Executive Summary / Key Takeaways

• Strategic Metamorphosis Complete: IHS has fundamentally transformed from a capital-hungry emerging market tower builder into a disciplined cash flow generator, with 72% of revenue now locked into decade-long contracts and net leverage falling from 3.9x to 3.3x in under a year.

• Asset Sales Unlock Hidden Value: Divestitures of Kuwait (14.2x EBITDA) and Rwanda (8.3x EBITDA) demonstrate that IHS's individual assets trade at premiums far above the corporate multiple of ~6.5x, suggesting the market systematically undervalues the portfolio.

• Nigeria's Inflection Point: After years of currency volatility, Nigeria has stabilized with Naira appreciation, 50% carrier tariff hikes (first in 12 years), and a 2% withholding tax rate—creating a rare macro tailwind that should drive 10%+ organic growth in IHS's largest market.

• Brazil as Growth Engine: The TIM (TIMB) agreement to build 3,000 sites over five years transforms Brazil from a cash-generating legacy market into a visible growth driver, with 68.9% tower growth already evident in Q3 2025.

• Valuation Disconnect: Trading at 6.5x EBITDA versus global peers at 19x, IHS is priced as if its emerging market risks remain unmitigated, despite having materially de-risked operations through power pass-through contracts and FX-matched debt.

Setting the Scene: The Forgotten Tower Giant

IHS Holding Limited, founded in 2001 and headquartered in London, operates one of the largest independent telecommunications tower portfolios in the world's fastest-growing mobile markets. With approximately 38,000 towers spanning Nigeria, Sub-Saharan Africa, and Latin America, the company sits at the intersection of two powerful secular trends: relentless mobile data growth in emerging markets and the capital efficiency demands of mobile network operators (MNOs) who increasingly prefer to lease rather than own infrastructure.

The tower industry operates on a simple but powerful economic model: build once, lease multiple times. Each additional tenant on a tower generates 60-80% incremental margins with minimal additional capital. This creates a compounding effect where tenancy ratios above 1.5x drive exponential returns on invested capital. IHS has spent two decades building this footprint, but until recently, the market viewed it as a capital-intensive roll-up story plagued by emerging market volatility.

That perception is now obsolete. The strategic review initiated in May 2024 marked an inflection point. Management committed to raising $500 million to $1 billion through asset sales, reducing CapEx by over 40%, and transforming the business model to maximize cash flow rather than tower count. The results are already visible: consolidated net leverage has dropped from 3.9x to 3.3x, adjusted EBITDA margins have expanded to 57.5%, and the company has upstreamed $271 million from Nigeria alone in 2024.

The competitive landscape reinforces IHS's unique positioning. American Tower (AMT) and SBA Communications (SBAC) dominate mature markets with 19x EBITDA multiples but have limited exposure to Africa's 98 million new mobile subscribers expected by 2025. Helios Towers (HTWS) competes directly in Africa but lacks IHS's Latin American footprint. Cellnex (CLNX) focuses on Europe's saturated markets. IHS's emerging market concentration, once seen as a liability, has become its moat—no global peer can match its scale and local expertise in these high-growth regions.

Strategic Differentiation: The Three Pillars of Transformation

Power Derisking Eliminates Earnings Volatility

IHS has fundamentally altered its risk profile by transitioning the majority of its business to power pass-through or indexation models. In Nigeria, power costs are now indexed to diesel prices and FX rates, while South Africa operates on a full pass-through structure. This matters because power historically represented 30-40% of operating costs and was the primary source of margin volatility. By eliminating this exposure, IHS has transformed from a commodity-exposed infrastructure play into a pure-play tower lessor with predictable earnings.

The financial implication is profound. Power volatility previously created 200-300 basis points of quarterly EBITDA margin swings. With indexation, margins have stabilized in the 57-66% range across segments. This predictability deserves a lower cost of capital, yet the market continues to price IHS as if it's exposed to the same risks as 2023. The TIM Brazil deal, which includes power pass-through terms, demonstrates that this model is now the standard for new contracts, ensuring the derisking is permanent.

Contract Renewals Create Decade-Long Visibility

The renewal of MTN (MTN) master lease agreements covering over 25,000 tenancies until 2032 and Airtel Nigeria until 2031 was not a routine commercial event—it was a structural de-risking of 72% of Group revenue. These contracts include 3-5% annual escalators and protect IHS from churn risk in its core markets. The average remaining tenant term of 7.8 years and $11.9 billion in contracted revenue provide visibility that no emerging market peer can match.

Why does this matter? Because tower valuations are fundamentally driven by the predictability of cash flows. When IHS renewed these contracts, it effectively converted a variable-rate emerging market revenue stream into a bond-like coupon backed by investment-grade MNOs. MTN Nigeria's 63% revenue growth and 53% EBITDA margin in its latest quarter confirm the carriers' ability to pay. Yet the market values these cash flows at a 6.5x multiple, a discount typically reserved for businesses with existential risk.

