Q2 2023 IHS Holding Ltd Earnings Call
Speaker 1: Thank you for standing by and welcome to the IHS Holding Limited second quarter 2023 earnings results.
Speaker 1: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad.
Speaker 2: If you would like to withdraw your question, press the star one again. For operator assistance throughout the call, please press star zero and finally, I would like to advise all participants that this call is being recorded. I'd now like to welcome Colby Sinofo, Executive Vice President of Communications, to begin the conference. Colby, over to you. Thank you, operator. Thanks also to everyone for joining the call today. I'm Colby Sinofo, the EVP of Communications here at IHS. We've been today our Sam Dyerwish, our chairman and CEO and Steve Houten, our CFO . This morning, we published our unaudited financial statements for the three month and six month periods ended June 30th, 2023 on the Investor Relations section of our website, an issue to related earnings release and presentation. These are the consolidated results of IHS holding limited, which is listed on the New York Stock Exchange under the ticker symbol IHS, which comprises the entirety of the group's operations. Before we discuss this, I would like to draw your attention to the disclaimer set out at the beginning of the presentation on slide two, we should be read and full along with the cautionary statement regarding forward-looking statements set out in our earnings release in 6K filed as well today. In particular, the information to be discussed may contain forward-looking statements which, by their nature, involve known in unknown risks, uncertainties, and other important factors, some of which are beyond our control that are difficult to predict, and other factors which may cause actual results, performance or achievements, or industry results to be materially different from any future results, performance or achievements, or industry results expressed or implied by such forward-looking statements, including those discussed in the risk factor section of our Form 20 app, filed with the Securities and Exchange Commission and other violence with the SEC. We'll also refer to non-IFRS measures that we view as important in assessing the performance of our business, reconciliation of non-IFRS metrics to the nearest IFRS metrics,
Speaker 3: can be found in our earnings presentation, which is available on the Investor Relations section of our website. And with that, I'd like to turn the call over to Sam Darwish, our chairman, and CEO . Thanks, Colby. And welcome everyone to our second quarter, 2023, Erdens Results Code. We remain well positioned to take advantage of the strong secular growth trends across our markets, which we expect to continue for years to come. We are reporting another strong quarter of performance across our KPIs, but of course, this is in the context of ongoing macroeconomic change in our largest markets, Nigeria. 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 have caused some anticipated friction, including the significant evaluation of the NIDA that occurred in mid-June. As a result, we now assume an average rate of 624 NIDA to the USD for the year versus 497 previously. And subsequently, we are revising our 2023 guidance for revenue, adjusted EBITA and RLACF, while maintaining our capex guidance and our target level is your issue of three to four times. Our expectation for revenue would have otherwise increased by 31 million dollars. I had the average for its raised previously assumed in our guidance remain unchanged. Reflecting the trend to continue to see in our fundamental business. The significant net loss position we report for the quarter also resulted from forage, as the devaluation drove significant non-cash financing costs. For the quarter, the change in forage rates had a $21 million negative impact, versus raised previously assumed in guidance.
Speaker 3: including a $25 million negative impact from the Naira devaluation. Excluding the Forex impact, results were ahead of our expectations, driven largely by our Nigeria segment, including a pull forward in revenue a quarter earlier than we had anticipated. We will see the full impact of the Naira devaluation in our third quarter results, and the impact of our Forex resets over Q3 and Q4 of 2023. 93% of our resets are quarterly and 4% are monthly. Separately, our board has exercised its drive to move forward from April 2024 to October 2023, the release of lockup restrictions on the final block of pre-IPO shares that are subject to lockup under the shareholders agreement. I'll speak more about this in a moment, but this will conclude the lockup period for our pre-IPO investors and will further move us towards achieving a normalised float. Additionally, the board has also authorised an up to $50 million stock buyback programme. I want to discuss some of our key highlights for the quarter. Starting with Nigeria, as I mentioned earlier, the Naira devaluation is a major part of our
Speaker 3: The new administration implemented three significant policy changes over the last few months, including two from a macro perspective and one that impacts companies like IHS that imports users. Starting with the macro changes, in mid-June, DeNiro was permitted to trade freely in order to convert to multiple forex rates. This was generally expected and positively received by the market and something we had discussed in previous calls. While it will take time to see the full impact of this change, it improves transparency in the Nigerian forex market and expected to improve liquidity and the ability for companies to access US dollars. Thus, it is a change that we welcome.
