Q3 2023 IHS Holding Ltd Earnings Call
[music].
Good day and welcome Judy I hate just holding limited earnings results call for the three months period ended September 32023.
Please note that today's conference is being webcast and recorded.
We would like to ask a question. Please press star and then one on your telephone keypad at anytime.
At this time I'd like to turn the conference over to Koby scientists out. Please go ahead Sir.
Thank you operator, thanks also to everyone for joining the call today I Colby scientists Albi EVP of communications to you and I guess with me today are Dan Darwish, our chairman and CEO, Steve <unk> our CFO.
Morning, We published our unaudited financial statements for the three month nine month periods ended September 32023 in the Investor Relations section of our website and issued a related earnings release and presentation.
The consolidated results of either 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.
We discuss the results I would like to draw your attention to the disclaimer set at the beginning of the presentation on slide two which should be read in full along with the cautionary statement regarding forward looking statements set out in our earnings release, and 6K filed as well today.
In particular, the information to be discussed may contain forward looking statements, which by their nature involve known and unknown risks uncertainties and other apart of 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.
Format or achievements or industry results expressed or implied by such forward looking statements, including those discussed in the risk factors section of our form 20-F filed with the Securities and Exchange Commission and our other filings with that D. C. Waldorf.
Well also refer to non <unk> measures, including adjusted EBITDA that we view as a foreign to assessing the performance of our business and E. L. F. Yeah, we view as important in assessing the liquidity of our business a reconciliation of non <unk> metrics to the nearest ifr's metrics can be found in our earnings presentation, which is available on the Investor Relations section of our website.
With that I'd like to turn the call over to Sam Darwish, our chairman and CEO.
Thanks, Colby and welcome everyone to our third quarter 2020 earnings results call.
We are reporting a solid quarter of performance across our Kpis with revenue and adjusted EBITDA in line for the head of our expectations notwithstanding the recent tenant devaluation.
While capex was meaningfully below.
Everyone should know from our prior earnings call. These Q3 results are the first full quarter results post the significant devaluation of the Nigerian currency that neither.
As a reminder, the naira devalues by 15, 9% from 472 in mid June to 753 at the end of Q2 and in Q3 I agree 768 versus 431 last year to 78% devaluation that drove a tough 0.4% reduction in <unk>.
Our reported dollar revenue.
The Forex protection mechanisms in our revenue contracts have begun to reset.
So and we will see more evidence of this resetting of our Q4 results.
Overall, the business continues to perform well driven by solid organic growth of 36% with contributions across each of our segments that reflects robust secular demand and the quality of our contract structures.
The reduction in Capex 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.
On a quarter over quarter basis, the night I represented a negative $139 million impact to revenue driven.
Driven by the devaluation that began in mid June.
Positively we expect to see a notable sequential set out in the revenue in Q4 as we see the full benefit of our contractual products, but he says he can't.
As a reminder, 53% of our revenue is tied to our tendency of which reached over USD revenue reset quarterly or sooner and nearly all of our revenue has an annual contractual escalator of which most occurred and Jonathan.
Given these expectations, we are maintaining our 2023 guidance for revenue adjusted EBITDA and Capex.
I'd also like to point out that we stopped reporting Fcs or returning leverage the tax law and have replaced it with H C F or.
Adjusted Levered free cash flow, which better reflects our liquidity position, we maintain the same range for ASI CF that we had for the audit of CF, but Steve will outline the slight change in definition between these two metrics later on.
We expect our heightened focus on cash generation to be even more evident in 2024 as we pursue operational efficiency through productivity enhancements cost reductions are slowing of Capex person versus 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 access to sustain healthy double digit organic growth, while delivering meaningful cash generation inherent in our business model. We look forward to sharing our 'twenty 'twenty four guidance next quarters.
Moving to slide seven I want to discuss some of our key highlights for the quarter.
Talking with Nigeria, as I mentioned earlier, the significant devaluation that began in mid June in addition to access to products remain a challenge.
However, encouraged by the appointment of a new governor of the Cvs in September and more recently reported airports to approximately $1 billion of before its backlog.
Represent positive developments, but there is still much more for the government to do we are not upstream from the Hugo says that $65 million competed in H, one 2028, but we will continue to assess opportunities for up streaming.
