CONSOLIDATED HIGHLIGHTS – THIRD QUARTER 2023
- Revenue of $467.0 million decreased 10.4% (or increased 30.6%
organically) reflecting a $214.5 million year on year foreign
exchange (“FX”) headwind largely as a result of the 78.2%
devaluation of the Nigerian Naira (“NGN”)
- Adjusted EBITDA of $232.0 million (49.7% Adjusted EBITDA
Margin) decreased 15.5%
- Loss for the period was $265.4 million
- Cash from operations was $234.4 million
- Adjusted Levered Free Cash Flow (“ALFCF”) was $79.6
million
- Total Capex was $105.4 million
- Maintaining 2023 guidance for revenue of $2,080-2,110 million,
Adjusted EBITDA of $1,130-1,150 million, Capital expenditure
(“Total Capex”) of $610-650 million and net leverage ratio target
remains 3.0x-4.0x. Introducing ALFCF guidance of $385-405 million
and removing Recurring Levered Free Cash Flow (“RLFCF”) guidance of
similar amount.
IHS Holding Limited (NYSE: IHS) (“IHS Towers” or the “Company”),
one of the largest independent owners, operators, and developers of
shared communications infrastructure in the world by tower count,
today reported financial results for the third quarter ended
September 30, 2023.
Sam Darwish, IHS Towers Chairman and Chief Executive Officer,
stated, ”We are reporting a solid quarter of performance across our
KPI’s driven by growth across each of our segments that reflects
robust secular demand and the quality of our contract structures.
The impact of the Naira devaluation since mid-June is of course
impacting these Q3 results, but the FX protection mechanisms in our
revenue contracts have begun to reset and we will see more evidence
of this resetting in our Q4 results. The reduction in capex in the
quarter 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.
We are encouraged by recent developments in Nigeria to address
the ongoing situation and, having operated in the country for over
22 years, including during other significant devaluations, we are
confident in the ability of our business there to return to growth
as it has done before. We are also pleased to see improvements in
macro conditions in Brazil and South Africa, and more broadly, we
remain well positioned to benefit from the strong, long-term
secular growth trends across our markets. We expect our heightened
focus on cash generation to be even more evident in 2024, as we
pursue operational efficiencies through productivity enhancements,
cost reductions and slowing of capex vs. recent years. In addition,
we are constantly reviewing our portfolio of markets and assets and
will continue to focus our capital allocation on what we believe to
be high-growth, core markets. We believe these initiatives will
help enable IHS to sustain healthy double-digit organic growth
while delivering the meaningful cash generation inherent in our
business model.
We are maintaining our 2023 guidance although incremental FX
headwinds now assumed in guidance equate to $11 million downside
for the year versus rates previously assumed.
Lastly, regarding shareholder considerations, we continue to
engage in constructive dialogue with Wendel and are making progress
toward our mutual goals. We also continue to engage with MTN Group
to better align on various commercial and governance matters and
will provide additional updates at the appropriate time.”
RESULTS FOR THE THIRD QUARTER 2023
The table below sets forth select unaudited financial results
for the quarters ended September 30, 2023 and September 30,
2022:
Three months ended
September 30,
September 30,
Y on Y
2023
2022
Growth
$’000
$’000
%
Revenue
467,023
521,317
(10.4
)
Adjusted EBITDA(1)
231,953
274,428
*
(15.5
)
Loss for the period
(265,351
)
(36,648
)**
(624.1
)
Cash from operations
234,437
294,190
(20.3
)
ALFCF(2)
79,610
89,656
(11.2
)
(1)
Adjusted EBITDA is a non-IFRS
financial measures. See “Use of Non-IFRS Financial Measures” for
additional information, definitions and a reconciliation to the
most comparable IFRS measures.
(2)
Starting in the third quarter of
2023, we replaced RLFCF with ALFCF. ALFCF, unlike RLFCF, only
includes the cash costs of business combination transaction costs,
other costs and other income and excludes the reversal of movements
in the net loss allowance on trade receivables and impairment of
inventory to better reflect the liquidity position in each period.
There is otherwise no change in the definition or calculation of
this metric for the periods presented as a result of the name
change. See “Use of Non-IFRS Financial Measures” for additional
information, a definition and a reconciliation to the most
comparable IFRS measures for ALFCF.
*
Re-presented to reflect the
remeasurement period adjustments, as required by IFRS 3, in respect
of updates to the accounting for the MTN SA Acquisition in May
2022.
**
Re-presented to reflect the
remeasurement period adjustments, as required by IFRS 3, in respect
of updates to the accounting for the GTS SP5 Acquisition in March
2022 and the MTN SA Acquisition in May 2022.
Impact of Nigerian Naira devaluation in mid-June 2023
In mid-June 2023, the Central Bank of Nigeria implemented steps
to unify the Nigerian foreign exchange market by replacing the old
regime of multiple exchange rate segments into a single Investors
and Exporters (“I&E”) window within which foreign exchange
transactions would be determined by market forces and which was
subsequently renamed NAFEM (Nigeria Autonomous Foreign Exchange
Market) in October 2023. The Group uses the USD/NGN rate published
by Bloomberg, which is approximately aligned to the I&E (now
NAFEM) window rate, for Group reporting purposes.
The NGN fell 59.4% between the period immediately prior to the
announcement (June 14, 2023) and the month end rate as at June 30,
2023 and continues to experience volatility, having devalued
further by 3.0% as at September 30, 2023. Due to the NGN
devaluation, Revenue and Segment Adjusted EBITDA were negatively
impacted by $180.5 million and $105.1 million, respectively, in the
third quarter 2023.
Due to the timing of the devaluation, the average USD/NGN rate
used to consolidate the Group results was NGN 767.7 for the third
quarter of 2023 and NGN 579.0 for the nine months ended September
30, 2023, as opposed to the closing rate of NGN 775.6 on September
30, 2023.
The continued devaluation of the NGN in the third quarter of
2023 also resulted in an impact on finance, specifically related to
unrealized foreign exchange losses of $76.8 million in our Nigeria
segment. This is due to the USD denominated historical shareholder
loans from Group entities to Nigeria and the USD denominated third
party debt (such as the 2026, 2027 and 2028 Notes). As the
functional currency of the Nigeria businesses is NGN, these USD
balances have been revalued in NGN using the rate as of quarter-end
resulting in an increase in unrealized loss on foreign
exchange.
Results for the three months ended September 30, 2023 versus
2022
During the third quarter of 2023, revenue was $467.0 million
compared to $521.3 million for the third quarter of 2022, a
decrease of $54.3 million, or 10.4%. Organic growth was $159.7
million, or 30.6% driven primarily by foreign exchange resets,
escalations and Lease Amendments. Revenue for the third quarter of
2022 included a one-off amount of $18.0 million. Aggregate
inorganic revenue growth was $0.5 million, or 0.1%, for the third
quarter of 2023, which primarily related to the fifth and sixth
stages of the Kuwait Acquisition. The increase in organic growth
was more than offset by the non-core impact of negative movements
in foreign exchange rates of $214.5 million, or 41.2% of which
$213.0 million was primarily due to the devaluation of the NGN.
