with 7,663 towers, macro conditions were largely positive as FX rates marginally strengthened, interest rates came down, and inflation stayed relatively flat. In MENA, towers and tenants grew by 9.2% and 9.7% respectively, while revenue increased by 13%, including 6% organic revenue growth, that driven primarily by new sites and escalations. Segment adjusted EBITDA grew by nearly 80%, mainly as a result of the revenue growth and a decrease in cost of sales. The Q4 23 segment adjusted EBITDA margin increased to 73.5%. Onto slide 16, and I'll briefly highlight our KPIs. As of December 31, our tower count was 40,075, up 1.1% from the end of 2022, driven primarily by ongoing new sites in LATAM and some in Nigeria. As you can see in the chart on the top right, collectively, we built more than 1,300 towers during the year, exceeding our guidance of approximately 1,250. Total tenants grew 2%, with the co-location rate of 1.49 times, up slightly versus last year. And lease amendments continue to be a significant factor of our growth, particularly in our Nigerian segment, given the historic 4G and now increasing 5G activity we are seeing. Lease amendments increased by almost 16% year on year. Moving on to slide 17, we look at our debt profile and related items. At December 31, 2023, we had approximately $4.1 billion of external debt and IFRS 16 lease liabilities. Of the $4.1 billion of debt, $1.94 billion represent our bond financings and other indebtedness includes $370 million that has been drawn down from the $500 million three-year bullet term loan at IHS Holding Limited level. We've undertaken various balance sheet initiatives to extend maturities, manage interest rate expense, swap dollar obligations into local currency where possible, and add flexibility to our capital structure. As mentioned, in October, we reduced the available undrawn commitments under the term loan by $100 million to $130 million and extended the availability period of this undrawn balance to April 2024. We've reduced the available undrawn commitments by another 70 million earlier this month in March as a result of pushing this USD exposure down into the Cote d'Ivoire market with $116 million equivalent term loan that matures in December 2028. In November, we extended the Group RCF maturity from March 25 to October 2026, which continues to have a 300 million capacity and is undrawn. Most recently, we've signed a $270 million bilateral loan to refinance essentially all of our letters of credit in Nigeria. This will extend the maturity of these obligations, reduce the interest expense by approximately 300 basis points, and release approximately $115 million equivalent of cash collateral previously held against these letters of credit. As you can imagine, we are pleased to have completed these initiatives, which further de-rest the balance sheet and increased our financial flexibility. Cash and cash equivalents decreased to $294 million at December 31. In terms of where that cash is held, approximately 12% was held in Naira at our Nigeria business. Moreover, in 2023, we upstreamed a total of $65 million from Nigeria alone, at an average rate of approximately 699 Naira to the dollar versus $207 million at a rate of approximately 550 million Naira in 2022, despite the USD shortages in the second half of 23. More positively, we've seen an increase in daily FX turnover or USD availability since government actions taken in January 2024, but we do caution it remains to be determined if such an increase will be sustained. Consequently, from all these moving elements, at the end of the fourth quarter, 23, our consolidated net debt was approximately $3.8 billion, and we had a consolidated net leverage ratio of 3.4 times, up 0.2 times year on year. In light of the continued Nigeria devaluation, we do expect leverage to increase over the coming quarters. However, our debt metrics are expected to remain within our target three to four times net leverage ratio. Now moving to slide 18, and we're introducing 2024 guidance that includes revenue in the range of $1.7 to $1.73 billion, adjusted EBITDA in the range of $935 to $955 million, ALFCF in the range of $285 to $305 million, and total capex in the range of $330 to $370 million. A few points I'd like to make here. Number one, revenue guidance includes an approximate $17.17 million reduction compared to 2023 as a result of an expected change in our accounting methodology on power pass-through revenue in South Africa, which will likely be accounted for as net revenue going forward rather than gross revenue and gross power cost. This, however, will have no impact on it just at EBITDA or ALFCF, as historically we've recognised an equal amount of power cost and power revenue. Number two, I'll speak more about FX rates in a moment, but excluding the change in how we recognise that power pass through in South Africa, the expected year-on-year reduction in financials is entirely the result of the Naira devaluation. And as Sam mentioned, it's expected to be a $535 million year-on-year headwind to revenue after adjusting for the impact of FX resets. And lastly, you may have seen in our disclosures, we have signed an agreement to sell our Peru business to SBA. While immaterial, given the small size of the business of 61 towers, guidance assumes that this transaction closes at the end of Q2 2024. You'll also see that CapEx is expected to come down significantly year on year as we increase our focus on cash generation, while still upholding the goal to maintain double digit organic revenue growth, which includes 49% in 2024. This does include a remaining small portion for Project Green of approximately $10 million. Then for the year we expect to build approximately 850 towers, including approximately 600 in Brazil. Then turning the page on slide 19 on the left you can see revenue by reporting currency for Q4 in the year, whereas on the right hand side we provide the breakout of revenue based on contract split. At the bottom of the slide shows the annual average FX rate assumptions used in our 2024 guidance and for the year we're assuming in guidance 1610 Naira to the dollar, which includes 1315 in Q1 of 2024 based on actual through February and 1815 on average in Q4 of 2024. And then finally, on slide 20, we provide the estimated full year financial impact of theoretical 10% devaluation in the Naira would have on our financials. While our 2024 guidance already assumes an average annual 1,610 naira to the dollar for the full year, with the naira rate getting to 1,850 by December 2024. Here we've shown the impact of a 10% devaluation beyond what we've assumed in the guidance. The figures in the middle of the page, including the approximate $40 to $45 million and $20 to $25 million impact to revenue and adjusted EBITDA respectively, provide a sense of what the 12-month run rate impact would be using our 2024 expectations. However, as you'll see on the right-hand side, the illustration in the middle of the page excludes an incremental approximate $15.15 million impact that could impact the quarter the devaluation actually occurs, assuming the devaluation was to occur at the beginning of the quarter. This represents the maximum lag that could occur between the devaluation when most of our fx resets would start to kick in the next quarter and as a reminder the vast majority of our resets are quarterly this now brings us to the end of our formal presentation and we thank you for your time today and operator please now open the line for questions

