Good day and welcome to the IHS Holding Limited Earnings Results Call for the three-month period ended September 30, 2023. Please note that today’s conference is being webcast and recorded. [Operator Instructions] At this time, I’d like to turn the conference over to Colby Synesael. Please go ahead, sir.

Thank you, operator. Thanks also to everyone for joining the call today. I’m Colby Synesael, 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 published our unaudited financial statements for the three-month and nine-month periods ended September 30, 2023 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. It 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 in 6-K, 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 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 20-F filed with the Securities and Exchange Commission and other filings with the SEC. We’ll also refer to non-IFRS measures, including adjusted EBITDA, that we view as important to assessing the performance of our business, and ALFCF, that we view as important in assessing the liquidity of our business. 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 website. With that, I’d like to turn the call over to Sam Darwish, our Chairman and CEO.

Thanks Colby, and welcome everyone to our third quarter 2023 earnings results call. We are reporting a solid quarter of performance across our KPIs, with revenue and adjusted EBITDA in line or ahead of our expectations, notwithstanding the recent current devaluation, while CapEx was meaningfully below. As everyone should know from our prior earnings call, these Q3 results are the first full quarter of results post the significant devaluation in the Nigerian currency, the Naira. As a reminder, the Naira devalued by 59% from 472 in mid-June to 753 at the end of Q2. And in Q3, average 768 versus 431 last year, a 78% devaluation that drove a 10.4% reduction in our reported dollar revenue. The Forex protection mechanism in our revenue contracts have begun to reset, and we will see more evidence of this resetting in our Q4 results. Overall, the business continues to perform well, driven by solid organic growth of 30.6%, with contributions across each of our segments that reflects robust secular demand and the quality of our contract structures. The reduction in CapEx reflects an increasingly more balanced approach we are taking to growth and cash generation, in light of what remains a challenging macroeconomic environment across the world, but particularly in Nigeria, and we now expect to be towards the low end of our CapEx guidance range for the year. On a quarter-over-quarter basis, the Naira represented a negative $139 million impact to revenue, driven by the devaluation that began in mid-June. Positively, we expect to see a notable sequential sell-off in revenue in Q4, as we see the full benefit of our contractual Forex resets kick in. As a reminder, 53% of our revenue is tied to our currency, of which really all USD contracted revenue resets quarterly or sooner, and nearly all…

Thanks, Sam, and hello, everyone. Turning to slide nine, as Sam mentioned, we’re pleased to show our Q3 performance was in line or better than expected, considering the backdrop of the significant currency devaluation in Nigeria, which I’ll reference at various points today. As you see here, towers are up almost 1% and tenants up more than 2% in the third quarter 2023 versus third quarter of 2022, while lease amendments again increased by double digit percentages. On a reported basis, revenue and adjusted EBITDA declined in the quarter, consistent with our prior expectation and guidance that the full impact of the June devaluation would not be reflected in our results until this Q3. Specifically in Q3, revenue declined by 10.4%, adjusted EBITDA by 15.5%, and ALFCFL by 11.2% in each case on a reported basis and driven largely by the impact of the devaluation, more than offsetting the continued strong organic activity across our markets. However, it’s worth noting that the period on period comparison is a bit distorted by the presence of some one-off revenue and adjusted EBITDA in the third quarter of 2022. And as we noted last quarter, we did see some pull forward of anticipated Q3 23 revenue into our Q2 results. Our adjusted EBITDA margin decreased by to 49.7%. Again, I draw your attention to what Sam said earlier about having seen a similar devaluation in Nigeria in 2016 and the build back of our earnings the following quarters as our contractual protections kicked in. You also see total CapEx fell by nearly 40% in the quarter, largely due to lower capital expenditure for Nigeria and the SSA segments, partially offset by an increase in LATAM, all of which I’ll discuss shortly. As Sam mentioned, we are taking a sharp look on CapEx for…

Thank you. [Operator Instructions] Your first question comes from the line of Greg Williams from TD Cowen. Your line is open.

Great. Thanks for taking my question. My questions are really around the migration of MTN over to American Tower. It sounds like it’s becoming a reality. And just wondering if you’re preparing for this migration and what the impacts would be in the past. I think you noted it’s $45 million a quarter, but back then the Naira was at $508 million, and with the deval, just hoping for an update on the exposure, the impact, and how it ramps out and sunsets in 2025 and beyond. And the second question is just how practical is it to move 2,500 towers in a short timeframe? And the risk is how much further can MTN go as you think about your contracts with the Ivory Coast and Rwanda and Zambia, and if there’s a threat, they could go further from here. Thanks.