Adjusted EBITDA was $232.0 million for the third quarter of
2023, compared to $274.4 million for the third quarter of 2022.
Adjusted EBITDA margin for the third quarter of 2023 was 49.7%
(third quarter of 2022: 52.6%). The decrease in Adjusted EBITDA
primarily reflects the decrease in revenue due to negative
movements in foreign exchange rates discussed above, alongside an
increase in administrative expenses resulting from an increase in
employee cost and professional fees and an increase in unrealized
foreign exchange losses within cost of sales, partially offset by
an overall decrease in cost of sales resulting from a decrease in
power generation costs, maintenance costs and security costs.
Loss for the period was $265.4 million for the third quarter of
2023, compared to a loss of $36.6 million for the third quarter of
2022. The increase in loss for the period reflects the decrease in
revenue discussed above and an increase in net finance costs,
specifically related to the unrealized foreign exchange losses on
financing the Group’s operations. This is coupled with an increase
in cost of sales due to an increase in unrealized foreign exchange
losses and an increase in net impairment of property, plant and
equipment and prepaid land rent costs primarily driven by power
equipment assets in our SSA segment being classified as assets held
for sale and remeasured at fair value less costs to sell, alongside
an increase in administrative expenses associated with staff costs
and professional fees.
Cash from operations and ALFCF for the third quarter of 2023
were $234.4 million and $79.6 million, respectively, compared to
$294.2 million and $89.7 million, respectively, for the third
quarter of 2022. The decrease in cash from operations primarily
reflects the aggregate impact of the decrease in revenue and
increase in administrative expenses, partially offset by a decrease
in cost of sales as discussed above. The decrease in ALFCF is
primarily due to lower cash from operations explained above and an
increase in net interest paid and income taxes paid. This is
partially offset by decreases in maintenance capital expenditure,
withholding tax and lease and rent payments made.
Segment results
Revenue and Segment Adjusted
EBITDA:
Revenue and Segment Adjusted EBITDA, our key profitability
measures used to assess the performance of our reportable segments,
were as follows:
Revenue
Segment Adjusted
EBITDA
Three months ended
Three months ended
September 30,
September 30,
September 30,
September 30,
2023
2022
Change
2023
2022
Change
$'000
$'000
%
$'000
$'000
%
Nigeria
271,394
355,351
(23.6
)
158,003
210,039
(24.8
)
SSA
133,481
114,801
16.3
66,285
63,521
*
4.4
Latam
51,883
42,104
23.2
38,163
29,993
27.2
MENA
10,265
9,061
13.3
5,155
3,828
34.7
Other
—
—
—
(35,653
)
(32,953
)
(8.2
)
Total
467,023
521,317
(10.4
)
231,953
274,428
*
(15.5
)
*
Re-presented to reflect the
remeasurement period adjustments, as required by IFRS 3, in respect
of updates to the accounting for the MTN SA Acquisition in May
2022.
Nigeria
Revenue for our Nigeria segment decreased by $84.0 million, or
23.6%, to $271.4 million for the third quarter of 2023, compared to
$355.4 million for the third quarter of 2022. Revenue increased
organically by $129.1 million, or 36.3%, driven primarily by an
increase in foreign exchange resets, escalations and Lease
Amendments. Revenue for the third quarter of 2022 included one-off
organic revenue of $18.0 million. The decrease in revenue was
primarily driven by the non-core impact of negative movements in
the Naira to U.S. dollar foreign exchange rate of $213.0 million,
or 59.9%. Year-on-year, within our Nigeria segment, Tenants
increased by 66, including 367 from New Sites and 622 from
Colocation, partially offset by 923 Churned (which includes, from
the first quarter of 2023, 727 towers occupied by our smallest Key
Customer on which we were not recognizing revenue), while Lease
Amendments increased by 4,170.
Segment Adjusted EBITDA for our Nigeria segment was $158.0
million for the third quarter of 2023, compared to $210.0 million
for the third quarter of 2022, a decrease of $52.0 million, or
24.8%. The decrease in Segment Adjusted EBITDA primarily reflects
the decrease in revenue driven by negative movements in foreign
exchange discussed above coupled with unrealized foreign exchange
losses of $15.8 million within other cost of sales. This is
partially offset by an overall decrease in cost of sales of $32.1
million, primarily resulting from lower overall consumption and
pricing of diesel of $38.2 million, alongside a decrease in
maintenance cost and security cost of $5.1 million and $2.8
million, respectively.
SSA
Revenue for our SSA segment increased by $18.7 million, or
16.3%, to $133.5 million for the third quarter of 2023, compared to
$114.8 million for the third quarter of 2022. Revenue increased
organically by $23.7 million, or 20.7%, driven primarily by
escalations, New Sites and Colocation and foreign exchange resets.
The increase in revenue was partially offset by the non-core impact
of negative movements in foreign exchange rates of $5.1 million, or
4.4%. Year-on-year, within our SSA segment, Tenants increased by
571, including 243 from New Sites and 342 from Colocation,
partially offset by 14 Churned, while Lease Amendments increased by
837.
Segment Adjusted EBITDA for our SSA segment was $66.3 million
for the third quarter of 2023, compared to $63.5 million for the
third quarter of 2022, an increase of $2.8 million, or 4.4%. The
increase in Segment Adjusted EBITDA primarily reflects the increase
in revenue discussed above, partially offset by an increase in cost
of sales and administrative expenses. Cost of sales increases
resulted from higher power generation and maintenance costs of
$12.9 million and $0.6 million, respectively, due to the increase
in asset base, while administrative expenses increased by $1.5
million, primarily from staff costs and professional fees.
Latam
Revenue for our Latam segment increased by $9.8 million, or
23.2%, to $51.9 million for the third quarter of 2023, compared to
$42.1 million for the third quarter of 2022. Revenue increased
organically by $6.2 million, or 14.8%, driven primarily by an
increase in growth from fiber and escalations. The increase in
revenue was also driven by the non-core impact of positive
movements in foreign exchange rates of $3.5 million, or 8.4%.
Year-on-year, within our Latam segment, Tenants increased by 504,
including 579 from New Sites and 190 from Colocation, partially
offset by 269 Churned, while Lease Amendments increased by 78.
Segment Adjusted EBITDA for our Latam segment was $38.2 million
for the third quarter of 2023, compared to $30.0 million for the
third quarter of 2022, an increase of $8.2 million, or 27.2%. The
increase in Segment Adjusted EBITDA primarily reflects the increase
in revenue discussed above and a decrease in cost of sales of $1.5
million, of which $1.6 million is other costs. The increase in
revenue and decrease in cost of sales is partially offset by an
increase in administrative expenses of $3.1 million, of which $2.1
million is staff costs and $0.6 million is professional fees.