And the remainder of 2023.
I would like to remind our audience that we have operated in Nigeria in particular for over 22 years and over that period, we've gone through other outside devaluations, including most recently in 2016 and each time, our business continued to grow thereafter, and we have confidence we will do so again this time.
For example, the naira devalues from approximately 197% to $1 two three or five in 2016, a devaluation of 55% back then we saw a similar next quarter's negative impact to revenue and profitability. As we are seeing now, but then we saw revenue and profitability build back over the next few quarters.
As our Forex resets and escalation mechanisms kick then leading to the Nigeria business delivering revenue growth of 22% in dollar terms the year. After 2017, an indication of how resilient our business was to devaluation as contract resets and Escalations kicked in.
Moving on first to Brazil, and then to South Africa, and Brazil, we remain focused on our sizeable build to suit program and during the quarter. We built 294 towers in Latam and remain on target to achieve our goal of 750 or more beds for the year. We also refinanced our existing tower co term.
Loans via the issuance of local debentures as we continue our focus on raising more debt in local currency to better align our debt profile with our revenue profile.
Resilient Central Bank again reduced interest rates by 50 basis points in early November the third consecutive time over the past few months.
So south Africa, while we are encouraged by the improvements we have seen in the level of load shedding since last quarter. We continue to evaluate our powered managed service business with MTN and others, we will update you as appropriate and if necessity.
On stock liquidity on October 16th 16th with freed up another 180 million shares and therefore all of the shares that have been subject to lockup under our shareholder agreement are now freely tradable.
Alpine certain holders remains subject to rule 144 requirements.
The expiration of the lockup over the past 18 months.
Here's to have had a positive impact on our trading liquidity, which has more than tripled from 122000 to over 400000 shares per day on average.
During the third quarter, we also repurchased nearly 950000 shares and spent $4 $8 million as part of our up to $50 million share buyback program that expires in August 2025.
Shifting to our balance sheet, we have over $850 million of available liquidity between cash and undrawn facilities plus various undrawn facilities at the Opco level. This reduction by $100 million from last quarter is because we have reduced the undrawn portion of our 2022 term loan by 100 million.
To $130 million, but extended the availability period of the Undrawn balance from October 2023 to April 'twenty 'twenty. Four. Additionally, derisking our capital structure remains a focus of ours and we have successfully extended the maturity of our 300 million group revolver.
From March 2025 to October 2026.
With net leverage of three two times, we are still comfortably within our target range of three to four and please remember that we have no meaningful debt maturities until Q4 2025.
We feel good about our balance sheet position, while we continue to monitor the market and evaluate ways to further strengthen our position as we have again recently done.
Lastly regarding shareholder considerations, we continue to engage in constructive dialogue with Vanderbilt and are making progress towards our mutual goals. We also continue to engage with MTN group to better align on various commercial and governance matters and we'll provide additional updates at the appropriate time.
With that I will turn the call over to Steve.
Thanks, Simon Hello, everyone turning to slide nine as Sam mentioned, we're pleased to show our Q3 performance was in line or better than expected considering the backdrop of the significant currency devaluation in Nigeria, which I referenced at various points today.
As you see here towers are up almost 1% and tenants up more than 2% in the third quarter 23 versus third quarter of 2022, while lease amendments again increased by double digit percentages.
On a reported basis revenue and adjusted EBITDA declined in the quarter consistent with our prior expectation and guidance that the full impact of the June devaluation would not be reflected in our results until this Q3.
Specifically in Q3 revenue declined by 10, 4% adjusted EBITDA by 15, 5% in the Lf CF fell by 11, 2% in each case on a reported basis and driven largely by the impact of the devaluation more than offsetting the continued strong organic activity across our markets.
However, it's worth noting that the period on period comparison is a bit distorted by the presence of some one off revenue and adjusted EBITDA in the third quarter of 2022 and as we noted last quarter. We did see some pull forward of anticipated Q3, 'twenty three revenue into our Q2 results.
Our adjusted EBITDA margin decreased by 49, 7%.
Again, a draw your attention to what Sam said earlier about having seen a similar devaluation in Nigeria in 2000, 2016, and the build back about earnings the following quarters as a contractual protections kicked in.
