The previously debt-laden towerco is slowly fortifying its balance sheet while looking to grow in markets like Latam
Towerco IHS Holding has signed a definitive agreement to sell IHS Towers’ 70% interest in IHS Kuwait including its around 1,675 sites and an additional 700 or so sites managed in Kuwait to Zain Group. The transaction is subject to customary closing conditions, including government and regulatory approvals, and is expected to close in the first half of 2025. The terms of the transaction reflect an enterprise value of $230 million for the IHS Kuwait portfolio. Under the terms of the transaction, Zain has agreed to increase its 30% ownership of IHS Kuwait to 100%, at an equity value for the remaining 70% stake of US$134 million.
In announcing the deal, IHS said the proceeds will be used to reduce company debt and the company has recently said that it is still on course to hit full-year 2024 guidance, projecting revenue between $1,670 million and $1,700 million, adjusted EBITDA of $900-920 million. Like many telcos, IHS was slapped by volatility in the Nigerian Naira, where its subsidiary which covers the bulk of its revenue was still able to renew and extend key contracts during Q3. In last month’s financial results the towerco said its deal with MTN Nigeria had secured nearly 13,500 tenancies through to 2032.
It still faces headwinds due to currency depreciation and as a result, has begun shifting more debt into local currencies. It is also attacking costs, reducing capex to $66.5 million and announcing further capex savings for the remainder of the year. This means it has revised its full-year guidance down to $270-300 million from $330-370 million.
“Today’s announcement forms part of our wider ambition to drive shareholder value and enhance our balance sheet,” said IHS Towers chairman and CEO Sam Darwish. “The transfer of IHS Kuwait to Zain, the largest mobile network operator in Kuwait, not only highlights the significant value contained within our portfolio but will also allow us to further reduce our net leverage.”
IHS Kuwait will continue to operate independently and provide passive tower infrastructure services in Kuwait. “This agreement will enhance Zain’s Digital Infrastructure regional expansion strategy in creating capital efficiencies and driving shareholder value,” said Zain vice-chairman and group CEO Bader Al Kharafi.
“It will also complement our ground-breaking deal with Ooredoo to acquire and merge approximately 30,000 towers. The aim of our sustainable and independent operating model is to provide passive infrastructure as a service, supporting the reduction of MENA’s carbon footprint and empowering the region’s digital future,” he added.
Brazil pivot
IHS Towers has over 40,000 towers across its 10 markets, including Brazil, Cameroon, Colombia, Côte d’Ivoire, Egypt, Kuwait, Nigeria, Rwanda, South Africa and Zambia. There was discussion about the towerco selling off its Zambian and Rwandan assets around August-time but progress on these has gone quiet.
While it is exiting markets to reduce debt, the towerco is also building up its tower portfolio and tenants in Latam, despite a reduction in revenue and capex related to regional operations in Q3. Brazil is the group’s second largest market after Nigeria, but the one where it is concentrating most of its construction and expansion efforts. IHS ended Q3 with 8,354 towers in place in Latin America, up 8.9% year-over-year. Of the total, 8,109 are in Brazil and 245 in Colombia. During the quarter, IHS built 160 towers in the region, adding to 151 built in Q2 and 161 in Q1.
According to Bnamericas, The number of tenants, that is, unique lessees for the sites in Latin America, grew by 6.5% to 10,812. Yet, revenue decreased 13% to $45.1m, as the group said it felt the hit from FX movements and a reduction in revenues of its customer Oi, which is undergoing judicial recovery. Year-to-date revenue in Latin America decreased 4.4% to $139m. During the quarter, IHS built 160 towers in the region, adding to 151 built in Q2 and 161 in Q1.
Its biggest Latin American clients are Brazil’s TIM, Vivo, Claro, accounting for 7%, 2% and 1% of global revenues. The biggest clients worldwide are MTN (62% of Q3 revenue) and Airtel (14%).
Pictured (l-r): Zain vice-chairman and group CEO Bader Al Kharafiand and IHS towers COO William Saad.