MENA
Revenue for our MENA segment increased by $1.2 million, or
13.3%, to $10.3 million for the third quarter of 2023, compared to
$9.1 million for the third quarter of 2022. Revenue increased
organically by $0.7 million, or 7.4% driven primarily by New Sites
and escalations, and grew inorganically in the period by $0.5
million, or 5.6%. Year-on-year, within our MENA segment, Tenants
increased by 162, including 58 from New Sites, and 109 from the
closing of the sixth stage of the Kuwait Acquisition.
Segment Adjusted EBITDA for our MENA segment was $5.2 million
for the third quarter of 2023, compared to $3.8 million for the
third quarter of 2022, an increase of $1.3 million, or 34.7%. The
increase in Segment Adjusted EBITDA primarily reflects the increase
in revenue discussed above and a decrease in cost of sales of $0.1
million.
INVESTING ACTIVITIES
During the third quarter of 2023, capital expenditure (“Total
Capex”) was $105.4 million, compared to $174.1 million for the
third quarter of 2022. The decrease is primarily driven by lower
capital expenditure for our Nigeria and SSA segments of $71.9
million and $21.7 million, respectively, partially offset by an
increase in capital expenditure of $25.0 million for our Latam
segment. The decrease in Nigeria was primarily driven by decreases
of $30.4 million related to maintenance capital expenditure, $20.0
million related to Project Green and $13.4 million from New Site
capital expenditure, $4.7 million of other capital expenditure and
$4.1 million for purchase of land for new or existing sites,
partially offset by an increase of $2.4 million in fiber capital
expenditure. The decrease in SSA is primarily driven by decreases
of $12.8 million related to refurbishment capital expenditure, $4.3
million from New Sites capital expenditure and $3.2 million in
other capital expenditure. The increase in Latam is primarily
driven by increases of $20.4 million related to New Sites capital
expenditure, $2.7 million related to corporate capital expenditure
and $1.7 million related to augmentation capital expenditure,
partially offset by an increase of $1.9 million related to fiber
capital expenditure. Our spending for Project Green was $8.3
million during the third quarter of 2023 and total spend since we
began the project to September 30, 2023 was $187.1 million.
FINANCING ACTIVITIES AND LIQUIDITY
Below is a summary of key facilities we have entered into,
repaid or amended during the third quarter of 2023. Approximate
U.S. dollar equivalent values for non-USD denominated facilities
stated below are translated from the currency of the debt at the
relevant exchange rates on September 30, 2023.
IHS Holding (2020) Revolving Credit Facility
In July 2023, the available commitments were increased to $300.0
million pursuant to the facility increase clause contained within
the IHS Holding RCF.
Nigeria (2023) Revolving Credit Facility
As of November 13, 2023, there are no amounts drawn and
outstanding under the Nigeria 2023 RCF.
IHS Brasil - Cessão de Infraestruturas S.A.
Debentures
IHS Brasil - Cessão de Infraestruturas S.A. issued debentures
for BRL 1,200.0 million (approximately $238.4 million), in
September 2023 (as amended and/or restated from time to time, the
“IHS Brasil Debentures”). The IHS Brasil Debentures amortize
semi-annually until maturity in August 2031.
The IHS Brasil Debentures contain customary information and
financial covenants, including but not limited to the maintenance
of specified net debt to EBITDA and interest cover ratios. They
also contain customary negative covenants and restrictions
including, but not limited to, dividends and other payments to
shareholders, intercompany loans and capital reductions.
The IHS Brasil Debentures are secured by a pledge over all
shares owned by Centennial Towers Brasil Cooperatief U.A. and IHS
Netherlands BR B.V. in IHS Brasil – Cessão de Infraestruturas S.A.
and a pledge over the bank account where the companies’ receivables
are deposited.
The IHS Brasil Debentures have an interest rate of CDI plus
3.10% (assuming a 252-day calculation basis) and will terminate in
August 2031.
The proceeds from the issuance of the IHS Brasil Debentures were
applied towards, inter alia, refinancing certain indebtedness of
IHS Brasil - Cessão de Infraestruturas S.A. (including the IHS
Brasil Facilities and the GTS Facility, as set out below) and
general corporate and working capital purposes.
IHS Brasil - Cessão de Infraestruturas S.A.
Facilities
In September 2023, we prepaid the full remaining principal
amount of the IHS Brasil Facilities and the GTS Facility of BRL
713.6 million (approximately $141.8 million) (plus accrued
interest) using the proceeds received following the issuance of the
IHS Brasil Debentures.
FINANCING ACTIVITIES AND LIQUIDITY AFTER REPORTING
PERIOD
Below is a summary of key facilities we have entered into,
repaid or amended after the third quarter of 2023.
IHS Holding (2022) Bullet Term Loan Facility
In October 2023, the available commitments under the IHS Holding
2022 Term Loan were voluntarily reduced by $100.0 million and the
availability period on the remaining balance of $130.0 million in
available commitments was extended to April 2024 from October
2023.
As of November 13, 2023, $370.0 million of the IHS Holding 2022
Term Loan was drawn. The undrawn portion of $130.0 million can be
applied toward general corporate purposes.
IHS South Africa Overdraft
IHS SA entered into a ZAR 350.0 million (approximately $18.5
million) overdraft facility agreement in October 2023 (the “IHS SA
Overdraft”). The IHS SA Overdraft is governed by South African law
and funds borrowed under the facility will be applied towards
general corporate purposes. The IHS SA Overdraft will terminate in
October 2024.
As of November 13, 2023, ZAR 117.9 million (approximately $6.2
million) has been drawn down under this facility.
IHS Holding (2020) Revolving Credit Facility
In November 2023, the IHS Holding RCF was further amended and
restated to, among other things, extend the termination date to
October 30, 2026.
SHARE BUYBACK PROGRAM
In August 2023, the Company’s board of directors (the “Board”)
authorized a stock repurchase program for up to $50.0 million of
the Company’s ordinary shares, effective as of August 15, 2023
through August 15, 2025, subject to market conditions, contractual
restrictions, regulatory requirements and other factors.
During the third quarter of 2023, the Company repurchased
948,101 shares, at an average price of $5.04 per share, for $4.8
million under its stock repurchase program. Shares repurchased were
cancelled.
Full Year 2023 Outlook Guidance
The following full year 2023 guidance is based on a number of
assumptions that management believes to be reasonable and reflects
the Company’s expectations as of November 14, 2023. Actual results
may differ materially from these estimates as a result of various
factors, and the Company refers you to the cautionary language
regarding “forward-looking” statements included in this press
release when considering this information. The Company’s outlook
reflects 1) $48.1 million of non-recurring revenue as adjusted for
withholding tax in first quarter of 2023 from our smallest Key
Customer in Nigeria for services previously provided but for which
revenue had not been recognized, and 2) approximately $25.0 million
of power pass through revenue in South Africa ($13.0 million
through third quarter 2023). Guidance does not include revenue from
the Egypt operations.