Youll also see total capex fell by nearly 40% in the quarter largely due to lower capital expenditure for Nigeria, and the SSA segments, partially offset by an increase in Latam all of which I'll discuss shortly.
As Sam mentioned, we are taking a short look on capex for the remainder of this year and into next year focusing on the projects that we believe promised the highest returns and a nice strategic.
Finally, our consolidated net leverage ratio was three two times at the end of Q3, essentially flat with last year and no. One times increase versus Q2 2023 again. This is consistent with the expected increase we flagged last quarter due to devaluation, albeit still within a three to four times range as we had guided.
Turning to our revenue on a consolidated basis, you can see how the devaluation 10, a quarter of strong organic growth into a 10, 4% reported decline in consolidated revenue for the third quarter.
Organic revenue growth of 36% was driven primarily by FX resets CPI escalations and lease amendments.
Power related revenue slightly increased due to increased power posture in South Africa.
On the right hand side, you can see the organic growth rates of each of our segments for the quarter with Nigeria, delivering 36% organic growth.
Inorganic growth for Q3 was less than $1 million, primarily due to the fifth and sixth six stages at our Kuwait acquisition.
On Slide 11, you can see our consolidated revenue adjusted EBITDA and adjusted EBITDA margins for Q3 'twenty three as.
We've discussed the Nigeria devaluation drove a 10% decrease in reported revenue in the third quarter. Despite quarterly despite quarterly organic revenue growth of over 30% and again demonstrated the continued strong topline growth trends of the business led by Nigeria in particular.
In Q3 23 reported revenue now reflects a full quarter's impact from the Nigeria devaluation and includes a $139 million headwind versus rates last quarter, albeit with a 2 million tailwind versus the 775, an IRA to the dollar FX rates and 3 million when including all FX assumptions assumed for <unk>.
Last quarter in our guidance.
While our quarterly FX resets on the U S dollar denominated portion of our Nigeria contracts did kick in on the first of July as expected. We have previously noted that some of these resets are calculated using the average rates of the prior quarter and therefore wouldn't yet fully make up for the mid devaluation in these third quarter results, but will be.
Reflected in our Q4 results.
Furthermore, the comparison is distorted a bit due to the $18 million of one off revenue and adjusted EBITDA in the third quarter of 2022.
In Q3, 23, adjusted EBITDA of $232 million decreased 15, 5% and adjusted EBITDA margin was 49, 7% down from the prior year.
The year over year changes in adjusted EBITDA and margin for the third quarter, primarily reflect the decrease in reported revenue I've already discussed and the absence of the one off items alongside an increase in administrative expenses.
Power generation cost of sales decreased by almost $24 million.
Driven by a $35 million diesel cost decrease primarily due to a 38% decrease in the price and a 5% decrease in consumption of diesel in Nigeria. It was ups.
Set by an $11 6 million increase in electricity costs, including as a result of project Green.
As previously highlighted three project Green, we continued to prioritize alternative sources of power to reduce that dependency on diesel.
On Slide 12 first review, our adjusted Levered free cash flow or a L Fcs, which as Sam pointed out replaces the rls VF metric the primary differences from our legacy assets that when reconciling from cash from operations ILS. Yet only includes the cash cost of business combination transaction costs.
And other income.
I'll ask Jeff also excludes the reversal of movements in the net loss allowance on trade receivables or bad debts and impairments of inventory there.
Better reflects the liquidity position in each period.
In Q3, 'twenty three we generated <unk> of $80 million, an 11% decrease versus Q3 of 2022 due to a combination of factors, including the decrease revenue and adjusted EBITDA, We've discussed already and increases in net interest paid and income taxes paid all partially offset by decreases in maintenance cap.
Ex withholding tax and lease payments made.
However, as a reminder, the ILS Jeff growth rate includes the $18 million of one off revenue in the third quarter of 2022.
<unk> cash conversion rate increased to 34, 3% versus the prior year's quarter.
Turning to Capex in Q3, 'twenty, three capex of $105 million decrease nearly 40% year on year.
