IHS Towers slashes infrastructure investment by 16% in the first half to safeguard cash flow
IHS Towers Shifts to Cash-Flow-Driven Strategy in H1 2025
IHS Towers, Africa's largest telecom infrastructure company, has made a strategic shift towards financial discipline and resilience in the first half of 2025. This change in approach reflects broader challenges in the sector, such as currency volatility, rising energy costs, and competitive bidding pressures.
The company's focus on financial discipline is evident in its efforts to improve balance sheet strength. IHS Towers has been using proceeds from asset disposals to pay down high-interest debt, lowering its net leverage from 3.7x at the end of 2024 to 3.4x in Q1 2025.
Operational efficiency initiatives, like Nigeria's "Project Green," have also played a significant role in this shift. These programs optimize existing infrastructure, reducing the need for costly upgrades and thereby lowering capital expenditure requirements.
IHS Towers has also streamlined its portfolio by divesting from smaller, lower-yield markets and focusing on high-growth regions with strong tenancy rates, such as Nigeria, South Africa, and Brazil. As a result, the company's portfolio has reduced by about 2.6% due to disposals rather than attrition.
Regarding infrastructure spending, IHS Towers cut its first-half 2025 capital expenditure by 15.8% to $89.9 million. The company has also lowered its full-year 2025 capex guidance to between $240 million and $270 million, indicating a focus on margin improvement and financial resilience over aggressive expansion.
This shift to a cash-flow-driven strategy has allowed IHS Towers to improve profitability. In Q1 2025, Adjusted EBITDA rose by 36.4% to $252.6 million, driven significantly by cost cuts and currency gains in Nigeria. However, the company now faces challenges in replacing lost tenancies and maintaining growth while keeping capital intensity low, especially in a competitive environment with operators like American Tower Corporation and Helios Towers.
In Q1 2025, IHS Towers' revenue increased by 5.2% year-on-year to $439.6 million. Nigeria, the company's largest market, saw a notable slowdown, with a 5.5% lower spending in Q1 and 10.4% lower in Q2. Despite these challenges, IHS Towers announced the planned sale of 1,465 towers in Rwanda, expected to close in the second half of 2025.
The biggest challenge in H1 came from tenant churn in Nigeria, driven by contract changes with MTN Nigeria, IHS's largest customer. About 1,050 MTN tenancies were not extended, with MTN awarding those sites to American Tower Corporation.
IHS Towers' revenue for the half-year totalled approximately $872.9 million. The company believes it is better positioned to weather macroeconomic volatility, currency headwinds, and competitive pressures due to a leaner portfolio, lower debt, and a sharper focus on its most profitable markets.
In Q2, revenue was $433.3 million, down 0.5% but ahead of market expectations. Adjusted EBITDA reached $252.6 million in Q1 and $248.5 million in Q2. Net income improved to $30.7 million and $32.3 million, respectively, compared to last year's loss.
MTN's strategic shift includes diversifying infrastructure partners to modernise networks, cut costs, and spread operational risks. Contracts with IHS and other tower companies include pricing linked to inflation and diesel costs, with a mix of naira and dollar components to manage exposure to currency volatility.
In conclusion, IHS Towers' strategic shift from an aggressive growth strategy to a more cash-flow-driven approach in the first half of 2025 is a response to the challenges facing the telecom infrastructure sector. By prioritizing financial discipline, operational efficiency, and portfolio streamlining, IHS Towers aims to improve its resilience and better position itself for the future.
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