1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Thesis
3. Valuation & Price Target
4. Business & Product Moat
5. People & Governance
6. Market & Macro
7. Financial Quality
8. Risk Register
9. Prediction Market
10. 𝕏 Posts
Discussion
1. Investment Snapshot
2. Valuation
Discussion
Symbol
IHS
Event Date
2021-10-14
IPO Date (Actual)
2021-10-13
Sector
Communication Services
Subsector
Wireless Telecommunication Services
Offer Range
$21.00-$21.00
Shares Offered
18M
328.05M
$6.9B
5.5%
Implied Upside vs Midpoint
Description
We are one of the largest independent owners, operators and developers of shared telecommunications infrastructure in the world, providing our customers, most of whom are leading MNOs, with critical infrastructure that facilitates mobile communications coverage and connectivity for 596 million people in emerging markets, across three regions and nine countries. We are the largest independent multinational emerging-market-only tower operator and one of the largest independent multinational tower operators globally, in each case by tower count. As of June 30, 2021, we operated 30,207 Towers across five countries in Africa, three countries in Latin America and one country in the Middle East. We are the largest tower operator in six of the nine markets in which we operate and we are the only independent tower operator of scale in five of these markets. We have a well-defined organic and inorganic expansion strategy designed to grow in existing markets with our existing and new customers and, given the significant global emerging market opportunities in telecommunications infrastructure, enter carefully selected growth oriented markets with compelling underlying fundamentals. Historically, our business has been predominantly focused on Towers, however we have begun complementing this business with additional telecommunications infrastructure offerings for our customers such as fiber connectivity. Aligned to this inorganic growth strategy, in February 2020 we completed the first closing of 1,022 towers in Kuwait through a controlling investment pursuant to the Kuwait Acquisition for the acquisition of up to 1,620 towers in the aggregate, with a further 207 towers transferred in subsequent closings. Also in February 2020 we completed the acquisition of 2,312 towers through a 100% investment pursuant to the CSS Acquisition with towers primarily in Brazil, as well as Peru and Colombia. More recently in 2021, we acquired 1,005 towers in Brazil pursuant to the Skysites Acquisition, 819 towers in Brazil and Colombia pursuant to the Centennial Acquisition and also signed definitive agreements for the acquisition of certain fiber assets from TIM Brasil pursuant to the TIM Fiber Acquisition, where TIM Brasil will be the anchor tenant on the fiber network. Each of these acquisitions supports our inorganic growth strategy of expanding into additional regions that meet our investment criteria, which opens up new markets that we believe will provide future organic and inorganic growth opportunities. --- Note: Data as of June 30, 2021 for ATC, Cellnex, SBA, IHS Towers and Helios. Data as of July 2021 for Phoenix Tower International. “ATC” refers to American Tower Corporation, “Cellnex” refers to Cellnex Telecom S.A., “SBA” refers to SBA Communications Corporation, “PTI” refers to Phoenix Towers International and “Helios” refers to Helios Towers plc. --- Our core business is providing shared telecommunications infrastructure services to MNOs and other customers, who in turn provide wireless voice, data and fiber access services to their end users and subscribers. We provide our customers with opportunities to lease space on existing Towers alongside current Tenants, known as Colocation, to install additional equipment on a Tower or request certain ancillary services, known as Lease Amendments, or to commission the construction of new Towers to the customer’s specifications, known as New Sites. Additionally, we lease space to our customers in secure locations within large building complexes, such as shopping malls, stadiums and airports, which we refer to as in-building solutions, or IBS, or distributed antenna systems, or DAS, as well as provide fiber connectivity. In certain strategic instances, we may also provide Managed Services, such as maintenance, security and power supply for Towers owned by third parties. As of June 30, 2021, our owned and operated tower portfolio supported 45,487 Tenants, with a Colocation Rate of 1.51x. Our primary customers are the leading MNOs in each of our markets. We also provide infrastructure and services to a number of other communications service providers. Our success in establishing deep customer relationships and operational excellence has enabled us to grow both organically and through 19 transactions, building a footprint that currently covers Nigeria, Côte d’Ivoire, Cameroon, Rwanda, Zambia, Brazil, Peru, Colombia and Kuwait. We are the largest tower operator in six of the nine markets in which we operate and are the only independent tower operator of scale in five of these markets. Our markets in Latin America (which we just entered in 2020) are the only ones in which we do not have a leadership position today. To support the telecommunications infrastructure needs of our customers, we typically enter into long-term MLAs of 5 to 15 years in duration, which