Speaker 3: On a related basis, we did upstream $50 million during the quarter, and we may look to upstream later in the year via the official window or through other structured transactions. Another key change that occurred in late May was the elimination of the retail petrol subsidy, which cost the country billions of dollars annually. Because we purchased diesel and not petrol to power our site, this change had only had a small impact on the fuel we used to fuel our own vehicles. Nevertheless, we believe this was a significant step forward for the country. Given the dollars the subsidy had required from the government to support, this is now expected to put more dollars back in the federal budget. Lastly, in July , the government initiated a 7.5% value added tax on imported diesel. Notably, this was not previously factored in our guidance, and we estimate it will add approximately $5 million to our costs over the remaining 6 months of the year.
Speaker 3: Moving first to Brazil and then to South Africa, in Brazil macro conditions continue to improve following the smooth governmental transition of power in January . Forest rates have strengthened against the US dollar while the central bank has recently elected to cut rates at first among large economies. We are focused on our sizable build to suit program and continue to assess a growing number of opportunities. We are excited about Brazil and like the strategic positioning we have earned in the market as a leading infraco provider with both power and fiber assets. Now to South Africa, as we stated last quarter and given various dynamics in the market including an unprecedented level of load sharing that has occurred in the country post deal close, we continue to evaluate our opportunities and will update you as appropriate and if necessary.
Speaker 3: On stock liquidity, on October 14th, the block D shares will be unblocked and the registered offering requirements for the block C shares will end, as well as agreement. This means that all three blocks become freely traded at the same time, thereby concluding the lock-up periods for our three IPO investors. The removal of the lock-up will move us further towards achieving a normalized look. Separately, our board has also authorized an up to $50 million two-year stock buy-back program. Recognizing the importance of maintaining a strong balance sheet, we continue to take a disciplined approach to capital deployment, including near-term M&A, while we keep assessing what's out there. As of the end of the quarter, we had over $960 million of available liquidity and leverage stood at 3.1 times. While this will increase slightly over the next 12 months, as a result of the impact of the NIRAD evaluation on our adjusted evita, we expect to remain well within our target range of three to four times. We continue to have no meaningful debt maturity until quarter 425, and we continue to monitor the market and evaluate ways to further strengthen our position as we have done historically. Lastly, I want to comment on statement some of our shareholders have made since last quarter regarding our government. Our board is committed to ensuring the integrity of the independence of IHS as a neutral digital infrastructure provider, and to maintaining strong corporate governance, supporting our customers, and increasing shareholder value.
Speaker 4: a 450 basis point gain on Q2-22. The results reflect the devaluation of the Nigerian Naira versus the US dollar that occurred in mid-June and thus only partially impacted the quarter, as well as some pull forward of anticipated Q3 revenue into Q2 which I'll discuss shortly. As you also see, total capex grew by 41% in the quarter, largely due to movements in Nigeria and Latam, whilst we saw an overall decrease in capex in SSA. Finally, our consolidated net leverage ratio was 3.1 times at the end of Q2, a slight decrease versus last year and flat on 1Q23, although as I'll discuss we do expect our leverage ratio to increase over the next 12 months in light of the devaluation but remaining within our target 3-4 times range. Turning to our revenue on a consolidated basis, slide 10 shows the components of our 16.8% reported consolidated revenue growth for the second quarter. Organic revenue growth of 29.7% was driven primarily by CPI escalations, power related revenue, FX resets and lease amendments, as well as some pull forward revenue we had anticipated for 3Q but actually occurred in 2Q.
