Company Overview - IHS Holding Limited (IHS) is currently experiencing significant attention from investors due to high implied volatility in its options market, particularly the Apr 17, 2025 $7.50 Put option [1] - The company holds a Zacks Rank 1 (Strong Buy) in the Communication - Infrastructure industry, which is in the top 2% of the Zacks Industry Rank [3] Analyst Insights - Over the past 30 days, one analyst has raised the earnings estimate for IHS Holding for the current quarter from 14 cents per share to 17 cents, with no downward revisions [3] - The current sentiment among analysts indicates a positive outlook for IHS Holding, suggesting potential for a significant price movement [4] Options Market Dynamics - The high implied volatility associated with IHS Holding's options suggests that traders are anticipating a substantial price movement, which could be linked to an upcoming event [2][4] - Options traders often seek to capitalize on high implied volatility by selling premium, aiming for the underlying stock to not move as much as expected by expiration [4]

Core Viewpoint - IHS Holding (IHS) has seen a significant stock price increase of 38.2% over the past four weeks, closing at $5.25, with analysts suggesting a potential upside based on price targets, indicating a mean estimate of $7.09, which represents a 35.1% upside potential [1] Price Targets and Analyst Consensus - The average price target for IHS includes eight short-term estimates ranging from a low of $4 to a high of $16, with a standard deviation of $3.89, indicating variability among analysts [2] - The lowest estimate suggests a decline of 23.8% from the current price, while the highest estimate indicates a potential upside of 204.8% [2] - A low standard deviation signifies a strong agreement among analysts regarding the stock's price movement direction, which can serve as a starting point for further research [7] Earnings Estimates and Market Sentiment - Analysts have shown increasing optimism about IHS's earnings prospects, as evidenced by a strong consensus in revising EPS estimates higher, which correlates with potential stock price increases [9] - Over the past 30 days, one estimate has increased, leading to a 30.9% rise in the Zacks Consensus Estimate for the current year [10] - IHS holds a Zacks Rank 1 (Strong Buy), placing it in the top 5% of over 4,000 ranked stocks based on earnings estimate factors, indicating strong potential for upside [11] Caution on Price Targets - While price targets are a common metric for investors, relying solely on them for investment decisions may not be prudent due to historical inaccuracies in predicting stock price movements [3][5] - Analysts often set optimistic price targets influenced by business relationships, which can lead to inflated estimates [6] - Price targets should be approached with skepticism, and while they can provide directional guidance, they should not be the sole basis for investment decisions [8][12]

Financial Data and Key Metrics Changes - The company reported a strong performance in 2024, with revenue showing 48% organic growth and adjusted EBITDA reaching $928 million, reflecting a margin of 54.3%, up 100 basis points from 2023 [10][11][12] - ALFCF generation was $304 million, exceeding guidance, driven by operational performance and ongoing CapEx optimization [12][19] - The consolidated net leverage ratio decreased to 3.7 times at the end of 2024, down from 3.9 times at the end of Q3 2024 [13][32] Business Line Data and Key Metrics Changes - Revenue from Nigeria grew approximately 62% on an organic basis, significantly benefiting from FX resets and power indexation, despite a reported revenue decline of 19% year-on-year due to FX headwinds [42][30] - The Sub-Saharan Africa segment saw revenue remain broadly flat, while adjusted EBITDA increased by 29.6% year-on-year, driven by lower costs [44] - In the LatAm segment, towers and tenants grew by 7.9% and 7.2% respectively, but revenue decreased by 18% due to negative FX movements [45] Market Data and Key Metrics Changes - The Nigerian market showed signs of stabilization, with the naira strengthening and the Central Bank of Nigeria increasing interest rates, which positively impacted the FX market [40][41] - The company benefited from a 50% increase in tariffs for mobile network carriers in Nigeria, the first adjustment in 12 years, which is expected to support infrastructure investment [18] Company Strategy and Development Direction - The company is focused on increasing profitability and reducing CapEx to enhance cash flow generation, with a target of raising $500 million to $1 billion through asset disposals [15][25] - Significant commercial progress was made, with 72% of group revenue renewed or extended, improving financial visibility [16][17] - The company plans to utilize excess cash flow primarily for debt reduction, with potential considerations for share buybacks or dividends in the future [25][70] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Nigerian market, citing improved macroeconomic conditions and bullish carrier CapEx plans [73][92] - The company anticipates continued organic revenue growth and further improvements in adjusted EBITDA margin and ALFCF generation in 2025 [20][59] - Management highlighted the importance of maintaining a strong balance sheet and expects leverage to remain within the target range of 3 to 4 times in 2025 [59][60] Other Important Information - The company completed the disposal of its 70% stake in IHS Kuwait for an enterprise value of $230 million, which is part of its strategic review to optimize the portfolio [23][24] - The company has made significant enhancements to its governance framework, aligning it more closely with mature US-listed companies [22] Q&A Session Summary Question: Update on Airtel new tenancies in Nigeria - The Airtel contract is progressing well, with significant work completed in the second half of 2024, primarily focused on colocation and 5G lease amendments [67][72] Question: Potential for stock buybacks and dividends - The company is evaluating options for capital allocation, with a focus on asset disposals first, followed by potential share buybacks or dividends [68][70] Question: Progress on portfolio optimization - The company is targeting $500 million to $1 billion in asset disposals, with the Kuwait disposal being a significant step [81][82] Question: Other markets with positive macro indicators - Positive momentum is observed in Francophone Africa and Brazil, with carriers looking to increase CapEx for 5G rollouts [87][90] Question: Constant currency performance metrics by region - The company has not provided forward-looking guidance for constant currency metrics but aims to simplify disclosures for future periods [96][98] Question: CapEx breakdown - Approximately one-third of the anticipated CapEx for 2025 is maintenance-related, with the remainder focused on growth initiatives [101][102] Question: Possible churn in the business - No significant churn is anticipated, with positive leasing trends across major markets [105][106]