have historically yielded strong renewal rates. As of June 30, 2021, the average remaining length of our MLAs with our Key Customers, who represented 92% of our Tenants, was 6.3 years. Additionally, these Key Customers had aggregate Contracted Tenant Lease Revenue of $9.8 billion and an average remaining tenant lease term of 7.4 years as of June 30, 2021. Our MLAs typically include annual inflation-linked revenue escalators, limited customer termination rights and, in certain cases, provisions designed to mitigate foreign exchange risk, such as periodic reset mechanisms to adjust for local currency devaluation. For the six months ended June 30, 2021 and the years ended December 31, 2020, 2019 and 2018, 63%, 65%, 65% and 66%, respectively, of our revenues were linked to the U.S. dollar or euro. Foreign currency-linked elements implemented in certain of our contracts aim to help provide protection against potentially adverse movements in local currency. Our U.S. dollar-linked revenues are denominated in U.S. dollars in the relevant MLAs, but paid to us in local currency through contractual mechanisms. In such cases, including the majority of our MLAs in Nigeria, our MLAs may contain a formula for periodically determining the U.S. dollar to local currency exchange rate. In other cases, such as Côte d’Ivoire and Cameroon, the MLAs are in local currencies that have a fixed exchange rate, or are “pegged”, to the euro. Our Middle East and Latin American businesses have MLAs, which typically only contain local currency lease fees. We have historically increased the number of our owned and operated Towers through a combination of constructing New Sites, as well as through acquisitions of tower portfolios from MNOs and independent tower companies. Shortly after entering new markets through acquisitions, we typically begin constructing New Sites. IHS Towers Overview by Country Market Share (December 31, 2020) Estimated Estimated # of IHS # of IHS Outsourced Total 2020 Towers Towers Towers Towers Population June 30, December 31, December 31, December 31, IHS Towers Country (millions) 2021 2020 2020 2020 Market Position Nigeria 209 16,522 16,537 25,535 37,625 #1 Côte d’Ivoire 27 2,701 2,702 2,702 4,079 #1 Cameroon 27 2,215 2,214 2,214 5,208 #1 Zambia 19 1,751 1,753 1,753 3,491 #1 Rwanda 13 1,160 958 958 1,605 #1 Kuwait 4 1,229 1,162 1,162 5,858 #1 Brazil 213 4,350 2,419 46,842 64,075 #5* Peru 33 51 51 6,731 17,903 n.m. Colombia 51 228 11 8,647 17,474 n.m. * IHS Towers market position is #4 after taking into consideration the Skysites Acquisition and the Centennial Acquisition, which we completed in January 2021 and April 2021, respectively. Source: Euromonitor International Limited (Economies & Consumers data) for Population, Analysys Mason estimates and IHS. We believe we offer a unique balance between existing infrastructure with visible revenue streams and high potential for revenue growth given the strong growth potential in our countries, the strength of our market positions within each country and our strategically important, unique tower locations. We believe that we are well positioned to improve margins and cash flow, while achieving long-term growth due to: • a large and scalable platform that provides critical infrastructure to help drive telecommunications activity and broader digital and economic progress; • a long-standing and stable operational platform that consistently delivers on our service level agreements to customers with proven network reliability; • a well-defined organic and inorganic expansion strategy designed to grow in existing markets with our existing and new customers and enter carefully selected growth-oriented markets with compelling underlying fundamentals; and • a comprehensive commitment towards contributing to sustainability and the well-being of our communities and environments where we operate. Our successful performance so far is the result of many years of building, acquiring, operating, managing, and owning telecommunications infrastructure in emerging market environments. As one of the pioneers of the tower infrastructure industry in Africa, we have worked with our customers to develop the experience needed to operate and grow a successful business in our sector. Our experience has provided us with years of insight, deep operational expertise, and strong relationships with various stakeholders that we believe will allow us to enhance our leadership position in existing and new markets. Our track record is highlighted by the following milestones: • 2001: Founded as a builder of telecommunication Towers for MNOs in Nigeria; our founders continue to lead the business today. • 2004: Launched our Managed Services operations for MNO-owned Towers with services including maintenance, security and power supply. • 2009: Began owning Towers and leasing space to MNOs in Nigeria and launched our Colocation operations through which we lease space to other MNOs. • 2013: Acquired MTN Côte d’Ivoire’s tower portfolio of 911 Towers and MTN Cameroon’s 818 Towers. Additionally, completed MLL agreements for Orange Côte d’Ivoire’s tower portfolio of 1,191 Towers and Orange Cameroon’s 819 Towers. • 2014: Successfully completed a $2.0 billion equity raise, which was drawn down in 2014 and 2015. • 2014: Entered Zambia and Rwanda through the acquisitions of MTN’s tower portfolios of 