Asset Sales Prove Portfolio Value

The disposal of IHS Kuwait for $230 million at 14.2x EBITDA and Rwanda for $274.5 million at 8.3x EBITDA are not one-off events—they are market validation of IHS's asset quality. These multiples are materially higher than the corporate 6.5x, proving that the public market systematically undervalues the portfolio. Management has indicated that further disposals remain under consideration, with the $500 million to $1 billion target representing 15-30% of the current enterprise value.

The implication is clear: every dollar of asset sale proceeds used for debt reduction creates more than a dollar of equity value because it eliminates debt trading at par while the underlying assets are worth 30-100% more than the corporate valuation suggests. The Rwanda proceeds of $175 million received in October 2025 will reduce net leverage to approximately 3.0x, placing IHS at the low end of its target range and triggering consideration of shareholder returns.

Financial Performance: Cash Flow Generation Takes Center Stage

Consolidated Momentum Builds Through Q3 2025

IHS delivered Q3 2025 revenue of $455 million, beating analyst estimates by 7.2% and representing 9% constant currency growth. Adjusted EBITDA of $261 million (57.5% margin) and ALFCF of $158 million demonstrate that the strategy is working. The 42.3% surge in operating cash flow to $259.6 million year-over-year proves that the business is now generating cash, not just accounting profits.

The composition of growth reveals the quality of the revenue. Constant currency growth of 9% was driven by CPI escalators (3-4%), new colocations and lease amendments (4-5%), and new site builds (2%). This is organic growth that doesn't depend on FX tailwinds or acquisitions. The fact that IHS achieved this while absorbing an $8 million revenue hit from MTN Nigeria site churn proves the underlying business momentum is stronger than headline numbers suggest.

Nigeria: The Turnaround Story

Nigeria, representing over 50% of segment revenue, has completed its transition from headwind to tailwind. Q3 2025 revenue of $268 million grew 5% organically despite 510 vacated tenants from the MTN churn. Reported growth of 11% benefited from Naira stabilization, but the real story is the operational leverage: segment EBITDA margins remain above 63% even as the company absorbs churn costs.

The macro environment has fundamentally improved. The Naira has appreciated from over N1,600/$ to N1,530-N1,550, inflation has dropped for six consecutive months to 18% (the lowest in three years), and the Central Bank cut rates by 50 basis points to 27%. Most importantly, the Nigerian Communications Commission approved a 50% tariff increase in January 2025—the first in 12 years. This directly supports MNOs' ability to invest in network expansion, creating a direct pipeline of new colocation demand for IHS.

Brazil: The Growth Engine Accelerates

The LATAM segment is experiencing a renaissance. Towers and tenants grew 68.9% year-over-year in Q3 2025, driven by the TIM agreement to build up to 3,000 sites. The 560 basis point EBITDA margin expansion to approximately 50% reflects both operating leverage and cost-saving initiatives. With 280 new sites added in the year and over 300 colocations, Brazil is no longer a mature cash cow—it's a growth market.

The TIM deal structure is particularly attractive. The minimum commitment of 500 sites over two years provides visibility, while the optionality for 3,000 sites over five years gives IHS a call option on Brazil's 5G rollout. With the Brazilian real appreciating and the telecom sector growing 6-7% annually, IHS has secured a growth driver that none of its global peers can replicate at this scale.

Sub-Saharan Africa: Stable Cash Generation

The SSA segment (ex-Nigeria) delivered 13% revenue growth in Q3 2025, though EBITDA declined 1% due to regulatory fee increases. This is the stable, predictable part of the portfolio—lower growth but consistent cash generation. The unwind of power managed service agreements with MTN South Africa has created cleaner comparisons, and the segment's 59% EBITDA margins remain healthy. While not the growth engine, SSA provides geographic diversification and stable cash flows to fund deleveraging.

Balance Sheet: The Path to Investment Grade

IHS has executed one of the most aggressive deleveraging programs in the tower sector. Net leverage fell from 3.9x at the start of 2024 to 3.3x in Q3 2025, with a clear path to 3.0x by year-end after applying Rwanda proceeds. The weighted average cost of debt dropped 100 basis points to 8.3% following the repayment of $154 million in high-interest debt.

Liquidity exceeds $950 million, rising to over $1.1 billion after the $175 million Rwanda proceeds received in October 2025. This fortress balance sheet provides strategic optionality: continue debt reduction to reach investment grade, fund organic growth in Brazil and Nigeria, or return capital to shareholders. Management has explicitly stated that dividends and buybacks are "absolutely on our radar" as leverage approaches the low end of the 3-4x target range.