Hi, Greg. This is Sam. Thanks for the question. Many questions. Let me try to dissect them into maybe two or three categories. I’ll start by talking about probably the materiality to the business going forward. I mean, look, even if they successfully move these tenancies, which is very questionable, we’ll talk about in a second, it is still not material to the business. We have around 60,000 tenants across 40,000 sites of the group, and these 2,500 tenants in Nigeria barely represent 4% of the total towers, maybe 7%, 8% of our group revenue. And the majority of the other renewals with MTN in Nigeria are coming up in 2029 and beyond. The average tenure of our contracts over seven years out, with many beyond 2030. So we feel good about that part. And given our organic growth rate, which has been more than 20% in Nigeria over the past three years, we believe that we can make up for the impact of these towers through our various commercial relationships. Now also, I think it’s important to note that the market situation across all our markets, Greg, is that they are underserved. It’s an important point because, for example, we have more than twice the SIM cards per tower in Nigeria than in mature markets like the United States. Thousands of villages remain without even cell phone coverage. This calls for more towers to be built, even before we deal with issues like density requirements for 5G, the increasing subscriber demand for capacity, the quality of service, the expanding coverage. So we firmly believe that capital and resources will continue to flow to growth and not to swapping towers from one operator to another. So that’s in terms of materiality. Now, in terms of other renewals in other markets,…

Great, thank you for the color, Sam.

Your next question comes from the line of Phil Cusick from JPMorgan. Your line is open.

Hi guys, thank you. Can you quantify the expected revenue pickup in Nigeria for the contracted resets over the next couple of quarters? I understand that it takes a little while on some of the contracts and what of those happen quarterly versus an annual, maybe a January 1st reset? And then second, you mentioned the improved discussions with Wendel. Can you give us any more update on that relationship? And it seems like you just covered everything you could say on the MTN side. Thanks.

I’ll say the first part. So, as you write clearly, some of the contracts in Nigeria are reset at different points and the vast, vast majority, over 93% of the contracts are reset quarterly. But some of them reset with a spot FX rate at the beginning of the quarter and some take an average of the preceding quarter. So, the ones that we’ve seen reset in Q3 were the ones that reset at a spot on 1 July. And then we’ll see another step up when those that take the average of the last quarter will reset again on the 1st of October, taking into account a full quarter of devalued Naira rate. We haven’t quantified it, but obviously being the last quarter of the year, given we’ve posted nine months results through so far and you know what our guidance is, you can pretty much see what the step up is. If I give you an example on the flow through into EBITDA, when you look at the results we’ve posted so far through the nine months and look at the full year, the range is 1130 to 1150. Even if we use the bottom of that range, you’re looking at EBITDA just mathematically at $259 million. So that’s about $232 million we’ve just posted in this quarter. So that gives you an idea just mathematically straight from our guidance of the sort of step up that we’ll expect to see next quarter.

On the second question regarding our shareholders, in particular the pre-IPO shareholders, look, we continue to talk. It’s very important to engage, to communicate, to note also that we are sticklers [Ph] when it comes to the standards of our governance. And we are always keen on ideas to improve the standards of governance and equally important, we’re also keen on any idea that could help value creation, value restoration, etcetera. So this is a good part of why we decided, by the way, to list our company in the United States under the watchful eye of the United States Securities and Exchange Commission. It’s a very high bar lots of companies or global companies avoid because they don’t want to be held accountable to such high standards, not us. Now having said that, our board of directors also that is made of industry bellwether, that also fiduciary duties to protect and safeguard the interests of our minority investors and our various clients. It’s something we are steadfast about. So again, but I do acknowledge and it’s important to keep talking and in the dialogue and finding solutions with our pre-IPO shareholders and hopefully the reasons will raise over time. But having said that also Phil, and in an environment where the rising and already high interest rates are a problem for everyone, including public equities, including our peers, including our markets, we have to remain focused on our business and the running of the business itself. We believe we have a very resilient business. We believe it’s strong. We intend to keep strengthening the business and keep growing it. But resilient businesses also demand alert stewards, alert and focused to it. And we see our job as primarily running the business to the benefit of all shareholders. And we intend to keep most of our focus there.

Okay, thank you.

Thanks, Phil.

[Operator Instructions] And your next question comes from the line of Brett Feldman from Goldman Sachs. Your line is open.

Thanks. A couple of questions. So you made the comments about a portfolio review and it sounded like you were discussing it within the context of being more focused on where you would deploy capital. So it’s a big capital projects, but I’m curious whether the portfolio review is broader and maybe looks into whether there are assets you could sell or monetize, whether it’s markets or just unique pieces of the portfolio. I saw you had some assets held for sale in your Sub-Saharan African markets. And I wasn’t entirely sure what the context on that was. And then regardless of the answer, one way or the other, you would have more excess capital either because you were spending less on capital projects or perhaps generating capital from selling assets. How would you go ahead and prioritize that additional capital? Would it mostly go towards further strengthening the balance sheet or could that be something that could fund the buyback program, which still has a lot of capacity under it? Thank you.

Thanks, Brett. Look, Brett, I think the important part is, again, our main focus at the moment, the business, the balance sheet, making sure basically that we remain as resilient as we’ve always been. Now, having said that, again, we’ve always said we are extremely mindful of where the share situation is. And this company constantly reviews every option that is out there. I mean, there is no stone that we want to leave unturned basically to try and get ourselves into a better place in terms of exposing to the world, showing how undervalued we believe our share is. And in addition, of course, maintaining and keep moving along the lines of strengthening cash flow generation in our balance sheet. So I can’t go into details unless things get decided and announced, but all options are on the table, to be honest. And in terms of the extra cash that we hope to show up and achieve, again, all options are open. We are constantly reviewing. Remember, we are a growth company at core, so we always review and look at potential growth opportunities. But every other option, including potential buybacks, other things, are all on the table.