To those on the phones, please press star 1 to raise your hand.

We will now pause briefly while we register questions in the Q&A roster. Our first question comes from the line of Michael Elias from TD Cohen.

Please go ahead. Great. Thanks for taking the questions. A few, if I may. You know, to start off relating to the evaluation of the strategic alternatives, I'm curious, Can you give us a sense for the intended scope of these alternatives? And specifically what I mean by that is, is the intention to consider the sale of the entire business or just perhaps parts of the business? And second, what makes now the right time to explore these alternatives? And would you be exploring these alternatives if it were not for the devaluation that we saw in the NIRA? I have a follow-up question after that, but any color on these alternatives would be great. Hi, Michael.

This is Sam. We believe the business is undervalued. It's not a direct reflection of where the Naira is. The business, as you've seen, is reporting solid numbers, and it's been reporting solid numbers quarter after quarter. Of course, the Naira devaluation situation will have an impact, but again, it is within manageable remit. The strategic evaluation is largely because we feel the frustration of shareholders. We believe that markets have not given IHS the necessary credit when it comes to our value and where our valuation should be. So it is our duty, in addition to running the business well in a good and solid matter, it is our duty to leave no stone unturned, basically to try and unlock value for shareholders. Now, in terms of details, Unfortunately, I won't be able to go into details. We've commenced that. We're doing that work at the moment together with our advisors, JP Morgan included, and we will communicate as and when appropriate.

Great. Thanks for the call there, Sam. Just as a follow-up question, you know, with the volatility that we've seen in the Naira, how would you describe the ability and need to upstream cash in 2024? Thanks.

Hi, Michael, it's Steve.

So you're right, volatility is a good word to describe it. 2023 was challenging, no doubt, in terms of sourcing our dollars and therefore upstreaming, although we did get $65 million out earlier in 2023. I think from a 2024 perspective, that we have seen more liquidity in the markets, January, February and March today. So, you know, that is certainly the positive. I would say that's off the back of the number of moves by Nigerian governments, central bank, monetary policy, et cetera, around the currency devaluation, but also interest rate increases. So that's the positive. But obviously, you know, we have to caution that we want to see it continue for a period of time. We've seen a couple of, let's call them false dawns in the last nine or ten months in terms of reforms. So we're again sitting at a point where we hope there's a positive outlook, certainly in terms of US dollar liquidity. But let's see. We want to see more dollar liquidity and then we'll be upstream.