This decrease was primarily driven by lower capital expenditure for our Nigeria, and SSA segments of $72 million and $22 million, respectively, partially offset by an increase in capital expenditure of $25 million for our Latam segment.
The decrease in Nigeria was primarily driven by decreases relates to maintenance capital expenditure project Green and new sites capital expenditure, while the decrease in the SSA segment is primarily driven by decreases related to new sites capital expenditure and some other capital expenditure we have.
The increase in Latam is primarily driven by increases related to new site Capex.
Our spending for project Green was $8 3 million during the third quarter of 2023 and the year to date spend was $83 million. While we have spent a total of $197 million. Since we began the project versus the original $214 million tied to Capex forecasted.
On the segment review on Slide 13, I'll first walk through our Nigeria business as in Nigeria macro environment remains complex as we discussed on our prior earnings calls this year, we are still in.
Courage by the Swift initial actions taken by the new government. Although it is clear that more work needs to be done.
We remain in close contact with our key customers two of which are again recently published healthy topline results in their businesses, albeit also showing the impacts from the Nigeria devaluation.
They continue to work closely with various regulators offenders not local banking partners to continue to best position IHS.
While we remain cautiously optimistic U S dollars continue to be difficult to source with FX reserves in the country, having decreased to $33 2 billion at the end of September 2023 from $34 1 billion at the end of June 2023.
Market participants continue to believe that the CBS will need to step in at some point to inject liquidity into the system and cleared the backlog of FX transactions and that had been published stories recently regarding potential government actions already underway.
Meanwhile, the price of both oil and ice Gaslog have increased recently.
Looking at ice gas oil it was $911 per ton in Q3 of 23 up from $687 per ton in Q2 of 'twenty three.
Moving to real GDP growth at expanded by two 3% in the quarter, but with the now lower projected full year 2023 growth rate of two 9%.
Inflation jumped to 26, 7% the September versus 28% in September 'twenty, two with the removal of perpetual sub subsidy a large factor there.
Overall, however, we continue to believe the business remains well positioned for long term success and to ensure the continuing macroeconomic challenges to this point and Nigeria business. Once again delivered strong organic results in the third quarter tracking well on all key metrics.
Revenue of $271 million decreased 24% year on year on a reported basis, but increased 36% on an organic basis in each case, reflecting the devaluation over the quarter and the other items we've discussed.
Organic growth was driven primarily by FX resets escalations and lease amendments and the negative FX impact of $213 million or <unk> 59, 9% due to the devaluation.
Our tower count decreased by 3%.
Tenant count increased by <unk>, 3% each versus the third quarter of 2002, largely reflecting the planned decommissioning discussed earlier this year, which does not impact revenue.
Our colocation rate Consequently improved to 158 times up from one five to three times in the third quarter of 2002.
Lease amendments continues to be a strong driver of growth with these increasing by 14, 3% quarter on quarter as our customers added additional equipment to our sites, particularly <unk> upgrades.
<unk> hundred 23 segment adjusted EBITDA in Nigeria was $158 million and nearly 25% decrease from a year ago and segment. Adjusted EBITDA margin was down 90 basis points to 58, 2% in each case largely driven by the by the naira devaluation impacting revenue, partially offset by an overall.
Decrease in cost of sales.
In our sub Saharan African segment thousand tenants increased by one 6% and two 7% respectively versus the third quarter 2002 <unk>.
Revenue increased by 16% of which organic revenue grew 21% driven primarily by Escalations new sites co locations and FX resets, while FX was a four 4% headwind.
Segment adjusted EBITDA increased by four 4% driven primarily by the increased revenue, partially offset by increases in cost of sales and administrative expenses.
Segment, adjusted EBITDA margin decreased to 49, 7% from 55, 3% in Q3.
We continue to monitor the macro environment in South Africa, particularly the ongoing power load shedding by the national utility, which appears to have moderated recently and as previously discussed we will continue to evaluate our power managed services offerings.
In our Latam segment towers tenants grew by six 6% and five 2%, respectively, whereas revenue and segment adjusted EBITDA increased by 23% and 27% respectively. In all cases versus Q3 2002.
In Brazil, our second largest market with 7388 towers macro conditions were largely positive as FX rates held steady and interest rates came down.
