IHS Holding Limited Ordinary Shares

Good day and welcome to the IHS Holding Limited third quarter 2024 earnings results call for the three month period ended September 30, 2024. Please note that today's conference is being webcast and recorded. If you would like to ask a question, please press star and then one on your telephone keypad at any time. At this time, I'd like to turn the conference over to Robert Berg. Please go ahead, sir.

Thank you, Operator. Thanks also to everyone for joining the call today. I'm Robert Berg, Head of Investor Relations here at IHS. With me today are Sam Darwish, our Chairman and CEO, and Steve Howden, our CFO. This morning, we published our unaudited financial statements for the three-month period ended September 30th, 2024 with the SEC, which can also be found on the Investor Relations section of our website. We also issued a related earnings release, presentation and supplemental deck. 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 disclaimer set out at the beginning of the presentation on slide two, which should be read in full, along with the cautionary statement regarding forward-looking statements set out in our earnings release and 6K, filed as well today. In particular, the information to be discussed may contain forward looking statements which, by their nature, involve known and unknown risks, uncertainties and other important factors, some of which are beyond our control that are difficult to predict and others 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 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 which 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 in our earnings presentation, which is available on the investor relations section of our websites. And with that, I'd like to turn the call over to Sam Darwish, our chairman and CEO.

Thanks, Robert, and welcome everyone to our third quarter 2024 earnings results call. I'm pleased to say that we are reporting solid performance across our key metrics in the third quarter, driven by healthy secular demand and the quality of our contract structures. This led to robust revenue performance despite significant year-on-year Forex headwinds, with our Forex resets helping to mitigate the impact of the Naira, which devalued as much as 52% year-on-year versus the dollar, causing us a 265 million headwind year-on-year. We are, however, pleased to have again seen reduced volatility of the Naira during the third quarter compared to earlier in the year. As we discussed at our 2nd quarter results in August, we announced a significant milestone in our long term commercial relationship with in Nigeria by renewing and extending all our tower contracts with in Nigeria through 2032. Our 3rd quarter financials reflect for the for the 1st time. Our new financial terms with MTN Nigeria, and this is the main driver for the 3.5% quarter-on-quarter decline versus the second quarter of 2024. On an organic basis, our third quarter revenues increased by 49%, when compared to the third quarter of 2023, driven by Forex reset and continued growth in revenue from collocation, lease amendments, and new sites. Looking at our profitability, our strong third quarter adjusted EBITDA grew over 3% year-on-year to $246 million, reaching a margin of 58.5%, and highlights the resilience of our financial model and our continued financial discipline. We are also pleased with our ALFCF generation during the third quarter, driven by EBITDA performance and ongoing CapEx optimization. Based on our year-to-date capital allocation decisions and our expectation of making further capex savings, we are revising our full-year 2024 capex guidance range down. Given our performance year-to-date, we also remain confident on achieving our current 2024 revenue, adjusted EBITDA, and ALFCF guidance, and are trending towards the upper end of our existing guidance ranges. We are also reiterating our target leverage ratio of three to four times. So in summary, profitability up, ALFCF generation up and capex down, all in line with our publicly stated goals. In addition to solid financial performance, we are making great progress across a number of our initiatives. Let's turn to slide six to look at some of the highlights. During the quarter, we have continued to deliver on numerous elements of our strategic review with the aim of unlocking shareholder value versus what we believe is our existing suppressed valuation. As already highlighted, our third quarter performance shows continued progress towards our goal of increasing adjusted EBITDA and substantially reducing our capex to increase cash flow generation. We continue to assess group-wide costs, CAPEX structures, and new ways to operate our networks, including how we can introduce more technology, especially artificial intelligence, into our ways of working to help us realize the targeted efficiencies. During the third quarter, we have also made important commercial progress across our African business, notably with our MTN Nigeria contract renewal and extension, which I will discuss in a little more detail very shortly. We continue to examine our portfolio of markets to determine the right composition for IHS going forward. And as previously indicated, this will include raising proceeds with a target of 500M to 1B dollars. The capital raised from these initiatives will primarily be allocated to reduce debt while also considering share buybacks and or introducing a dividend policy. As a reminder, these initial targets do not rule out additional initiatives we are assessing in parallel in our pursuit of increasing shareholder value. Moving to MTN, the MTN Nigeria commercial deal puts us in a great position, having now renewed and extended all our tower contracts with MTN in Nigeria through 2032, covering nearly 13,500 tenancies and approximately 23,800 lease amendments. With this milestone, we have now recently renewed and extended all six of our MTN country MLAs well into the next decade, in addition to the extension of our Airtel Nigeria MLA to 2031. The result of this important commercial progress is that we have recently renewed over 70% of our group revenue, markedly improving our financial profile and visibility. We have lengthened our average tenant term duration to 8.1 years, increased our contracted revenues to $12.3 billion, and ensured that we have no material renewals with our largest customer MTN until the end of 2032. This draws a line under a series of customer renewals. We have also de-risked our operating model by materially reducing our exposure to power prices. With the expectation that this will result in reduced volatility of our earnings through our contract renewals, we have moved the significant majority of our business to either power pass through, like, in South Africa or power indexation, like, in Nigeria. And Steve will discuss in more depth later in the call. Moving to our balance sheet, we continue to take a disciplined approach to cash generation and capital deployment, recognizing the importance of maintaining a strong balance sheet. We remain comfortable with our cash position, and we continue to expect to remain within our target leverage range of 3 to 4 this year, albeit at the top end of the range. During the quarter, we have continued to make improvements in line with our strategic priorities. We have extended our maturity profile and shifted more of our debt into local currency through our new $439 million equivalent five-year term loan, which is split across a U.S. tranche and a South African Rand tranche. Proceeds from the facility were used to fully refinance our $430 million term loan that was due to mature in October 2025. Lastly, on Nigeria, We have seen reduced volatility of the Naira during the quarter compared to earlier in the year, although devaluation against the USD still remained. The average USD Nigerian Naira Forex rate was 1,601 in the third quarter 24 versus 1,392 in the previous quarter. We continue to see strong U.S. availability, allowing us to source and upstream U.S. dollars to group, with $155 million upstream year-to-date from Nigeria as of November 8, 2024, of which $74 million was upstream since the end of the second quarter. And with that, I will turn the call over to Steve.