The Company’s outlook is based on the following assumptions:
- Organic revenue Y/Y growth of approximately 34% (31% when
excluding the $48.1 million non-recurring revenue in first quarter
2023)
- Average foreign currency exchange rates to 1.00 U.S. Dollar for
January 1, 2023 through December 31, 2023 for key currencies: (a)
628.0 Nigerian Naira; (b) 5.01 Brazilian Real (c) 0.93 Euros (d)
18.51 South African Rand
- Project Green capex $90.0-100.0 million
- Build-to-suit of circa 1,250 sites of which ~200 sites in
Nigeria and ~750 sites in Brazil
- Net leverage ratio target of 3.0x-4.0x
Metric
Current Range
Previous Range
Revenue
$2,080M - $2,110M
$2,080M - $2,110M
Adjusted EBITDA (1)
$1,130M - $1,150M
$1,130M - $1,150M
Recurring Levered Free Cash Flow (2)
Not applicable
$385M - $405M
Adjusted Levered Free Cash Flow (2)
$385M - $405M
Not applicable
Total Capex
$610M - $650M
$610M - $650M
(1)
Adjusted EBITDA and ALFCF are
non-IFRS financial measures. See “Use of Non-IFRS Financial
Measures” for additional information and a reconciliation to the
most comparable IFRS measures. We are unable to provide a
reconciliation of Adjusted EBITDA and ALFCF to (loss)/profit and
cash from operations, respectively, for the periods presented above
without an unreasonable effort, due to the uncertainty regarding,
and the potential variability, of these costs and expenses that may
be incurred in the future, including, in the case of Adjusted
EBITDA, share-based payment expense, finance costs, and insurance
claims, and in the case of ALFCF net movement in working capital
and other non-operating expenses, each of which adjustments may
have a significant impact on these non-IFRS measures.
(2)
Starting in the third quarter of
2023, we replaced RLFCF with ALFCF. We have presented RLFCF above
solely for the purpose of showing our previous guidance range for
comparative purposes and it is replaced by ALFCF guidance for the
full year 2023. As described last quarter, we are unable to provide
a reconciliation of RLFCF to (loss)/profit and cash from
operations, respectively, for the periods presented above without
an unreasonable effort. ALFCF, unlike RLFCF, only includes the cash
costs of business combination transaction costs, other costs and
other income and excludes the reversal of movements in the net loss
allowance on trade receivables and impairment of inventory to
better reflect the liquidity position in each period. There is
otherwise no change in the definition or calculation of this metric
for the periods presented as a result of the name change. See “Use
of Non-IFRS Financial Measures” for additional information, a
definition and a reconciliation to the most comparable IFRS
measures for ALFCF.
Conference Call
IHS Towers will host a conference call on November 14, 2023 at
8:30am ET to review its financial and operating results.
Supplemental materials will be available on the Company’s website,
www.ihstowers.com. The conference call can be accessed by calling
+1 646 307 1963 (U.S./Canada) or +44 20 3481 4247
(UK/International). The call passcode is 8388435.
A simultaneous webcast and replay will be available in the
Investor Relations section of the Company’s website,
www.ihstowers.com, on the Earnings Materials page.
Upcoming Conferences and Events
IHS Towers management is expected to participate in the upcoming
conferences outlined below:
- RBC Capital Markets Technology, Internet, Media and Telecom
Conference (New York) – November 15, 2023
- Wells Fargo 7th Annual TMT Summit (Rancho Palos Verdes, CA) –
November 28, 2023
- UBS Annual Global TMT Conference (New York) – December 5,
2023
- New Street Research/BCG Future Series Conference: The Future of
Wireless, AI and Convergence (New York) – December 12, 2023
About IHS Towers
IHS Towers is one of the largest independent owners, operators
and developers of shared communications infrastructure in the world
by tower count and is one of the largest independent multinational
towercos solely focused on emerging markets. The Company has nearly
40,000 towers across its 11 markets, including Brazil, Cameroon,
Colombia, Côte d’Ivoire, Egypt, Kuwait, Nigeria, Peru, Rwanda,
South Africa and Zambia. For more information, please email:
communications@ihstowers.com or visit:
www.ihstowers.com
Cautionary statement regarding forward-looking
Information
This press release 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 Act”). All statements other
than statements of historical facts contained in this press release
may be forward-looking statements. In some cases, you can identify
forward-looking statements by terms such as “may,” “will,”
“should,” “expects,” “plans,” “anticipates,” “could,” “intends,”
“targets,” “projects,” “contemplates," “believes,” “estimates,”
“forecast,” “predicts,” “potential” or “continue” or the negative
of these terms or other similar expressions. Forward-looking
statements contained in this press release include, but are not
limited to statements regarding our future results of operations
and financial position, including our anticipated results for the
fiscal year 2023, industry and business trends, business strategy,
plans, market growth, the impact of the devaluation of the Naira
and other economic and geopolitical factors on our future results
and operations, our objectives for future operations and our
participation in upcoming presentations and events.