While inflation did go up Q on Q, we saw it tick back down again in October.
In our Latam segment overall Q3, 'twenty three organic revenue increased 15% driven primarily by an increase from ice systems fiber deployment and Escalations segue.
Segment adjusted EBITDA grew by 27% in the quarter with a segment adjusted EBITDA margin of 73, 6%, a 240 basis point increase.
In the maintenance segment towers tenants grew by 10, 1% and 10, 6% respectively. In Q3, 2003, and revenue grew by 13%, including seven 4% organic revenue growth.
Segment adjusted EBITDA grew by 35% in the quarter with segment adjusted EBITDA margin of 52%, reflecting the increased revenue and a decrease in cost of sales.
On to slide 14, and I'll briefly highlight our Kpis as of September 30th our tower Count was 39739 up north of 9% from the same period last year, driven primarily by ongoing new sites in Latam in sub Saharan African segment.
As you can see in the chart on the top right collectively we built over 400 towers during the third quarter of 2023, and as we continue to see the ramp up and build through the quarters of 2023 to achieve the full year target of approximately 1250 newbuild sites.
Titled Tenants grew two 3% with the Colocation right at $1 four nine times up slightly versus last year.
We continue to point out the lease amendments are a significant factor for us, particularly in our Nigerian segment, given the historic <unk> and now increasing <unk> activity. We are seeing these.
These amendments increased by over 17% year on year.
On slide 15, we look at our capital structure and related items.
September 32023, we had approximately $4 one $4 billion of external debt and <unk> 16 lease liabilities of $4. One $4 billion of debt 194 billion represent a bond financings and other indebtedness increased $370 million that we drew down in 'twenty to 'twenty two from the 600.
Million three year bullet timeline at the IHS holding limited level.
However in October we reduce the available undrawn commitments as Sam mentioned under this term loan by $100 million now down to $130 million and extended the availability period of this undrawn balance to April 2024.
Cash at the end of the group Rcs has increased from $270 million to $300 million in the quarter and in November we extended the maturity of this facility from March 2025 to October 2026.
There are currently no amounts outstanding under either the <unk> or the local currency all CF, we have in Nigeria.
Additionally, during the quarter in Brazil, we should debentures for $1 2 billion Reais approximately $238 million at the amortize semi annually until maturity in August 2031.
The proceeds of the issuance of the debentures were used to repay in full the existing principal debt of $714 million.
Which is approximately $142 million.
As well as for general corporate purposes.
This Brazilian local currency refinancing extended the maturity of the outstanding debt and reduced the interest rate versus the prior debt.
Cash and cash equivalents was essentially flat at $425 million at September 30, and in terms of where that cash is held approximately 15% of the total cash was held in naira Aside Nigeria business.
Consequently from all these moving elements at the end of Q3 dollars 23, a consolidated net debt was approximately $3 7 billion and our.
Holiday <unk> net leverage ratio was three two times up <unk>, one times from June and still at the low end of our net leverage target range of three to four times.
Demonstrating our strong balance sheet.
However, similar to what we said last quarter I would note that in the light of the Nigeria devaluation, we do expect leverage to tick up slightly more into the first half of 2024.
Moving to slide 16, we are maintaining our guidance for revenue adjusted EBITDA and Capex. However, we are replacing our Lf CF guidance with ILS CF.
Although we have retained guidance in absolute terms, we have reduced our expectations for the naira for the fourth quarter to 775 naira to the dollar from the previous $750 to the dollar.
As a result, we now expect to be at the low end of the range for adjusted EBITDA We.
We also expect to be at the low end of the range for Capex, but this is more a reflection of proactive decisions, we are making to curtail our spend and that will continue into 2024.
Our <unk> guidance is the same range. We previously had for our FCS. However, it includes an approximate $8 million benefit in terms of the difference in calculation, which offset the otherwise FX headwind, we expect to see in adjusted EBITDA.
As a reminder, we expect to see a step up in revenue in Q4, 'twenty three as we see the full benefits of our FX resets tied to the Nigerian devaluation that began in mid June.
Guidance also continues to include approximately $25 million in power pass through revenue in South Africa of which we have recognized $13 million through Q3.