Speaker 4: This is included in other. Additional revenue growth was driven by new colocation, new sites, and fiber deployment as usual. As you can imagine, the full impact of the NIRID evaluation towards the end of the quarter is not reflected in the level of escalations and FX resets you see here, nor fully in the negative impact from FX, all of which I will discuss further. The level of power-related revenue continues to reflect the high energy price environment and includes a $24 million increase in diesel-linked revenue. I would also, again, note that we now include the power pass-through revenue we receive in South Africa within the power segment, which in Q2 increased $2 million. On the right, you can see the organic growth rates of each of our segments for the quarter, with Nigeria delivering 37% organic growth, including the port forward revenue.
Speaker 4: Inorganic growth for Q2 was 3.9%, reflecting almost entirely the South African acquisition. Inorganic growth will drop further in Q3 as we have now passed the anniversary of the South African acquisition. On slide 11 you can see our consolidated revenue and adjusted EBITDA and adjusted EBITDA margins for Q2 2023. As I discussed on the prior slide, in the second quarter IHS generated a nearly 17% increase in reported revenue. Organic revenue growth was even higher at nearly 30%, again demonstrating the continued strong top line growth trends of the businesses, led by Nigeria in particular. However, as a result of the Naira devaluation in mid-June, 2Q23 revenue includes a $21 million headwind versus rates previously assumed in guidance, including a $25 million headwind from the Naira, since the FX resets on the US dollar denominated portion of our Nigerian contracts doesn't kick in until July onwards. In Q2 23 adjusted EBITDA of $304 million increased 27% versus Q2 22 and adjusted EBITDA margin was 55.6% up 450 basis points from the prior year.
Speaker 4: The year-over-year changes in adjusted EBITDA and margin for the second quarter primarily reflect the increase in revenue we've already discussed and partially offset with year-on-year increases in cost of sales mainly due to increased maintenance and repair costs on a larger business as well as increased administrative expenses resulting from employee costs related to the acquisitions. Power generation cost of sales decreased by $6 million driven by a $12 million diesel cost decrease primarily from a 13.1% decrease in diesel price and a 5.5% decrease in consumption all offset by a $6 million increase in electricity costs including as a result of Project Green and all of these movements coming from Nigeria. As previously highlighted through Project Green we continue to prioritize alternative sources of power to reduce our dependency on diesel. On slide 12 we first review our recurring levered free cash flow.
Speaker 4: We generated RLFCF of $91 million in Q2-23, a 4% increase versus Q2-22 due to a combination of factors including the increased revenue and adjusted EBITDA discussed already and decreases in income taxes paid. These factors were offset in part by increases in net interest paid, lease payments made mostly due to the South African acquisition, maintenance capex and withholding tax. Our RLFCF conversion rate was 30%.
Speaker 4: Turning to capex and in Q2 23 capex of $207 million dollars increased 41% year on year. This increase was largely due to movements in Nigeria and Latam. Increased investment in Nigeria in Project Green, maintenance capex and fibre deployment was offset in part by decreases in new site capex there.
Speaker 4: In LATAM we saw growth in NUSITE CAPEX and ICE systems fibre roll-out, whilst we saw an overall decrease in CAPEX in Sub-Saharan Africa. Onto the segment review on slide 13, our first walk through our Nigerian business. The Nigerian macro remains complex as we discussed previously and on our earlier earnings call this year. We are encouraged by the swift actions taken by the new government including the removal of the fuel subsidy and the liberalisation of the forex regime that resulted in the devaluation of the NIRA that took place in mid-June. We remain in close contact with our key customers, two of which have again recently published healthy top-line results in their businesses. We also continue to work closely with various regulators, our vendors and our local banking partners to continue to best position IHS. While we are cautiously optimistic our Annual
Speaker 4: US dollars continue to be difficult to source, although remain available. FX reserves in the country have decreased to $34.1 billion at the end of June 2023, from $35.5 billion at the end of March 2023. And market participants believe that the CBN will need to step in at some point to inject liquidity into the system and clear the backlog of FX transactions. That being said, the price of both oil and ice gas oil have decreased quarter on quarter.
