IHS Towers, the fifth-largest independent TowerCo in the world, reported a loss of $31 million as a result of the depreciation of the naira in June of this year.
The corporation has reduced its projections for the amount of money it expects to make this year but will not alter the amount of money it intends to spend.
IHS Towers reported a revenue decrease of 9.4% as compared to the first quarter of 2023, following four consecutive quarters of revenue growth. According to IHS, the devaluation of the naira was the cause of the drop in income, which put it $46 million below the revenue it had generated in the previous quarter.
“Our expectation for revenue would have otherwise increased by $31 million had the average FX rates previously assumed in our guidance remained unchanged,” Sam Darwish, the Chairman and CEO, remarked in a statement.
“We are encouraged by the recent policy changes implemented in Nigeria that are intended to put the country on a better economic path. In the near-term, however, these changes will cause some anticipated friction, including the significant devaluation of the Nigerian Naira that occurred in mid-June,” the statement read in another part.
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Why the IHS lost
IHS Towers generated 67% of its income in the second quarter of 2023 from its main market, Nigeria. The telecom infrastructure firm also operates in ten other countries, including Brazil, South Africa, Zambia, Egypt, and Kuwait, which serves as its foothold in the Middle Eastern region.
The new president of Nigeria, Bola Tinubu, began implementing reforms in June, which resulted in a rise in both local prices and bank stock prices. The move to relax controls on exchange rates had a negative impact on a number of companies doing business in Nigeria. These companies reported lower revenues as a result of the necessity to restate their numbers so that they would be consistent with the newly regulated floating naira-dollar rates.
MTN Nigeria, IHS Towers’ largest customer in its largest market, also recorded a foreign exchange loss in its 2023 second-quarter report, which brought down profits for the time by 64%. This caused IHS Towers to lose 64% of its revenue during the period. IHS Towers and MTN Group are currently engaged in a heated boardroom battle over MTN’s demand for a greater degree of control over the tower company. Although it has a 26% stake in Towerco, MTN Group only has a 20% voting share in the company.
Towerco was able to cut its debt by $155 million as a result of the devaluation of the naira, therefore, not all of the news was negative for the company. On the other hand, as a direct result of the devaluation, the cash available to the corporation was cut by 19 million dollars.
IHS does a quarterly assessment and reset of the exchange rates. By the end of the year, the organisation anticipates having a better understanding of how the naira’s devaluation has played out.
About IHS
IHS Towers is one of the largest independent owners, operators, and developers of shared communications infrastructure in the world based on the number of towers that it owns and operates. Additionally, IHS Towers is one of the major independent international towercos that is completely focused on emerging countries.
In its 11 markets, the company has almost 40,000 towers, which are located in Brazil, Cameroon, Colombia, Côte d’Ivoire, Egypt, Kuwait, Nigeria, Peru, Rwanda, South Africa, and Zambia respectively. For additional details, please contact us by e-mail at communications@ihstowers.com or go to our website at www.ihstowers.com.