Core Insights - IHS Holding reported quarterly earnings of $0.73 per share, significantly exceeding the Zacks Consensus Estimate of $0.08 per share, and up from $0.46 per share a year ago, representing an earnings surprise of 812.50% [1] - The company posted revenues of $437.82 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 5.82%, although this is a decline from year-ago revenues of $509.78 million [2] - IHS Holding shares have increased by approximately 33.9% since the beginning of the year, contrasting with a decline of -3.5% in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.14 on revenues of $415.52 million, and for the current fiscal year, it is $0.55 on revenues of $1.67 billion [7] - The estimate revisions trend for IHS Holding is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Communication - Infrastructure industry, to which IHS Holding belongs, is currently ranked in the top 5% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Revenue Dependence and Customer Relationships - For the year ended December 31, 2024, revenue from the top three MNO customers accounted for 99% of consolidated revenue, with MTN Nigeria and Airtel Nigeria contributing 46% and 11%, respectively [51]. - 58.3% of the company's revenue for the year ended December 31, 2024, was derived from Nigerian operations, highlighting the significant reliance on this market [65]. - The company is dependent on the financial strength of its customers, many of whom may operate with substantial leverage, impacting their capital spending and demand for tower space [52]. - The company has experienced disputes with customers regarding lease agreements, which could lead to terminations or modifications adversely affecting revenue [55]. - Consolidation among customers could lead to reduced demand for tower space and negatively impact revenue [119]. - MTN Group accounted for 61% and 60% of the company's revenue for the years ended December 31, 2024, and 2023, respectively [244]. Financial Risks and Foreign Exchange Exposure - For the years ended December 31, 2024, 2023, and 2022, 47%, 49%, and 52% of the company's revenue was linked to the U.S. dollar and euro, indicating significant foreign exchange exposure [68]. - The Naira depreciated by 69.1% against the U.S. dollar from June 14, 2023, to December 31, 2024, impacting the company's financial results and customer payment capabilities [73]. - The company holds approximately $2,447.9 million in U.S. dollar-denominated debt as of December 31, 2024, which exposes it to foreign exchange risks [76]. - Diesel costs, a significant expense for the company, are linked to U.S. dollars, and any depreciation of local currencies could increase operational costs [78]. - The company may face challenges in maintaining foreign exchange protection mechanisms in contracts, which could adversely affect financial performance [72]. - The existence of multiple foreign exchange markets may complicate the translation of financial results into U.S. dollars, affecting overall financial condition [81]. Operational Challenges and Cost Management - The company is focusing on operational efficiencies through cost reductions and a strategic review process aimed at aligning initiatives with long-term objectives and shareholder value creation [92]. - The company relies heavily on diesel for operations, particularly in markets with unreliable power grids, and any disruption in diesel supply could significantly impact service delivery and financial performance [101]. - The company may face increased operating costs due to diesel price volatility, which has been influenced by various geopolitical and economic factors [107]. - The company plans to adopt a balanced approach to revenue growth and cash generation, particularly in response to macroeconomic headwinds, including the depreciation of the Naira in June 2023 and January 2024 [92]. Regulatory and Compliance Risks - The company may face penalties for non-compliance with licensing and approval requirements, which could adversely affect its operations and financial condition [155]. - The Federal Competition and Consumer Protection Commission in Nigeria may classify the company as having a dominant market share, which could result in regulatory inquiries or actions, including fines or operational restrictions [218]. - The company is subject to ongoing tax audits in multiple jurisdictions, which could result in material liabilities and affect its financial condition [225]. - Changes in tax laws, including the introduction of a global minimum tax rate of 15% under the OECD's BEPS project, may adversely impact the company's tax obligations and overall financial position [230]. Technology and Cybersecurity Risks - The company relies on key information technology systems, which may be vulnerable to physical or digital damage, security breaches, or cyberattacks [182]. - Cybersecurity risks are evolving, with potential impacts on IT systems and confidential information due to increased frequency and sophistication of cyberattacks [184]. - The implementation of new technology upgrades, including artificial intelligence, involves risks that could disrupt operations and financial reporting [171]. Environmental, Social, and Governance (ESG) Considerations - The company is subject to increasing scrutiny regarding its sustainability and ESG initiatives, which may impact operational costs and reputation if not executed effectively [94]. - The company may incur substantial costs related to environmental compliance and remediation due to its operations involving hazardous materials, which could adversely affect its financial condition [194]. - Climate change poses inherent risks that could disrupt operations and increase costs, impacting the company's financial condition [209]. - The company anticipates facing increased regulations and stakeholder expectations related to climate change, which could adversely affect its business operations [210]. Internal Control and Financial Reporting - A material weakness in internal control over financial reporting was identified as of December 31, 2024, affecting the ability to produce accurate financial statements [175]. - The independent registered public accounting firm issued an adverse opinion regarding internal control over financial reporting due to the identified material weakness [178]. - The company may face delays and increased costs in remediating identified weaknesses in internal controls, impacting financial condition and operating results [176]. Market Competition and Growth Strategy - The company is expanding into new geographic markets, including Latin America and South Africa, which may present unique competitive and regulatory challenges [67]. - The competitive landscape in Brazil includes ATC, SBA, and Highline, which own more towers than the company [1]. - Increased competition may lead to higher costs for acquiring attractive tower portfolios and could limit acquisition opportunities [2]. - The company may need to adapt its business model to accommodate new technologies such as 5G, which could affect growth opportunities [125].