If we look at ICE GASL, it was $687.00 in Q2, 23, down from $819.00 in Q1, 23.00. And then moving to real GDP growth, it expanded by 2.3% in Q1, 23, where the projected foliar 2023 growth rate of 3.2%. The inflation increased to 22.8% this June , versus 18.6% in June 2022. So overall, we continue to believe the business remains well positioned for long term success, and to endure these near-term macroeconomic challenges. To this point, an Nigerian business once again delivered strong results in the second quarter, tracking well on our key metrics. Q2, 23 revenue of $365 million increased 13.5% year-on-year on a reported basis, and 37% on an organic basis. In each case, reflecting the devaluation over a small portion of the quarter and the poor forward of revenue discussed. Top line growth was driven primarily by the usual group of escalations, power-related revenue.
as well as FX resets and lease amendments. The negative FX impact was $74.5 million or 23% due to the NIRID evaluation. Our tower count decreased by 2% and total tenant count increased by 0.4% each versus Q2-22 largely reflecting the planned decommissioning previously discussed which does not impact revenue. Our co-location rate consequently improved to 1.57 times up from 1.53 times in Q2-22. Lease amendments continue to be a strong driver of growth with these increasing by 9.8% quarter on quarter as our customers added additional equipment to our sites particularly 4G upgrades. Q2-23 segment adjusted EBITDA in Nigeria was $238 million, a 30% increase from a year ago and segment adjusted EBITDA margin was up 820 basis points to 65.4%. And let me now briefly summarise the results in our other segments.
As our Sub-Saharan African segment includes our South African business since Q2 2022, towers and tenants increased by 1.5% and 2.6% respectively versus Q2 last year. Revenue increased by 30% of which organic revenue grew 15% driven primarily by escalations, new sites, colorcations and FX resets whereas inorganic revenue grew 19% driven by that South African acquisition and FX was a 4.3% headwind. Segment adjusted EBITDA increased by 19% driven primarily by the increased revenue and partially offset by increases in power generation costs, maintenance security costs and administrative expenses. Segment adjusted EBITDA margin decreased to 51% from 55.8% in Q2 last year and we continue to monitor the macro environment in South Africa particularly the ongoing power load shedding by the national utility and as previously discussed we continue to evaluate and manage services opportunity. In our LATAM segment towers and tenants grew by 4% and 3.2% respectively.
Whereas revenue and segment adjusted a bit are increased by 13 and 14% respectively, in all cases versus Q2 last year. In Brazil, a second largest market with 7139 towers, macro conditions will largely stable as GDP growth accelerated, FX rates marginally strengthened, interest rates held steady in the quarter, and inflation decreased. In our Latin segment overall, Q223 organic revenue increased 14%, driven primarily by an increase from my systems, fiber deployment, and escalations. Segment adjusted a bit dark group by 14% also in the quarter, with a segment adjusted EBITDA margin of 73.1%. In MENA, towers and tenants each group by 6.8% in Q223 and revenue group by 11%, including 8.4% organic revenue growth. Segment adjusted a bit dark group by 29% in the quarter, with a segment adjusted EBITDA margin of 54.5% reflecting the increased revenue and a decrease in admin expenses. On to slide 14, and I'll briefly highlight our KPIs. As of June 30, our tower count was 39,298 up 0.6% from the same period last year, driven by ongoing new sites in Latin, SSA and MENA. As you can see in the chart on the top right, collectively we built nearly 300 towers during the second quarter of 2023.
Total tenants grew 1.9% with the colocation rate at 1.49 times, up slightly versus last year. We continue to point out that lease amendments are a significant factor for us, particularly in our Nigerian segment, given the ongoing 4G upgrades by our customers there and the initial 5G activity we are seeing. While lease amendments increase by almost 12% year on year, they are not included in our colocation rate calculation. We continue to see no reason why we can't get to 2 times or greater on our overall portfolio over the long term, and our more mature portfolios of towers are at or above that rate. On slide 15 we look at our capital structure and related items. At 30 June 2023 we had approximately $4.06 billion of external debt in IFRS 16 lease liabilities. Of the $4.06 billion of debt, $1.94 billion represent our bond financings, and other indebtedness includes $370 million that we drew down last year from the $600 million 3-year bullet term loan facility at the IHS Holding Limited level. Additionally, as previously discussed in January 2023, we entered into an up to $165 billion NIRA 5-year term loan facility, the commitments under which we further increased by another 11.5 billion NIRA during the quarter, while also drawing down an additional 15 billion NIRA for a total of the 165 billion NIRA drawn under this facility as of 14 August 2023, effectively concluding the capacity of this facility. During the quarter, we also increased capacity under the Group RCF to 300 million NIRA.
