Executive Summary / Key Takeaways

• IHS Holding Limited is undergoing a significant strategic transformation, shifting focus towards enhanced profitability, robust cash flow generation, and balance sheet optimization through disciplined capital allocation and targeted asset disposals.
• The company delivered strong Q2 2025 financial results, with revenue of $433 million, Adjusted EBITDA of $248.5 million (57% margin), and ALFCF of $54 million, exceeding expectations and leading to a raised full-year 2025 guidance across all key metrics.
• Strategic initiatives, including the renewal of over 70% of Group revenue with key customers like MTN and Airtel , de-risking power exposure through indexation, and the sale of non-core assets like Rwanda, are materially improving financial visibility and strengthening the balance sheet.
• IHS has significantly reduced its net leverage to 3.4x in Q2 2025 and is on track to reach the lower end of its 3x-4x target range by year-end, paving the way for potential direct shareholder returns through dividends or share buybacks.
• The company's operational efficiency, driven by technology and AI adoption, coupled with an improving macroeconomic environment in key markets like Nigeria, underpins a compelling investment thesis for sustained organic growth and value creation.

IHS's Foundation and Strategic Evolution in a Dynamic Landscape

IHS Holding Limited, established in 2001, operates as a leading independent owner, operator, and developer of shared communications infrastructure across Africa and Latin America. Its core business revolves around providing essential services such as colocation, lease amendments, and new site builds to mobile network operators (MNOs) and internet service providers. Historically, IHS pursued a diversification strategy, expanding into the Middle East and Latin America to reduce its reliance on Nigeria. This journey has shaped its current strategic responses to market dynamics, particularly in navigating the complexities of emerging economies.

The telecommunications infrastructure industry is characterized by high capital requirements and stringent regulatory approvals, creating significant barriers to entry that benefit established players like IHS. However, it also faces intense competition from global giants such as American Tower Corporation , Crown Castle International Corp. , and SBA Communications Corporation (SBAC), which boast larger scale and broader global reach. While these competitors often lead in mature markets with superior financial efficiency and R&D investment, IHS carves out a distinct niche through its deep localized expertise and adaptability in emerging markets. For instance, IHS's focus on tailored rural telephony solutions and its ability to navigate complex regulatory environments provide a competitive edge, enabling quicker market entry in underserved regions.

IHS's market positioning is notably strong in areas with high demand for affordable infrastructure, particularly across its African footprint. In Brazil, the carrier environment has consolidated to three major players, which is expected to foster positive momentum for tower companies. The company's contractual relationships are robust, with over 70% of its Group revenue recently renewed or extended, including all MTN Nigeria tower contracts through 2032 and the Airtel Nigeria MLA to 2031. This significantly enhances financial visibility and increases contracted revenues to $12.3 billion.

Operational Excellence and Technological Differentiators

IHS is not merely a passive infrastructure provider; it actively leverages technology and operational innovation to drive efficiency and enhance its competitive moat. The company is committed to introducing "more technology, especially artificial intelligence into our ways of working to help us realize future efficiencies." This includes optimizing processes for diesel distribution and operational planning, which has positively impacted cash flow generation.

A tangible example of this operational innovation is the significant reduction in capital expenditure (CapEx) per tower in Brazil. By implementing changes in tower design, structure, and sourcing, IHS has been able to lower CapEx per tower by 50%. This involves building lighter towers and optimizing the sourcing and assembly of materials, demonstrating a smarter approach to infrastructure deployment rather than simply reducing investment. Furthermore, the completion of "Project Green," a multi-year power investment initiative, has largely reduced future CapEx requirements in this area. These operational advancements contribute directly to IHS's competitive advantage by enabling more cost-effective and efficient network expansion, particularly in high-growth emerging markets.

Financial Resilience and Strategic Deleveraging

IHS has demonstrated strong financial resilience, particularly in Q2 2025, with results exceeding expectations across key metrics. Revenue for the quarter reached $433 million, driven by 11% organic growth from colocation, lease amendments, new sites, and CPI escalators. This was achieved despite a 9% impact from foreign exchange rate movements, notably the Nigerian Naira's depreciation year-on-year. Adjusted EBITDA stood at $248.5 million, maintaining a robust margin of over 57%, which highlights the company's effective cost control and the resilience of its financial model through contract resets.

Adjusted Levered Free Cash Flow (ALFCF) was $54 million, reflecting the rephased interest payments following the November 2024 bond refinancing. Total CapEx decreased by 14% year-on-year to $46 million, underscoring a more disciplined capital allocation strategy.