We have based these forward-looking statements largely on our
current expectations and projections about future events and
financial trends that we believe may affect our business, financial
condition and results of operations. Forward-looking statements
involve known and unknown risks, uncertainties and other important
factors that may cause our actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements, including, but not limited to:
- non-performance under or termination, non-renewal or material
modification of our customer agreements;
- volatility in terms of timing for settlement of invoices or our
inability to collect amounts due under invoices;
- a reduction in the creditworthiness and financial strength of
our customers;
- the business, legal and political risks in the countries in
which we operate;
- general macroeconomic conditions in the countries in which we
operate;
- changes to existing or new tax laws, rates or fees;
- foreign exchange risks and/or ability to access U.S. Dollars in
our markets;
- the effect of regional or global health pandemics, geopolitical
conflicts and wars (including the current conflict between Russia
and Ukraine) and acts of terrorism;
- our inability to successfully execute our business strategy and
operating plans, including our ability to increase the number of
Colocations and Lease Amendments on our Towers and construct New
Sites or develop business related to adjacent telecommunications
verticals (including, for example, relating to our fiber businesses
in Latin America and elsewhere) or deliver on our sustainability or
environmental, social and governance (ESG) strategy and initiatives
under anticipated costs, timelines, and complexity, such as our
Carbon Reduction Roadmap and Project Green, including plans to
reduce diesel consumption, integrate solar panel and battery
storage solutions on tower sites and connect more sites to the
electricity grid;
- reliance on third-party contractors or suppliers, including
failure, underperformance or inability to provide products or
services to us (in a timely manner or at all) due to sanctions
regulations, supply chain issues or for other reasons;
- our estimates and assumptions and estimated operating results
may differ materially from actual results;
- increases in operating expenses, including increased costs for
diesel;
- failure to renew or extend our ground leases, or protect our
rights to access and operate our Towers or other telecommunications
infrastructure assets;
- loss of customers;
- risks related to our indebtedness;
- changes to the network deployment plans of mobile operators in
the countries in which we operate;
- a reduction in demand for our services;
- the introduction of new technology reducing the need for tower
infrastructure and/or adjacent telecommunication verticals;
- an increase in competition in the telecommunications tower
infrastructure industry and/or adjacent telecommunication
verticals;
- our failure to integrate recent or future acquisitions;
- the identification by management of material weaknesses in our
internal control over financial reporting, which could affect our
ability to produce accurate financial statements on a timely basis
or cause us to fail to meet our future reporting obligations;
- increased costs, harm to reputation, or other adverse impacts
related to increased intention to and evolving expectations for
environmental, social and governance initiatives;
- reliance on our senior management team and/or key
employees;
- failure to obtain required approvals and licenses for some of
our sites or businesses or comply with applicable regulations;
- inability to raise financing to fund future growth
opportunities or operating expense reduction strategies;
- environmental liability;
- inadequate insurance coverage, property loss and unforeseen
business interruption;
- compliance with or violations (or alleged violations) of laws,
regulations and sanctions, including but not limited to those
relating to telecommunications regulatory systems, tax, labor,
employment (including new minimum wage regulations), unions, health
and safety, antitrust and competition, environmental protection,
consumer protection, data privacy and protection, import/export,
foreign exchange or currency, and of anti-bribery, anti-corruption
and/or money laundering laws, sanctions and regulations;
- fluctuations in global prices for diesel or other
materials;
- disruptions in our supply of diesel or other materials;
- legal and arbitration proceedings;
- reliance on shareholder support (including to invest in growth
opportunities) and related party transaction risks;
- risks related to the markets in which we operate, including but
not limited to local community opposition to some of our sites or
infrastructure, and the risks from our investments into emerging
and other less developed markets;
- injury, illness or death of employees, contractors or third
parties arising from health and safety incidents;
- loss or damage of assets due to security issues or civil
commotion;
- loss or damage resulting from attacks on any information
technology system or software;
- loss or damage of assets due to extreme weather events whether
or not due to climate change;
- failure to meet the requirements of accurate and timely
financial reporting and/or meet the standards of internal control
over financial reporting that support a clean certification under
the Sarbanes Oxley Act;
- risks related to our status as a foreign private issuer;
and
- the important factors discussed in the section titled “Risk
Factors” in our Annual Report on Form 20-F for the fiscal year
ended December 31, 2022.
The forward-looking statements in this press release are based
upon information available to us as of the date of this press
release, and while we believe such information forms a reasonable
basis for such statements, such information may be limited or
incomplete, and our statements should not be read to indicate that
we have conducted an exhaustive inquiry into, or review of, all
potentially available relevant information. These statements are
inherently uncertain and investors are cautioned not to unduly rely
upon these statements. You should read this press release and the
documents that we reference in this press release with the
understanding that our actual future results, performance and
achievements may be materially different from what we expect. We
qualify all of our forward-looking statements by these cautionary
statements. Additionally, we may provide information herein that is
not necessarily “material” under the federal securities laws for
SEC reporting purposes, but that is informed by various ESG
standards and frameworks (including standards for the measurement
of underlying data), and the interests of various stakeholders.
Much of this information is subject to assumptions, estimates or
third-party information that is still evolving and subject to
change. For example, our disclosures based on any standards may
change due to revisions in framework requirements, availability of
information, changes in our business or applicable government
policies, or other factors, some of which may be beyond our
control. These forward-looking statements speak only as of the date
of this press release. Except as required by applicable law, we do
not assume, and expressly disclaim, any obligation to publicly
update or revise any forward-looking statements contained in this
press release, whether as a result of any new information, future
events or otherwise.
IHS HOLDING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF LOSS AND OTHER
COMPREHENSIVE INCOME/(LOSS) (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND
2022
Three months ended
Nine months ended
September 30,
September 30,
September 30,
September 30,
2023
2022*
2023
2022*
$’000
$’000
$’000
$’000
Revenue
467,023
521,317
1,615,755
1,435,132
Cost of sales
(365,032
)
(297,598
)
(949,774
)
(818,797
)
Administrative expenses
(93,835
)
(91,527
)
(291,877
)
(284,941
)
(Net loss allowance)/net reversal of loss
allowance on trade receivables
(711
)
1,597
(5,225
)
3,397
Other income
33
70
369
4,207
Operating profit
7,478
133,859
369,248
338,998
Finance income
5,823
6,412
18,233
11,035
Finance costs
(261,993
)
(234,223
)
(1,804,222
)
(574,081
)
Loss before income tax
(248,692
)
(93,952
)
(1,416,741
)
(224,048
)
Income tax expense/(benefit)
(16,659
)
57,304
(89,118
)
23,945
Loss for the period
(265,351
)
(36,648
)
(1,505,859
)
(200,103
)
Loss attributable to:
Owners of the Company
(263,377
)
(30,702
)
(1,497,525
)
(190,941
)
Non‑controlling interests
(1,974
)
(5,946
)
(8,334
)
(9,162
)
Loss for the period
(265,351
)
(36,648
)
(1,505,859
)
(200,103
)
Loss per share—basic $
(0.79
)
(0.09
)
(4.49
)
(0.58
)
Loss per share—diluted $
(0.79
)
(0.09
)
(4.49
)
(0.58
)
Other comprehensive
income/(loss):
Items that may be reclassified to profit
or loss
Fair value loss through other
comprehensive income
—
—
7
—
Exchange differences on translation of
foreign operations
4,789
(52,962
)
629,748
(43,309
)
Other comprehensive income/(loss) for
the period, net of taxes
4,789
(52,962
)
629,755
(43,309
)
Total comprehensive loss for the
period
(260,562
)
(89,610
)
(876,104
)
(243,412
)
Total comprehensive loss attributable
to:
Owners of the Company
(251,373
)
(79,165
)
(876,163
)
(240,219
)
Non‑controlling interests
(9,189
)
(10,445
)
59
(3,193
)
Total comprehensive loss for the
period
(260,562
)
(89,610
)
(876,104
)
(243,412
)
*
Re-presented to reflect the
remeasurement period adjustments, as required by IFRS 3, in respect
of updates to the accounting for the GTS SP5 Acquisition in March
2022 and the MTN SA Acquisition in May 2022.