further demonstrating our strong balance sheet.
However, I would note that because the devaluation occurred late in the quarter, we do expect leverage to tick up slightly in the second half of 2023 when adjusting for a full quarterly impact of the devaluation as I'll discuss shortly regarding our guidance. And finally, as it further relates to the devaluation, I wanted to point out that Q2 goes an unusually large net loss of approximately $1.2bn.
which is driven primarily by $1.4 billion in finance costs, the vast majority of which is unrealised FX losses. The components of finance costs include net FX losses from financing, both realised and unrealised, net FX losses on derivative instruments, both realised and unrealised, as well as interest expenses.
As is typical each quarter, these costs arise principally due to our bonds, given the embedded options therein, and because of the intercompany share of the loan structure we have used historically to fund the business. These costs, which are very largely non-cash, can vary significantly and typically increase in the context of a devaluation of the NIRA, which is the primary reason why they increase dramatically in Q2. We've added slide 21 to the appendix to help further explain this dynamic and highlight the large delta this past quarter. Moving to slide 16, and as a result of the NIRA devaluation we're revising 2023 guidance for revenue to $2.08 to $2.11 billion, adjusted EBITDA to $1.13 to $1.15 billion and RLFCF to $1.85 to $405 million and maintaining our total capex guidance of $610 to $650 million. As Sam mentioned at the beginning for the year and as highlighted on slide 17, we now assume an FX rate for the...
although this would have no impact on adjusted EBITDA or RLFCF.
Guidance also continues to exclude any revenue from Egypt although we continue to evaluate opportunities in the market that we believe could align with our financial and strategic objectives. For the year we continue to expect to build approximately 1,200 towers which is slightly more than the amount we built in 2022. This includes a notable drop in Nigeria as we pull back on new site builds as we shift more of our focus to Project Green but also includes a tripling of tower builds in Brazil that we backlend loaded in 2023. On slide 17 on the top you can see revenue by reporting currency for Q2-23 whereas on the bottom we provide the breakout of revenue based on contract split.
The right side shows the average annual FX rate assumptions used now in our 2023 guidance and has been updated since last quarter. This equates to a $141 million downside for the year versus rates assumed last quarter of which over 100% is as a result of the devaluation of the NIRA.
This now brings us to the end of our formal presentation. We thank you for your time today and operator please now open the line for questions. Thank you and as a reminder to those on the phones press star 1 to raise your hand. We will now pause briefly while we register questions in the Q&A roster. Your first question comes from the line of Jonathan Atkin from RBC Capital Markets. Your line is open. Good morning this is reforms to pressure film customers and hence carriers in the shorter term. Can you just update us on the leasing activity that you've been seeing and the tone of customer conversations you've had about future activity? And then I have a follow up. So firstly we haven't seen any form of slowdown in carrier leasing activity at this point in time. In fact in Q2 we posted more pretty strong numbers in terms of close to 300 about 278 billed to suit across the business. But probably more relevant to your question was about 1100 lease amendments.