The Nigeria segment, IHS's largest market, reported Q2 2025 revenue of $260 million, with organic growth exceeding 10% despite a $5 million revenue reduction from MTN Nigeria site churn. Its Adjusted EBITDA margin improved to 65.5%, benefiting from cost-saving initiatives and Naira devaluation. In Sub-Saharan Africa, revenue increased by 18%, driven by new tenants and colocations, though Adjusted EBITDA saw a 4% decrease due to higher power generation and maintenance costs. The Latin America segment achieved 6% organic growth, with towers and tenants growing by 7.3% and 9.7% respectively, even after writing down the remaining Oi (OIBRQ) revenue. Its Adjusted EBITDA margin expanded by 260 basis points, primarily from cost-saving measures.

A cornerstone of IHS's strategic review is balance sheet optimization. The company repaid $154 million of high-interest debt in Q2 2025, including an $80 million Nigerian term loan and $273 million of Brazilian debentures, effectively lowering its weighted average cost of debt by 100 basis points. This proactive debt management, combined with asset disposals, has significantly reduced consolidated net leverage to 3.4x at the end of Q2 2025, down from 3.9x a year prior. The company also refinanced its $300 million revolving credit facility, extending its availability to Q3 2028, bolstering liquidity to over $830 million.

Outlook: Sustained Growth and Shareholder Returns

IHS has raised its full-year 2025 guidance across all key metrics, reflecting strong performance and a positive outlook. The company now expects revenue between $1.7 billion and $1.73 billion, Adjusted EBITDA between $985 million and $1.005 billion, and ALFCF between $390 million and $410 million. Total CapEx is projected to be in the range of $240 million to $270 million, a reduction from previous guidance. This revised guidance implies an 11% organic revenue growth rate at the midpoint, driven by increased constant currency growth assumptions and improved operational performance. The guidance also incorporates an estimated reduction in contribution from the Rwanda disposal, which is expected to close in the second half of 2025.

Management anticipates continued strength in colocations and lease amendments for the remainder of 2025 and into 2026, particularly in Nigeria and Brazil. The ongoing rollout of 5G across its major markets, coupled with MNO tariff increases in Nigeria and a stabilizing Naira, are expected to drive sustained growth. Nigeria's economy, recently rebased to approximately $250 billion in 2024, with telecommunications contributing 8.5% to real GDP growth, underscores the sector's vital role. The reduction in Nigerian withholding tax rates from 10% to 2%, effective January 1, 2025, is also expected to significantly boost cash flow.

As IHS approaches the lower end of its 3x-4x net leverage target range, the company will evaluate the introduction of dividends and/or share buybacks. This commitment to direct shareholder remuneration, following debt reduction, signals a maturing capital allocation strategy. Acquisitions are currently not a priority, with the focus remaining on internal improvements and maximizing shareholder value.

Risks and Competitive Dynamics

Despite the positive outlook, IHS faces inherent risks typical of its operating environment. Foreign exchange volatility, particularly with the Nigerian Naira, remains a key concern, though the company has de-risked its operating model by shifting a significant majority of its business to power pass-through or power indexation, which acts as a hedge against currency and diesel price fluctuations. Geopolitical developments in regions like the DRC, while monitored, have not yet impacted IHS's business in Rwanda. Customer concentration, though mitigated by long-term contracts with major MNOs like MTN (MTN) and Airtel (AAF), is another factor.

In the competitive landscape, IHS's smaller scale and lower R&D investment compared to global players like American Tower (AMT) and Crown Castle (CCI) could pose long-term challenges in technological innovation and market share in more developed segments. For instance, while IHS has demonstrated operational technology prowess in areas like lighter tower construction, it may lag in advanced network integration capabilities that larger competitors offer. However, IHS's strategic focus on emerging markets, its regulatory expertise, and its ability to execute tailored solutions provide a strong competitive moat in its core geographies. The company's proactive approach to contract renewals and operational efficiencies positions it to capitalize on the increasing demand for connectivity in its markets.

Conclusion

IHS Holding Limited is executing a compelling strategic transformation, moving beyond a period of macroeconomic headwinds to focus on disciplined growth, enhanced profitability, and robust cash flow generation. The company's strong Q2 2025 performance, coupled with a raised full-year guidance, underscores the effectiveness of its initiatives in de-risking its operating model, optimizing its portfolio through strategic asset disposals, and aggressively reducing debt. With net leverage firmly within its target range and an improving macroeconomic backdrop in key markets like Nigeria, IHS is well-positioned to deliver sustained organic growth. The company's commitment to leveraging technology for operational efficiencies and its clear path towards potential shareholder returns through dividends or buybacks solidify a compelling investment thesis, making IHS a noteworthy opportunity for discerning investors seeking exposure to the high-growth telecommunications infrastructure sector in emerging markets.