Do want to again caution that timing of such moves is difficult to predict and could be delayed. Although we do not anticipate that this will impact adjusted EBITDA or Lf CF.
For the year, we now expect to build approximately 1250 towers. This includes an additional 50000, Nigeria invest that previous guidance.
And on slide 17 on the top you can see revenue by reporting currency for Q3 dollars 23, whereas in the Boston, we provide the breakout of revenue based on contracts slip.
The right side shows the average annual FX rate assumptions used in our 2023 guidance and has been updated since last quarter.
This equates to $11 million downside for the year versus rates assumed last quarter.
And that 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 as a reminder for those on the phones press star one to raise your hand.
We will now post briefly while we register questions in the queue and die Rostov.
Your first question comes from the line of Greg Williams from TD Cowen Your line is open.
Great. Thanks for taking my question.
My questions are really around.
The migration of MTN over American tower, it sounds like it's becoming a reality and I'm. Just wondering if you are preparing for this migration and what the impacts would be in the past I think in order to its $45 million a quarter, but back then the narrow was at 508 and with the <unk> just hoping for an update on the exposure the impact and how it ramps out.
And sunsets in 'twenty, five and beyond and the second question is just how practical is it to move 2500 towers.
In a short timeframe and the risk is how much further can MTN go as you think about your contracts with the Ivory coast in Rwanda, and Zambia, and if there's a threat. They could go further from here. Thanks.
Hi, Greg.
Sam Thanks for the question.
Many questions.
Maybe let me try to dissect them.
Into late May.
Maybe two or three categories.
I'll start by talking about probably the materiality to the business going forward.
I mean look even if they successfully moved these currencies, which are which is very question and Doug will talk about in a second if it's still not material to the business.
Around 60000 tenants across 45 of the group and these 2500 tenants in Nigeria Bad deal represents 4% of the total towers, maybe 78% of our group revenue.
And the majority.
All of the other renewals with MTN, Nigeria are coming up in 2029 and beyond the average tenure of our contracts over seven years with many beyond 2030. So we feel good about that part and given our organic growth rate, which has been more than 20% in Australia over the past three years will be.
Please that we can make up for the impact of these towers through our various commercial relationship.
Also I think it's important to note that the.
The market situation across all our markets Greg Craig is that we are.
Under serve as an important point because.
For example, we have more than twice the Sim cards.
Power in Nigeria, and mature markets like the United States.
Of villages remained without even cell phone coverage. This calls for more towers to be built even before we deal with issues like density requirements for <unk>, the increasing subscriber demand for capacity the quality of service expanding coverage. So we firmly believe that chapter of resources will continue.
Flows to growth and not to swapping towers from one operator to another so that's in terms of.
But the reality.
Now in terms of other renewals in other markets look outside Nigeria, many of our I mean in Nigeria in particular I need to highlight that we are the largest by far if you remember our closest competitor we have 16000 power our closest competitor has 8000 desktops.
Our size outside Nigeria, many of our other markets, even lack of credible alternative it may take time and engage negotiations, but we feel good about our prospects given the alternatives or actually lack of thereof to be more accurate. So that's on the on this market not in terms of the third party.
Sure.
Do we think that transition or that relocation is practical corporate market.
Sure.
Maybe let me start by addressing it.
From a different perspective, moving business from one tower operator to another global another globally is very rare.
And we have as affected one of the lowest customer churn for good reasons, so to better put this into perspective, maybe let's look at the United States and the situation. Many of you guys are familiar with during the 2016 2019 period when AT&T engaged in a very public dispute with the tower goes with public debt.
Elevations to most hours and legal action threats and this and that.
Over a two and a half year period, and after two and a half years period. If you look at the SEC filings they only moved.
<unk> 600 out of the 65000 power from one operator to another under 1% now this is the United States with its relatively advanced infrastructure and this is AT&T and 35 600 towers were moved in a period of two five years.
Now look at Nigeria by contract.
Unlike the United States, 95% of all power to Nigeria don't have even a connectivity to the grid and need power systems complex to run complex the bid and of course toward using the environment. Unlike unlike the United States also.