The debt refinancing completed in November 2024 was masterful. By extending maturities to 2029-2031 and better matching debt FX exposure to revenue profiles, IHS eliminated refinancing risk and reduced earnings volatility. The $86 million prepayment of the high-interest Nigerian term loan in April 2025 and the $273 million Brazilian debenture redemption in June demonstrate disciplined capital allocation.

Outlook: Guidance Raises Signal Confidence

Management has raised 2025 guidance three times, a clear signal of accelerating momentum. The current outlook calls for $1.72-1.75 billion in revenue (10% organic growth at midpoint), $995 million-1.015 billion in EBITDA, and $400-420 million in ALFCF. The $20 million uplift in revenue and EBITDA guidance from Q2 reflects stronger-than-expected performance in Nigeria and Brazil, partially offset by the Rwanda disposal.

The guidance assumptions are conservative. The full-year Naira rate of N1,523/$ assumes continued stability, while the Q4 rate of N1,500 flat implies no further appreciation despite the positive macro trend. The company has factored in lower contributions from FX resets and power indexation due to lower diesel prices, but these have minimal impact on EBITDA and ALFCF due to the pass-through structure.

The TIM Brazil deal is not fully reflected in guidance. With 500 sites minimum over two years and potential for 3,000 over five, IHS has embedded a growth driver that could drive upside to 2026-2027 estimates. Similarly, the Nigeria tariff hikes, which management believes will impact 2025 spending due to quality-of-service obligations, provide a tailwind that may not be fully captured in current forecasts.

Risks: What Could Break the Thesis

Currency Volatility Remains the Primary Risk

Despite recent Naira stability, emerging market currencies remain inherently volatile. A 10% devaluation would impact reported revenue by approximately $45 million and EBITDA by $26 million, though the underlying business would remain intact. The risk is that FX volatility could mask operational performance and delay multiple expansion. Mitigation comes from the fact that 70% of debt is now FX-matched to revenue, and power indexation provides a natural hedge.

Customer Concentration Creates Churn Risk

MTN and Airtel represent over 70% of revenue. While contracts are renewed through 2031-2032, the MTN Nigeria site churn demonstrates that even long-term agreements include optimization clauses. The 2,576 sites vacated under the Nine Mobile agreement show that smaller carriers can create disruption. However, the financial impact is limited—management estimates the Nine Mobile churn will have "only a limited financial impact over the coming years"—and the TIM Brazil deal diversifies the customer base.

Execution Risk on TIM Brazil Deployment

The commitment to build 3,000 sites in Brazil requires flawless execution in a market with complex permitting and power challenges. While IHS has proven capabilities, any delays could impact 2026-2027 growth expectations. The mitigating factor is the minimum 500-site commitment over two years, which de-risks the near-term outlook while preserving upside.

Valuation: The Discount Makes No Sense

At $7.48 per share, IHS trades at an enterprise value of $5.76 billion, representing 3.26x revenue and 6.49x EBITDA. This is a 65% discount to American Tower (19.15x EBITDA) and SBA Communications (19.25x EBITDA), despite IHS delivering superior organic growth (10% vs. 5-7% for peers) and faster deleveraging.

The valuation disconnect is most stark when comparing asset sale multiples. Kuwait's 14.2x EBITDA and Rwanda's 8.3x EBITDA imply that the public market values IHS's remaining portfolio at less than the sum of its parts. Even applying a conservative 8.0x multiple to the core business would value IHS at approximately $12 per share, representing 60% upside before considering any multiple expansion.

The free cash flow yield of 7.6% ($420 million ALFCF guidance vs. $5.5 billion enterprise value) is more than double the 3-4% yields of AMT and SBAC. As leverage falls below 3.0x and management introduces dividends or buybacks, the yield story will attract income-oriented investors, creating a new valuation floor.

Conclusion: The Market Will Catch Up

IHS Holding has completed a strategic transformation that the market has yet to recognize. The company has de-risked its business model through power indexation, locked in decade-long contracts with its largest customers, and proven its assets are worth far more than the corporate valuation suggests. Nigeria's macro stabilization and Brazil's TIM deal provide visible organic growth drivers that emerging market peers cannot match.

The path forward is clear: continue deleveraging to the low end of the 3-4x target range, unlock additional value through selective asset sales, and introduce shareholder returns. The 6.5x EBITDA multiple is unsustainable for a business generating 10% organic growth with 57% EBITDA margins and a clear path to investment grade.

For investors, the critical variables are execution on the TIM Brazil deployment and continued Naira stability. If both hold, the valuation gap will close as the market recognizes that IHS is no longer a volatile emerging market roll-up, but a disciplined cash flow generator with irreplaceable assets in the world's fastest-growing mobile markets. The transformation is complete; the re-rating has just begun.