IHS HOLDING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(UNAUDITED)
AT SEPTEMBER 30, 2023 AND DECEMBER 31, 2022
September 30,
December 31,
2023
2022*
$’000
$’000
ASSETS
Non‑current assets
Property, plant and equipment
1,754,367
2,075,441
Right of use assets
883,234
965,019
Goodwill
638,538
763,388
Other intangible assets
908,821
1,049,103
Fair value through other comprehensive
income financial assets
10
10
Deferred income tax assets
60,873
78,369
Derivative financial instrument assets
1,889
6,121
Trade and other receivables
153,972
130,347
4,401,704
5,067,798
Current assets
Inventories
60,381
74,216
Income tax receivable
2,375
1,174
Trade and other receivables
629,245
663,467
Cash and cash equivalents
425,436
514,078
Assets held for sale
21,139
—
1,138,576
1,252,935
Total assets
5,540,280
6,320,733
LIABILITIES
Current liabilities
Trade and other payables
569,761
669,149
Provisions for other liabilities and
charges
309
483
Derivative financial instrument
liabilities
51,887
1,393
Income tax payable
65,322
70,008
Borrowings
457,941
438,114
Lease liabilities
86,898
87,240
1,232,118
1,266,387
Non‑current liabilities
Trade and other payables
5,493
1,459
Borrowings
3,084,214
2,906,288
Lease liabilities
507,008
518,318
Provisions for other liabilities and
charges
84,811
84,533
Deferred income tax liabilities
141,842
183,518
3,823,368
3,694,116
Total liabilities
5,055,486
4,960,503
EQUITY
Stated capital
5,391,363
5,311,953
Accumulated losses
(4,814,310
)
(3,317,652
)
Other reserves
(321,440
)
(861,271
)
Equity attributable to owners of the
Company
255,613
1,133,030
Non‑controlling interest
229,181
227,200
Total equity
484,794
1,360,230
Total liabilities and equity
5,540,280
6,320,733
* Re-presented to reflect the remeasurement period adjustments, as
required by IFRS 3, in respect of updates to the accounting for the
MTN SA Acquisition in May 2022.
IHS HOLDING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND
2022
Attributable to owners of the
Company
Non‑
Stated
Accumulated
Other
controlling
Total
capital
losses
reserves
Total
interest
equity
$’000
$’000
$’000
$’000
$’000
$’000
Balance at January 1, 2022
5,223,484
(2,860,205
)
(842,911
)
1,520,368
223,188
1,743,556
NCI arising on business combination
—
—
—
—
831
831
Options converted to shares
86,470
—
(86,470
)
—
—
—
Share‑based payment expense
—
—
10,230
10,230
—
10,230
Other reclassifications related to
share-based payment
—
1,560
(2,835
)
(1,275
)
—
(1,275
)
Total transactions with owners of the
company
86,470
1,560
(79,075
)
8,955
831
9,786
Loss for the period*
—
(190,941
)
—
(190,941
)
(9,162
)
(200,103
)
Other comprehensive (loss)/income*
—
—
(49,278
)
(49,278
)
5,969
(43,309
)
Total comprehensive loss*
—
(190,941
)
(49,278
)
(240,219
)
(3,193
)
(243,412
)
Balance at September 30, 2022*
5,309,954
(3,049,586
)
(971,264
)
1,289,104
220,826
1,509,930
Balance at January 1, 2023
5,311,953
(3,317,652
)
(861,271
)
1,133,030
227,200
1,360,230
Shares repurchased and cancelled through
buyback program
(10,022
)
—
—
(10,022
)
—
(10,022
)
NCI arising on business combination
—
—
—
—
1,922
1,922
Share‑based payment expense
—
—
9,327
9,327
—
9,327
Options converted to shares
89,432
—
(89,432
)
—
—
—
Other reclassifications related to share
based payment
—
867
(1,426
)
(559
)
—
(559
)
Total transactions with owners of the
company
79,410
867
(81,531
)
(1,254
)
1,922
668
Loss for the period
—
(1,497,525
)
—
(1,497,525
)
(8,334
)
(1,505,859
)
Other comprehensive income
—
—
621,362
621,362
8,393
629,755
Total comprehensive
(loss)/income
—
(1,497,525
)
621,362
(876,163
)
59
(876,104
)
Balance at September 30, 2023
5,391,363
(4,814,310
)
(321,440
)
255,613
229,181
484,794
*
Re-presented to reflect the
remeasurement period adjustments, as required by IFRS 3, in respect
of updates to the accounting for the GTS SP5 Acquisition in March
2022 and the MTN SA Acquisition in May 2022
IHS HOLDING LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND
2022
Three months ended
Nine months ended
September 30,
September 30,
September 30,
September 30,
2023
2022
2023
2022
$’000
$’000
$’000
$’000
Cash flows from operating
activities
Cash from operations
234,437
294,190
750,428
677,599
Income taxes paid
(8,450
)
(6,452
)
(42,407
)
(46,454
)
Payment for rent
(1,204
)
(1,175
)
(4,147
)
(5,305
)
Payment for tower and tower equipment
decommissioning
(6
)
(320
)
(327
)
(178
)
Net cash generated from operating
activities
224,777
286,243
703,547
625,662
Cash flow from investing
activities
Purchase of property, plant and
equipment
(124,413
)
(122,011
)
(393,015
)
(284,867
)
Payment in advance for property, plant and
equipment
(18,772
)
(51,870
)
(88,920
)
(139,783
)
Purchase of software and licenses
(3,494
)
(234
)
(19,670
)
(13,238
)
Consideration paid on business
combinations, net of cash acquired
(4,486
)
(8,993
)
(4,486
)
(735,917
)
Proceeds from disposal of property, plant
and equipment
508
255
1,468
1,109
Insurance claims received
32
80
310
1,694
Interest income received
5,761
3,364
17,338
10,380
Deposit of short term deposits
(59,173
)
(70,628
)
(187,938
)
(358,694
)
Refund of short term deposits
15,908
10,733
36,631
162,316
Net cash used in investing
activities
(188,129
)
(239,304
)
(638,282
)
(1,357,000
)
Cash flows from financing
activities
Transactions with non-controlling
interest
—
11
—
11
Shares repurchased and cancelled through
buyback program
(5,713
)
—
(5,713
)
—
Bank loans received
318,765
118,884
976,944
834,677
Bank loans repaid
(226,741
)
(44,184
)
(644,591
)
(114,211
)
Fees on loans and derivative
instruments
(6,149
)
(3,282
)
(14,820
)
(12,559
)
Interest paid
(79,173
)
(69,070
)
(224,118
)
(173,739
)
Payment for the principal of lease
liabilities
(14,844
)
(22,966
)
(59,426
)
(52,717
)
Interest paid for lease liabilities
(15,405
)
(11,543
)
(40,699
)
(27,763
)
Initial margin received on non‑deliverable
forwards
145
6,629
197
13,106
(Losses) settled/ profits received on
non‑deliverable forwards
—
(172
)
420
(3,197
)
Net cash (used in)/generated from
financing activities
(29,115
)
(25,693
)
(11,806
)
463,608
Net increase/(decrease) in cash and cash
equivalents
7,533
21,246
53,459
(267,730
)
Cash and cash equivalents at beginning of
period
433,048
567,298
514,078
916,488
Effect of movements in exchange rates on
cash
(15,145
)
(58,076
)
(142,101
)
(118,290
)
Cash and cash equivalents at end of
period
425,436
530,468
425,436
530,468
Use of Non-IFRS financial measures
Certain parts of this press release contain non-IFRS financial
measures, including Adjusted EBITDA, Adjusted EBITDA Margin and
Adjusted Levered Free Cash Flow (“ALFCF”). The non-IFRS financial
information is presented for supplemental informational purposes
only and should not be considered a substitute for financial
information presented in accordance with IFRS, and may be different
from similarly titled non-IFRS measures used by other
companies.