Core Insights - IHS Holding possesses several strong competitive advantages that safeguard its financial performance while the stock is trading at a discount [1] Group 1: Company Analysis - The company is viewed as an attractive investment opportunity due to its competitive advantages [1] - The stock is currently undervalued, presenting a potential buying opportunity for investors [1] Group 2: Investment Philosophy - The investment approach emphasizes a focus on emerging markets and seeks low-risk, high-uncertainty bets [1] - The investor's philosophy is influenced by notable economists and emphasizes an owner-mindset while largely ignoring macroeconomic noise [1]

Industry Perspective - The deal signifies a major consolidation within the telecom industry, with companies adjusting their portfolios and strategies to meet evolving market conditions and technological advancements [1] - The transaction aligns with IHS Holdings' strategy to explore opportunities that enhance shareholder value [1] Company Actions - IHS Holding has completed the sale of its tower operations in Kuwait to Zain Group for an enterprise value of $230 million [2] - The proceeds from the sale will primarily be utilized to reduce the company's debt, leading to a healthier financial position and improved balance sheet in the upcoming quarters [1][2] Company Portfolio - IHS Holdings operates a portfolio of over 39,000 towers across nine markets, including Brazil, Cameroon, Colombia, Cote d'Ivoire, Egypt, Nigeria, Rwanda, South Africa, and Zambia [2] - Zain now holds a 70% stake in IHS Kuwait Limited, which includes approximately 1,675 sites and an additional 700 managed sites [10] Market Performance - Shares of IHS Towers have decreased by 27.5% over the past year, contrasting with the industry's growth of 10.1% [11] - IHS Towers currently holds a Zacks Rank of 3 (Hold) [12]

Group 1 - IHS Holding has entered into a definitive agreement to sell its tower operations in Kuwait to Zain Group for an enterprise value of $230 million, which includes approximately 1,675 sites and an additional 700 managed sites [1] - Zain Group, founded in 1983, serves 47.2 million active customers across the Middle East and Africa and is well-equipped to integrate the new towers into its network [2] - The acquisition is expected to close in the first half of 2025, subject to customary closing conditions and regulatory approvals, with Zain Group acquiring a 70% stake in IHS Kuwait Limited [3] Group 2 - The deal represents significant consolidation within the telecom industry, as companies adapt to changing market conditions and technological advancements, and is part of IHS Holdings' strategy to drive shareholder value [4] - Proceeds from the transaction will primarily be used to reduce IHS's debt, contributing to a healthier financial position and improved balance sheet in upcoming quarters [4] - IHS shares have declined by 29% over the past year, contrasting with the industry's growth of 14.8% [5]

IHS TOWERS 3Q24 EARNINGS RESULTS NOVEMBER 12, 2024 DISCLAIMER 2 Forward-Looking Information This presentation 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 ...

Financial Data and Key Metrics Changes - The unaudited financial statements for the three-month period ended September 30, 2024, were published, indicating the consolidated results of IHS Holding Limited [3]. Business Line Data and Key Metrics Changes - No specific details regarding changes in business line data and key metrics were provided in the available content. Market Data and Key Metrics Changes - No specific details regarding changes in market data and key metrics were provided in the available content. Company Strategy and Development Direction and Industry Competition - No specific details regarding company strategy, development direction, or industry competition were provided in the available content. Management's Comments on Operating Environment and Future Outlook - No specific comments from management regarding the operating environment or future outlook were provided in the available content. Other Important Information - A disclaimer regarding forward-looking statements was highlighted, indicating that the information discussed may involve known and unknown risks and uncertainties [4]. Q&A Session All Questions and Answers - No specific questions and answers from the Q&A session were provided in the available content.