719 Towers in Zambia and 550 Towers in Rwanda. These transactions helped establish us as the largest independent tower company in EMEA by tower count. • 2014: Executed landmark transactions in Nigeria to acquire a total of 10,966 Towers. We acquired 4,154 of these Towers from MTN Nigeria and 2,116 of these Towers from 9mobile in 2014 and the balance of 4,696 Towers from MTN Nigeria the following year. • 2015: Expanded through the acquisitions of Airtel Zambia’s 949 Towers and Airtel Rwanda’s 200 Towers and further expanded in Nigeria through the acquisition of an additional 555 Towers from 9mobile. • 2016: Acquired HTN Towers which owned 1,211 Towers, the first tower company-to-tower company transaction in Africa, which reinforced our leadership in Africa’s largest market. • 2016: Issued our debut $800 million 9.500% senior notes due 2021 (now fully refinanced and redeemed as noted below under 2019), the largest African corporate high yield bond single issue offering at the time. • 2019: Refinanced outstanding debt of our Nigeria operations (approximately $1.8 billion), including issuing $1.3 billion of new senior notes, as well as new senior credit facilities, resulting in a more simplified debt capital structure, extended maturities and lower cost of debt. • 2020: Expanded our footprint by entering the Middle East through the completion of the Kuwait Acquisition, a controlling investment in Zain Kuwait’s 1,620 towers in Kuwait, of which we completed the first closing of 1,022 towers in February 2020 and 140 towers in October 2020. • 2020: Expanded our footprint by entering Latin America through the completion of the CSS Acquisition, for 2,312 towers primarily across Brazil, as well as Peru and Colombia. • 2020: Completed a tack-on transaction for $150 million in aggregate principal amount of senior notes and upsized our IHS Holding Revolving Credit Facility to $225 million in available borrowing capacity. • 2021: Expanded our Latam business through the acquisitions of Skysites in Brazil, Centennial Brazil and Centennial Colombia, acquiring 1,005 towers, 602 towers and 217 towers, respectively. • 2021: Signed definitive agreements with TIM Brasil for the acquisition of existing fiber assets and future deployment of fiber assets in Brazil, pursuant to the TIM Fiber Acquisition. • 2021: Completed third closing of 67 towers in April 2021 in Kuwait pursuant to the Kuwait Acquisition, with the remainder of the towers currently managed and operated under a Managed Services agreement until they can be legally transferred to us. Completed acquisition of 162 towers in April 2021 from Airtel Rwanda. • 2021: Expanded the restricted group for our $1,450 million senior notes to encompass IHS Holding Limited and all of IHS Holding Limited’s subsidiaries (other than unrestricted subsidiaries). • 2021: Entered into a $500 million bridge facility in August 2021 that can be used for certain acquisitions. Upsized IHS Holding Revolving Credit Facility by $20 million to $245 million in July 2021. As of August 18, 2021, the IHS Holding Revolving Credit Facility and the IHS Holding Bridge Facility remain undrawn. We believe that the underlying telecommunications trends in our markets will continue to drive the need for additional infrastructure and enable us to further augment our growth through continued Colocation, Lease Amendments, New Site construction, adjacent telecommunications infrastructure investments such as fiber and acquisition activity. New telecommunication infrastructure services such as small cells will further add to our growth opportunities with the roll-out of 5G in some of our markets. As of June 30, 2021, with an average age of our tower portfolio of 5.9 years, based on the date of integration of the sites, and a Colocation Rate of 1.51x, we believe that we have a young portfolio with ample capacity to continue growing organically, as well as to realize further gains on operating margins from operational efficiencies. We believe this organic growth will help drive enhanced cash flow generation from our existing assets. --- IHS Holding Limited was incorporated in the Republic of Mauritius as a private company limited by shares on July 26, 2012 under the Mauritian Companies Act 2001. On completion of the Migration, IHS Holding Limited will cease to be incorporated in the Republic of Mauritius and will be incorporated and registered by way of continuation as an exempted company with limited liability under the Companies Act (as amended) of the Cayman Islands. Our principal executive offices will be located at 1 Cathedral Piazza, 123 Victoria Street, London SW1E 5BP, United Kingdom. Our telephone number at this address will be +44 20 8106 1600. Our website address is www.ihstowers.com.
IHS Holding Ltd annual income statement and balance sheet, FY 2022 to FY 2025, as reported in SEC filings.
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Revenue | $2.0B | $1.9B | $1.5B | $1.6B |
| Gross profit | $804M | $889M | $794M | $877M |
| Operating income | $312M | $524M | $604M | $821M |
| Net income | ($470M) | ($2.0B) | ($1.6B) | $127M |
| Metric | FY 2022 | FY 2023 | FY 2024 | FY 2025 |
|---|---|---|---|---|
| Total assets | — | $5.3B | $4.2B | $4.5B |
| Total liabilities | — | $5.0B | $4.6B | $4.6B |
| Total equity | — | $329M | ($314M) | ($89.8M) |
| Cash & equivalents | — | — | $578M | $826M |