We define Adjusted EBITDA as profit/(loss) for the period,
before income tax expense/(benefit), finance costs and income,
depreciation and amortization, impairment of withholding tax
receivables, business combination transaction costs, impairment of
property, plant and equipment and related prepaid land rent on the
decommissioning of sites, net (profit)/loss on sale of assets,
share-based payment (credit)/expense, insurance claims, listing
costs and certain other items that management believes are not
indicative of the core performance of our business. The most
directly comparable IFRS measure to Adjusted EBITDA is our
profit/(loss) for the period.
Segment Adjusted EBITDA (defined as profit/(loss) for the
period, before income tax expense/(benefit), finance costs and
income, depreciation and amortization, impairment of withholding
tax receivables, business combination transaction costs, impairment
of property, plant and equipment and related prepaid land rent on
the decommissioning of sites, net (profit)/loss on sale of assets,
share-based payment (credit)/expense, insurance claims, costs
relating to this offering and certain other items that management
believes are not indicative of the core performance of its
business)) to assess the performance of the business.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by
revenue for the applicable period, expressed as a percentage.
We believe that Adjusted EBITDA is an indicator of the operating
performance of our core business. We believe Adjusted EBITDA and
Adjusted EBITDA Margin, as defined above, are useful to investors
and are used by our management for measuring profitability and
allocating resources, because they exclude the impact of certain
items which have less bearing on our core operating performance. We
believe that utilizing Adjusted EBITDA and Adjusted EBITDA Margin
allows for a more meaningful comparison of operating fundamentals
between companies within our industry by eliminating the impact of
capital structure and taxation differences between the
companies.
Adjusted EBITDA measures are frequently used by securities
analysts, investors and other interested parties in their
evaluation of companies comparable to us, many of which present an
Adjusted EBITDA-related performance measure when reporting their
results.
Adjusted EBITDA and Adjusted EBITDA Margin are used by different
companies for differing purposes and are often calculated in ways
that reflect the circumstances of those companies. You should
exercise caution in comparing Adjusted EBITDA and Adjusted EBITDA
Margin as reported by us to Adjusted EBITDA and Adjusted EBITDA
Margin as reported by other companies. Adjusted EBITDA and Adjusted
EBITDA Margin are unaudited and have not been prepared in
accordance with IFRS.
Adjusted EBITDA and Adjusted EBITDA Margin are not measures of
performance under IFRS and you should not consider Adjusted EBITDA
or Adjusted EBITDA Margin as an alternative to profit/(loss) for
the period or other financial measures determined in accordance
with IFRS.
Adjusted EBITDA and Adjusted EBITDA Margin have limitations as
analytical tools, and you should not consider them in isolation.
Some of these limitations are:
- they do not reflect interest expense, or the cash requirements
necessary to service interest or principal payments, on our
indebtedness;
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized will often need to be
replaced in the future and Adjusted EBITDA and Adjusted EBITDA
Margin do not reflect any cash requirements that would be required
for such replacements;
- some of the items we eliminate in calculating Adjusted EBITDA
and Adjusted EBITDA Margin reflect cash payments that have less
bearing on our core operating performance, but that impact our
operating results for the applicable period; and
- the fact that other companies in our industry may calculate
Adjusted EBITDA and Adjusted EBITDA Margin differently than we do,
which limits their usefulness as comparative measures.
Accordingly, prospective investors should not place undue
reliance on Adjusted EBITDA or Adjusted EBITDA Margin.
We define ALFCF as cash from operations, before certain items of
income or expenditure that management believes are not indicative
of the core cash flow of our business (to the extent that these
items of income and expenditure are included within cash flow from
operating activities), and after taking into account net working
capital movements, net interest paid or received, withholding tax,
income taxes paid, lease payments made, maintenance capital
expenditure, and routine corporate capital expenditure. We believe
that it is important to measure the free cash flows we have
generated from operations, after accounting for the cash cost of
funding and routine capital expenditure required to generate those
cash flows. Starting in the third quarter 2023, we replaced RLFCF
with ALFCF. Unlike RLFCF, ALFCF only includes the cash costs of
business combination transaction costs, other costs and other
income and excludes the reversal of movements in the net loss
allowance on trade receivables and impairment of inventory to
better reflect the liquidity position in each period. There is
otherwise no change in the definition or calculation of this metric
for the periods presented as a result of the name change.
We believe ALFCF is useful to investors because it is also used
by our management for measuring our operating cash flow, liquidity
and allocating resources. While Adjusted EBITDA provides management
with a basis for assessing its current operating performance, we
use ALFCF in order to assess the long-term, sustainable operating
liquidity of our business. ALFCF is derived through an
understanding of the funds generated from operations, taking into
account our capital structure and the taxation environment
(including withholding tax implications), as well as the impact of
non-discretionary maintenance capital expenditure and routine
corporate capital expenditure. ALFCF provides management with a
metric through which to measure the underlying cash generation of
the business by further adjusting for expenditure that are
non-discretionary in nature (such as interest paid and income taxes
paid), as well as certain cash items that impact cash from
operations in any particular period.
ALFCF and similar measures are frequently used by securities
analysts, investors and other interested parties in their
evaluation of companies comparable to us, many of which present an
ALFCF-related measure when reporting their results. Such measures
are used in the telecommunications infrastructure sector as they
are seen to be important in assessing the liquidity of a business.
We present ALFCF to provide investors with a meaningful measure for
comparing our liquidity to those of other companies, particularly
those in our industry.
ALFCF and similar measures are used by different companies for
differing purposes and is often calculated in ways that reflect the
circumstances of those companies. You should exercise caution in
comparing ALFCF as reported by us to ALFCF or similar measures as
reported by other companies. ALFCF is unaudited and has not been
prepared in accordance with IFRS.
ALFCF is not intended to replace cash from operations for the
period or any other measures of cash flow under IFRS. ALFCF has
limitations as an analytical tool, and you should not consider it
in isolation. Some of these limitations are:
- not all cash changes are reflected, for example, changes in
working capital are not included and discretionary capital
expenditure are not included;
- some of the items that we eliminate in calculating ALFCF
reflect cash payments that have less bearing on our liquidity, but
that impact our operating results for the applicable period;
- the fact that certain cash charges, such as lease payments
made, can include payments for multiple future years that are not
reflective of operating results for the applicable period, which
may result in lower lease payments for subsequent periods;
- the fact that other companies in our industry may have
different capital structures and applicable tax regimes, which
limits its usefulness as a comparative measure; and
- the fact that other companies in our industry may calculate
ALFCF differently than we do, which limits their usefulness as
comparative measures.