From JP Morgan, your line is open. Hi, guys. Thanks. Sam, we've been talking about potentially a buyback for quite a long time. And we've talked about the math between the liquidity in the stock and any accretion on the buyback. How did that math go in for the 50 million authorised today? And was that any kind of compromise with Wendell and MTN? And then talk maybe about the relationship with those two companies. Thanks. Thanks. Maybe I'll start with the buybacks. Keith can start with the buyback, and I can talk about the second aspect. So, Phil, you're obviously right in terms of the two items that you comment on. We've obviously been thinking through a buyback for a little while. As most people know, we've commented on that before. We have also been thinking through for a long time how to try and promote liquidity.
into the IHS free float, which is obviously of paramount importance to us as well. So those are kind of the two key variables in a few of our actions that we've taken this quarter. So firstly, announcing the buyback, but secondly, unblocking the rest of the pre IPO shareholder lock up arrangements, which will come forward to mid October this year. So that will remove all the restrictions from the pre IPO shareholders to be able to trade freely. We wanted to do that to obviously encourage and finalise the encouragement of that free float. So that gets done. And then in terms of the share buyback, look, we continue to want to drive value into the IHS stock. And although this is a kind of more limited in size, and it's a 24 month programme, so 50 million over 24 months, it's incremental. But we do think it's the right thing to be doing in terms of allocating that capital to something that, you know, we feel is important, given the continued undervalue of the IHS stock. So it's a combination of factors. But yes, very focused on driving up liquidity in the free. Shareholders, notably the ones you've mentioned, have made statements in public. I prefer not to comment on such. But having said that, we have a duty to engage, to listen, to consult, to analyse and where we think good ideas are worth implementing. Just simple as that. OK, maybe if I can one more. Any update on backlog of payments from smaller customers in Nigeria? Thank you. No, nothing, nothing to report there. OK, thanks, guys. Thanks, Pape. Your next question comes from the line of Greg Williams from TD Cohen. Your line is open.
which comes with the benefits of reducing greenhouse gas emissions and reducing our scope to emissions over time but also happens to have a very good financial return profile as well. Remember we'd been saying that it would be a 30% IRR project. So yes we diverted capital from Nigeria BTS into Project Green so the BTS in Nigeria will be lower this year for sure but where we are spending capital and growing the business from a tower count point of view is in Brazil where we continue to to forecast approximately 750 new build sites this year. That program is ramping nicely. It ramped at the end of Q1 and then really has been ramping up through Q2 and onwards so that remains on track and you know that's a part of the business where we want to continue adding to the tower count through building. Okay great thanks and then just one more question you talked earlier about evaluating some other balance sheet initiatives so maybe you could give us some color on what you're looking at whether that's
We are open to ideas, we are open to suggestions and we'll continue to analyze, evaluate and see whatever works to move us into that direction.
And are there, as you thought about these issues for some time, are there examples or kind of case studies that you found of other companies that might have dealt with some of the same or similar types of issues and maybe the timing and the mechanisms they use to resolve it to improve value proposition for shareholders? I would stress these things don't happen overnight. So we look around and try to learn the best of everything out there, including our own ideas. And first and foremost, keep delivering on the operations of the business and execute on the business itself. And then add on top what else can we do to try and unlock value? We've spoken.
on this call and over the last 12-18 months around the free float that's obviously critical in our minds. Again we've tried to address some actions by announcing you know bring forward the unlock which isn't going to solve everything but you know is in our gift to try and promote you know additional trading and additional free float to come into the market but ultimately not in our hands right it's up to shareholders. So you know we will keep looking around at what others have done in the past, we'll keep adding our own ideas. It's a big focus of ours right now so we will work we will keep working hard.
And then just on the business, is there – And Mike, without implementing, are hopefully going to plan this in the right direction. But Rome wasn't built in a day, especially with the massive headwinds we face from the local macro and from some of our markets. Thanks. And just on the business, on the organic performance, is there anything that we should be mindful of just in terms of any churn events over the coming 12 to 18 months that you have visibility in? Mike, nothing that's sort of – nothing that would be unusual, nothing significant that we're aware of at this point in time. I think it goes without saying that the shape of our quarters will be impacted by the devaluation in Nigeria. So just to remind you all, and you'll see this in the materials that we've published today, although the devaluation in Nigeria happened in the middle of June , so only two weeks impact in the quarter that we've just reported, hence not hugely visible in the numbers that we report from a KPI perspective, obviously balance sheet and financing costs, but revenue, EBITDA, RLF, yeah.