Brett, I’ll just add, I’ll just add, I mean, keep in mind, we think about just one bucket of that question, which is the CapEx that we spend each year. And whilst we’re not getting into guidance for 2024 at this point in time, just remember that in the last couple of years, we’ll have spent, in excess of $600 million per year on a variety of projects, growth oriented, towers, fibre, Project Green. And some of those things will have a different flavour next year. Project Green, as we know, was a heavy spend in 2022 and 2023, and will be a much lighter spend in 2024, purely because of the programme that we’ve announced publicly. And likewise, with towers and fibre, we’re really thinking about the trade-off of growth versus cash generation and cash preservation within the business such that, we’re making the right decisions and, again, at some step trying to generate maximum value for shales.

Thank you.

Your next question comes from the line of Michael Rollins from Citi. Your line is open.

Thanks, and good morning. Two questions, if I could. The first is, you mentioned in reference that you have low churn in the business. I was just curious if you could articulate what those churn rates look like for the company, as well as for any of the key geographic regions. And then secondly, just taking a step back, I’m just curious if you can remind us of where you have common ground with MTN and Wendel, and where there are differences in perspective, and if any of those differences have evolved, changed over the last few months, as we’re just trying to appreciate the -- kind of the background to the situation. Thank you.

Mike, so on the first one on churn, as you know, we don’t include that in our revenue growth which is not selling fast, because it’s quite small. Something that, we’ve been discussing with you and others for a while. In the quarter that has gone, it was 70. So, across a base of 60,000 tenants, our churn was 70. In prior quarters, sometimes it’s 100, sometimes 150, sometimes it’s next to zero. So, the churn rates over a blended period of time, there’s a sort of 1%, maybe even sub 1%. And then when you look at also who those tenants are, that churn tends to be on what we call the non-key customers. We define key customers in our disclosure material as the top tier of customers who represent, north of 92, 93% of our revenue base. And actually, the majority of the churn that we do see, albeit small, comes out of the non-key customers.

On the second question, Mike, and again, I’ve spoken about that a few minutes ago. So, our shareholders, in particular, our three ICO shareholders, Wendel and MTN, have been vocal about the governance requirements, which on this side, we perceive more as efforts to change the balance of influence between them and us and the post-ICO shareholders. And given that one of them, in particular, is a client, is actually a large client, this adds a substantial complexity to the situation. So, their demands, their requirements are clear. It’s a complex discussion, and we will report, Mike, as and when appropriate.

If I could just follow up with one more. In the past, even on this call, you referenced different actions that the company’s trying to take to improve shareholder value. Is there a higher level set of goals or principles that you want to bring into the company to continue to create forward progress on that goal to improve shareholder value? Is there anything that you’ve been able to simplify or determine as the best course, if you do one, two, three things, that this can have the best results for shareholders?

Mike, I’ll maybe have a go at that. We’ve spoken on this call and previously around resolving the matters with MTN and Wendel on the shareholder side. We’re very cognizant of that. And we’ve also been a bit more forthcoming on this call around how we’re going to look at CapEx and the organic side of capital deployments. And so you’re starting to see some things come through that we’ll continue to add into overtime in recognition of where we are as a business within our markets, also within the globe, within the world in terms of the macroeconomic situation that everybody is facing. And so those are just a couple of the initial elements of thinking that you’re starting to see and hear more of. And we’re looking forward to pushing those couple of initiatives forward. And then as we continue progressing, as Sam said a few moments ago, as a company, as a board, we’re constantly thinking. No one’s happy with how the company is valued today. We’re constantly thinking about ways that we can look to improve on that. And we’ll communicate on those as and when they become announceable.

Don’t forget, we have multiple issues we’re dealing with. We have the global macro situation, which is not conducive. We have a concentration in Nigeria, which we’re trying to kind of like solve for or diversify of. We have a relatively some elevated client concentration, which also needs to be addressed. We have, in addition to all of these, we have a daily trading situation, which I’m happy to say that has improved. As I said earlier, our daily trading volumes have tripled, almost tripled, over the past period. So moving in the right direction. But there are multiple issues that we need to deal with. And we are trying to deal with each of it in a different way. In terms of the trading, for example, we have recently removed all lockups on all shareholders. We announced a potential buyback. Now, as we just exercised a small part of it. But again, we need to be mindful of how we allocate our capital. So there are initiatives to address basically the various levels of why do we see the share price is undervalued. And we may come back with other things on different, on some of these other different challenges. But again, Rome was not built in a day. And we need to be thoughtful and careful, especially navigating these challenging global and shareholder situations.

Thank you.

Thanks, Mike.

That brings us to the end of the IHS Holding Limited Third Quarter 2023 Earnings Results Call. Should you have any questions, please contact the Investor Relations team via the email address, investorrelations@ihstowers.com. The management team, thank you for your participation today and wish you a good day.