Accordingly, you should not place undue reliance on ALFCF.
Reconciliation from profit for the period to Adjusted
EBITDA
The following is a reconciliation of Adjusted EBITDA to the most
directly comparable IFRS measure, which is profit for the three and
nine months ended September 30, 2023 and 2022:
Three months ended
Nine months ended
September 30,
September 30,
September 30,
September 30,
2023
2022*
2023
2022*
$'000
$'000
$'000
$'000
Loss
(265,351
)
(36,648
)
(1,505,859
)
(200,103
)
Adjustments:
Income tax expense
16,659
(57,304
)
89,118
(23,945
)
Finance costs(a)
261,993
234,223
1,804,222
574,081
Finance income(a)
(5,823
)
(6,412
)
(18,233
)
(11,035
)
Depreciation and amortization
104,931
117,474
340,381
340,173
Impairment of withholding tax
receivables(b)
10,508
11,422
35,112
39,141
Business combination transaction costs
161
3,685
1,647
17,928
Net impairment of property, plant and
equipment and prepaid land rent(c)
103,429
3,099
108,510
1,768
Net (gain)/loss on disposal of property,
plant and equipment
(386
)
(134
)
(952
)
13,650
Share-based payment expense(d)
2,654
4,127
9,571
9,752
Insurance claims(e)
(32
)
(70
)
(310
)
(1,686
)
Other costs(f)
3,211
966
8,059
1,274
Other income(g)
(1
)
—
(59
)
(2,521
)
Adjusted EBITDA
231,953
274,428
871,207
758,477
Divided by total revenue
467,023
521,317
1,615,755
1,435,132
Adjusted EBITDA Margin
49.7
%
52.6
%
53.9
%
52.9
%
*
Re-presented to reflect the
remeasurement period adjustments, as required by IFRS 3, in respect
of updates to the accounting for the GTS SP5 Acquisition in March
2022 and the MTN SA Acquisition in May 2022
(a)
Finance costs consist of interest
expense and loan facility fees on borrowings, the unwinding of the
discount on our decommissioning liability and lease liability,
realized and unrealized net foreign exchange losses arising from
financing arrangements and net realized and unrealized losses from
valuations of financial instruments. Finance income consists of
interest income from bank deposits, realized and unrealized net
foreign exchange gains arising from financing arrangements and net
realized and unrealized gains from valuations of financial
instruments.
(b)
Revenue withholding tax primarily
represents amounts withheld by customers in Nigeria and paid to the
local tax authority. The amounts withheld may be recoverable
through an offset against future corporate income tax liabilities
in the relevant operating company. Revenue withholding tax
receivables are reviewed for recoverability at each reporting
period end and impaired if not forecast to be recoverable.
(c)
Represents non-cash charges
related to the impairment of property, plant and equipment and
related prepaid land rent on the decommissioning of sites.
(d)
Represents credits and expense
related to share-based compensation, which vary from period to
period depending on timing of awards and changes to valuation
inputs assumptions.
(e)
Represents insurance claims
included as non-operating income.
(f)
Other costs for the three months
ended September 30, 2023 included one-off consulting fees related
to corporate structures and operating systems of $1.7 million and
one-off consulting services of $0.7 million. Other costs for the
nine months ended September 30, 2023 included one-off consulting
fees related to corporate structures and operating systems of $4.5
million, one-off consulting services of $1.7 million and one-off
professional fees related to financing of $0.2 million. Other costs
for the three months and nine months ended September 30, 2022
included professional costs related to Sarbanes-Oxley (SOX)
implementation costs of $1.0 million along with professional fees
and system implementation costs.
(g)
Other income for the nine months
ended September 30, 2022 related to a tax indemnity receipt from a
seller relating to a prior acquisition.
Reconciliation from cash from operations to ALFCF
The following is a reconciliation of ALFCF to the most directly
comparable IFRS measure, which is cash from operations for the
three and nine months September 30, 2023 and 2022:
Three months ended
Nine months ended
September 30,
September 30,
September 30,
September 30,
2023
2022
2023
2022
$'000
$'000
$'000
$'000
Cash from operations
234,437
294,190
750,428
677,599
Net movement in working capital
(2,355
)
(23,214
)
124,275
67,895
Income taxes paid
(8,450
)
(6,452
)
(42,407
)
(46,454
)
Withholding tax(a)
(23,159
)
(28,854
)
(90,088
)
(84,835
)
Lease and rent payments made
(31,453
)
(35,684
)
(104,272
)
(85,785
)
Net interest paid(b)
(73,412
)
(65,706
)
(206,780
)
(163,359
)
Business combination transaction costs
328
6,264
4,436
16,884
Other costs(c)
2,969
740
7,747
5,753
Other income(d)
—
(2,500
)
—
(2,500
)
Maintenance capital expenditure(e)
(19,259
)
(48,894
)
(114,278
)
(117,681
)
Corporate capital expenditure(f)
(36
)
(234
)
(1,590
)
(1,321
)
ALFCF(g)
79,610
89,656
327,471
266,196
Non-controlling interest
(3,186
)
(1,461
)
(7,747
)
(5,231
)
ALFCF excluding non-controlling
interest
76,424
88,195
319,724
260,965
(a)
Withholding tax primarily
represents amounts withheld by customers and amounts paid on bond
interest in Nigeria which is paid to the local tax authority. The
amounts withheld by customers may be recoverable through an offset
against future corporate income tax liabilities in the relevant
operating company.
(b)
Represents the aggregate value of
interest paid and interest income received.
(c)
Other costs for the three and
nine months ended September 30, 2023 included one-off consulting
fees related to corporate structures and operating systems and
one-off consulting services and one-off professional fees related
to financing. Other costs for the three months and nine months
ended September 30, 2022 included professional costs related to
Sarbanes-Oxley (SOX) implementation costs million along with
professional fees and system implementation costs.
(d)
Other income for the nine months
ended September 30, 2022 related to a tax indemnity receipt from a
seller relating to a prior acquisition.
(e)
We incur capital expenditure in
relation to the maintenance of our towers and fiber equipment,
which is non- discretionary in nature and required in order for us
to optimally run our portfolio and to perform in line with our
service level agreements with customers. Maintenance capital
expenditure includes the periodic repair, refurbishment and
replacement of tower, fiber equipment and power equipment at
existing sites to keep such assets in service.
(f)
Corporate capital expenditure,
which are non-discretionary in nature, consist primarily of routine
spending on information technology infrastructure.
(g)
ALFCF replaces the previously
used RLFCF metric with effect from third quarter 2023. ALFCF only
includes the cash costs of business combination transaction costs,
other costs and other income and excludes the reversal of movements
in the net loss allowance on trade receivables and impairment of
inventory to better reflect the liquidity position in each period.
There is otherwise no change in the definition or calculation of
this metric for the periods presented as a result of the name
change.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231114345362/en/
communications@ihstowers.com
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