Great. Thanks for the call. Thank you. Our next question comes from the line of Richard Choey from JP Morgan.

Please go ahead.

Hi. I wanted to ask about the Latin America business. Where should we expect that percentage of revenue to go to by the end of this year and maybe longer term given the growth you're seeing there?

How big of a business could that get?

Hi, Richard. So good question.

I think, you know, One thing to note, obviously, in terms of the overall contribution mix is that LATAM as a segment has been growing at sort of between 15% and 17% year on year. So it continues to grow nicely. Revenue for the full year was over $200 million. So, you know, that business is becoming a really significant component of our overall mix. And given the opposite direction, if you like, of Nigeria, given the devaluation, it becomes an increasing percentage of IHS by the fact that it's growing in Nigeria's development and therefore getting a little bit smaller. So we haven't got a set target on it right now. The focus with LATAM is to grow it organically for the short term. but obviously that's a key element of our value make up and you know it's the business we want to continue growing organically where we can.

Great and I guess a little bit more color on the mix between the tower growth and the fiber growth it seems like both are growing at a pretty healthy pace.

Yeah both growing at a healthy pace so we don't actually split prior discussions there is a an element of disclosure on it buried in the uh in the 20s and the fire business grew at 30 percent um last year um from a renewable perspective in the towers um just a little bit less than that but still growing uh still growing strong thank you thank you as a reminder if you'd like to ask a question please press the star followed by the one on your telephone keypad

Our next question comes from the line of Eric Luebchar of Wells Fargo.

Please go ahead.

Great. Thank you for taking the question. I wanted to touch on the MTN agreement to move 2,500 sites. I know it's tied up in the courts right now, but any update on your base case and how many sites you think could eventually get moved to your competitor in that market?

Hi, Eric.

This is Sam. Look, we've been public about our view here and we remain consistent. I think it's a very, very, very tall order to be able to move equipment covering 20 million users or so. on 2,500 towers that most of which do not exist in a country like Nigeria, where power, infrastructure, permits, regulation is all an uphill battle. I mean, that conversation we've had in October, today we are in February or March, actually, with another maybe eight, nine, ten months left before the expiry. And no significant work has occurred on the towers, largely because of some of the things we just mentioned. So that remains a very, very tall order for us. But again, I mean, MTN is a partner of ours. We've been in partnership for more than two decades. Discussions are always ongoing.

Okay, I appreciate that. And just one follow-up. Your guide this year kind of implies 55% EBITDA margin, a nice uptick versus last year. So anything you could walk us through in terms of areas you're seeing cost efficiencies between lower diesel costs, Project Green, and then kind of the longer term path to get to 60% EBITDA margins, how you see that transforming over the next few years?

Hey, Eric. So a few things on the cost side. So yeah, you're right, the guide implies mid-50s, we've done margins, so a couple of percentage points higher than where we finished 2023. What's driving that? A lot that's driving that is around some of the cost action that we've been taking, and that's in a variety of different areas. Everybody knows about Project Green, which has been driving down diesel consumption and therefore overall costs within Nigeria in particular, bits and pieces in other markets as well, but mainly in Nigeria. And part of it is a reaction to where the macro is globally, where the macro is in our key markets like Nigeria. And we've been really looking at our cost structure and where we can be more efficient, where we can operate the business in more sensitive and intelligent ways for less cost. So there's a lot of focus from us right now. of capex spend, and it's also evident in the margins in terms of where we're looking to drive efficiency that are cost-based as well.

And Eric, this is why also artificial intelligence and the proliferation of artificial intelligence is critical to whatever we're doing at the moment on the ground. For years we've been operating this infrastructure which has a lot of challenges in terms of logistics, diesel delivery, field maintenance, given the complex nature of where we operate now. Suddenly, all this data, because of this elevated level of compute, we find ourselves available to us through the LLMs and what the big guys have created. Suddenly, we have now this massive tool available to us with a lot of data that we've accumulated over the decades, and we are now in the middle of kind of like redefining how we operate using that massive compute availability. And part of what you're seeing here is because of that, and you're going to see more of that over the next few months.

Thanks, Sam. Thank you. Thank you. Our next question comes from Stella Quidge of Barclays.