second half. The second one is on Project Green, you sort of reiterated the savings you expect by the end of the project. Is that updated for the avoidance of the VAT or could that be incremental or am I just thinking about that wrong? And then the higher level question is, it gets back to capital allocation. You're operating closer to the low end of your leverage range right now. I know that it will drift up a little bit, but you're in a pretty good liquidity position. It doesn't seem like the conditions are supportive of M&A right now for a range of reasons. And as much as you'd like to buy back a lot of your stock, you've noted you want to be mindful of the float. And so the big picture question is in light of all of that, how are you likely going to prioritize excess capital over the next year or so? Is this mostly about just building liquidity and paying down debt or do you think that there's other opportunities right now that you think that could be even more creative? Thank you.
Okay Brett, I'll just scribble down a few things. You might have to remind me of the first one. I'll take the VAT one first, so in relation to Project Green. So that won't impact the rollout of Project Green. That VAT is on diesel import, so not related to the actual project, bringing new equipment, deploying new equipment. But would you save more money now? When you could see it, yeah exactly, I was just going to say where you could see some potential positive impact, all else being equal, is that a saving from diesel on a unit basis would now be 7.5% higher. So yes, we could see some potential benefit from that, all else being equal. On the capital allocation point, sorry Brett, do you want to jump in? What was your first question again? Can you just remind me? I was going to remind you, the $31 million improvement to the outlook on the debt back, how much of that was in the quarter versus in the second half.
Yeah, so majority of it was in the first half of the year, probably about two thirds of it was in the first half of the year, third of it coming in the second half of the year. And then on capital allocation, Sam, do you want to jump in? Yeah, yeah, sure. Look, Brett, our priority at the moment is our balance sheet. We need to make sure that, and while we are comfortable at the moment, we need to make sure that we keep it tight, especially with the headwinds that we're facing from, again, global macro and in particular, the Nigeria devaluation situation. But we also feel somehow okay about our leverage zone, even with an impending devaluation, if it stays within reason. And we continue to assess and evaluate opportunities out there. If we feel there are great deals that make strategic sense to us and could provide enhanced value to our shareholders, we will probably cover them. But again, the priority at the moment is our balance sheet. Thank you.
Your next question comes from the line of Stella Credge from Barclays. Your line is open. Hi there afternoon everyone many thanks for all the updates and there was two things that I wanted to ask about. The first is could you just let us know what our contracts will be maturing in the near term and you know given that some of the customers seem sensitive around you know the devaluation the dollar component you know what do you think might be similar or different in future to our contracts as you you go through those negotiations and that was that was the first one and the second one I know you were previously asked about capital structure and optimization but I wanted to ask it a slightly different way more in terms of do you see any funding needs in the next you know three to six months either at the OPCO levels or at the whole core level of suggest nothing that you did do some small borrowing in say South Africa increased local RCS etc and in the last few months that would be the second one thanks
Sure, hi Stelasti. I'll go in reverse order. So funding needs, we've got small incremental things that we're doing as I sort of alluded to on a prior question that was asked. We've got small incremental things we're doing at OpCo, so LATAM for example, we're looking at things and we may look to do other things in relation to the wider capital structure, but those are, you know, we'll see how we go on those bits and pieces. So that's on the capital structure. We'll obviously announce things as and when things get done. And from a maturity perspective, so we've got some smaller contracts across Sub-Saharan Africa in the next 18 months. And then we've got one in Nigeria at the very end of 2024, 31st December , 1st January 2025, in terms of the key contracts that are coming up for renewal. Otherwise, everything out is longer term. In terms of future tower contracts, that's very difficult to comment on. Everybody has wish lists, customers have wish lists, we have wish lists. Keep in mind, we also have a blend of different contracts across our particular African portfolio where some include power, some don't. Some have higher dollarization, some have lower dollarization. So there's a whole raft of things, some have lease amendments captured within them, some don't. So there's a whole raft of different items that typically both sides want to optimize. And the reality is given the growth nature of our markets and given significant roll outs that continue in those.