Please go ahead.

Hi there. Afternoon, everyone. Many thanks for all the updates.

I was wondering if I could ask about the status of the other contracts at MTN which you have coming up. So I know the update on Ivory Coast. I see you've got Zambia Jew, Rwanda Jew, and then the small amount of towers at the end of this year. I just wondered if there was any update on the status there. And in terms of a related question, you also referenced the comments from MTN Nigeria during the recent release saying they were looking at changes to existing tower leases.

I mean, what kind of changes would you be open to from the IHS side? That would be great.

Thanks. Look, we don't comment on ongoing discussions. MTN and us in particular, as I've alluded earlier, we've been partners for two decades. We are engaged on multiple fronts at any given point in time. We do like to announce things that are kind of like that happened that are basically dusted and cleared. And that's why we've announced basically Cote d'Ivoire and Cameroon. At the moment, to be honest, the only thing I would say is that everyone has seen from MPN's most recent announcement from our clients. numbers in Nigeria that they're under pressure. I mean, this massive negative movement of the currency, which is roughly 250% negative in almost 14 months, is definitely taking its toll on them. I mean, these guys are mostly local currency revenue generating companies. And at the moment, we feel our job and our duty is just to stand by them and find ways to help elevate the pressure. I mean, this is not our first rodeo. We've seen this before. We've stood up before and we've supported them. And at this stage of time, that's what we're gonna continue to do. I mean, that's what I can say.

And then Stella, just a quick follow up. and hopefully the updates are positive in terms of getting Camden CIB, Cameroon and Cote d'Ivoire behind us and done, more upcoming on some of the other smaller ones as well. But also just to kind of reiterate the ASL announcement that we put out in January in Nigeria, which was covering 3,900 tenancies over a five-year period. of which 2,500 are co-locations. So whilst obviously there's correctly a lot of focus on MTN, and that's the case within IHS as well, but we're also making sure we continue progressing and moving forward in a material way with other key customers as well.

That's great. Many thanks for those answers.

I mean, if I could maybe also ask something on the liquidity stroke debt side. Could you just comment on, in terms of the cash balance at the moment, how much is the whole call versus the op call's? This $115 million release of cash collateral, is this included in the cash balance at the end of 2023? And then finally, this Ivory Coast refinancing stroke new debt, what was actually the benefit at the whole call in terms of the settlement of intercompany loans, for instance?

Sure.

So Stella, on the bilateral, that was only signed a few days ago. So no, the approximately 150 million cash collateral is not included in the December 31 cash balance. So that is additional cash, additional liquidity. And as we said, that will reduce interest on those specific obligations by about 3%. So it's saving interest, it's bringing up cash and it's leverage positive. So that was the reason for doing that. On the Cote d'Ivoire loan, so that was something that I know you and I have spoken about before and spoken with many others about as well with You know, we have U.S. dollar obligations at the top. Can we utilize our local markets and local currency markets to try and rotate some of that dollar obligations down back into the countries at local currency level? So that was just one example of that. One hundred and sixteen million dollar million dollars equivalents. which has been shifted down into CIB. So what we've done is we've raised that money in Cote d'Ivoire. There was a tiny stop of existing debt in Cote d'Ivoire, which has been refinanced. And then we're in the process of upstreaming that capital up to the whole code where we will extinguish some dollar obligations. Again, that was signed just before the end of the year, but the drawdown of the upstreaming was done It hasn't been completed yet, but the process has been completed, and that is not in the year-end cash numbers. So that's another upside to the business. And there, in that example, we were able to get extremely comparative, if not slightly cheaper, interest rates in the local market versus US dollar obligations. So again, managing maturities and managing currency, the balance sheet, but also making sure we take care of interest rate expense as well.

the split of the whole core cash that you're in? This is a rough breakdown.

Sorry, we haven't disclosed that. But it hasn't moved materially in the last quarter. So they're just under $300 billion of cash around the group.

And there's a comfortable balance sitting offshore. Many thanks for that. Thank you.

That brings us to the end of the IHS Holding Limited 4Q and 4-Year Earnings Results Conference Call. Should you have any questions, please contact the Investor Relations team via the email address investorrelations at ihstowers.com. The management team, thank you for your participation today and wish you a good day.