Eliminated local manufacturing and almost all of the materials, Greg need to be built for to build a tower and power systems will need to be imported into the country than unlike the United States. There are significant security logistical concern of transported and building without causing delays, causing additional costs, causing unnecessary headache.
Then you add the multiple levels of environmental and regularity permit very complicated permitting framework in Nigeria by the way that after all of this the process of relocating and optimizing the radio network itself that covers the millions of customers that are being served using these towers.
And they have to do it after they build this now.
Now remember again, we are the largest dollar provided in Nigeria was $16000 as I've said and the next nearest competitor has 8000. This means that if you are moving our unique to likely build.
Fashion portfolio of the new tower account, just simply co locate on existing power locations that you have so in a nutshell, Greg the resourceful empty AT&T and adopt relocating 500 600 sites over a two and a half year period in the United States. While this relocation project that has been suggested.
So just moving to 1500 and almost a year in Nigeria.
What do you say look this is why we are comfortable about where we are but again, we have to be respectful, we have to be mindful of our client relationships. We continue to engage and it's important to support our customers in every way possible. We are a service driven company, we understand that we believe that will continue.
To think this way.
Great. Thank you for the color Sam.
Your next question comes from the line of Philip Cusick from JP Morgan Your line is open.
Hi, guys. Thank you.
Can you quantify the expected revenue pickup in Nigeria for the contracted resets over the next couple of quarters I understand that it takes a little while on some of the contracts and what of those are happened quarterly versus annual Mega January 1st reset.
And then second you you mentioned.
The improved discussions with <unk> can you give us any more update on that relationship.
And it seems like you just covered everything you could sell on the MTN side. Thanks.
Hi, I'm sorry, the first part I would say as you rightfully case out of the contracts in Nigeria.
Our reset to a different points and the vast vast majority over 93% of the contracts are recessing quarterly and but some of them reset with a spot FX rates began in the quarter and some take an average of the preceding quarter. So the ones that we've seen reset in Q3 with the ones that.
The swaps on one July and then we will see another step up when those that take the average of the last quarter. We will reset again on the first of October take into account.
No.
Quarter of devalued not or rates.
We haven't quantified it, but obviously being the last quarter of the year, given we post nine months results.
<unk> three so far 90 now what our guidance is and you can pretty much see what step up is if I give you. An example on the fly right to EBITDA.
When you look at the results we posted so far three to nine months and look at the full year. The range is at 11 30 to 11 50, and if we use the bottom of that range, you're looking at EBITDA, just mathematically as $251 million.
So that's a snapshot of the $32 million, we just posted.
This quarter. So that gives you an ics just mathematically strikes my guidance of the sort of step up we would expect to see next quarter.
On the second question.
Regarding our shareholders.
Particular, the pre IPO shareholders.
We continue to talk is very important to talk to engage to communicate.
To note also that we are sticklers when it comes to the standards of our governance.
And we are always keen on ideas to improve the standards of governance and equally important. We're also keen on the idea that could help the value.
Can we gain share in the value of our exploration et cetera et cetera. So this is a good part of why we decided by the way for our company in the United States under the watchful eye of the United States Securities and Exchange Commission.
Very high bar lots of companies are global companies avoid because they don't want to be held accountable for such high standard not US now having said that our board of directors also that is made of industry bellwethers that also fiduciary duties to protect and safeguard the interest of our minority investors in our various clients is something we are.
Fast.
Hi, Bob So again.
I do acknowledge and it's important to keep talking in the dialogue and finding solutions with our pre IPO shareholders and hopefully reach.
We're right over time, but having said that also fell and in an environment, where the rising an already high interest rates are a problem for everyone, including public equities, including our peers, including our market. We have to remain focused on our business and the running of the business itself. I mean, we believe we have a very.
A resilient business we believe.
With strong.
We intend to keep strengthening the business and keep growing it but it is Indian businesses also demand alert Stuart alert and focused Stewart with.
We see our job as primarily running the business to the benefit of all shareholders and we intend to keep.
Most of our focus there.
Okay. Thank you.
Thanks Vic.
As a reminder to those on the phones press star one to raise your hand and joined the queue and your next question comes from the line of brick Selman from Goldman Sachs. Your line is open.
Thanks, a couple of questions. So you made the comments about a portfolio review and it sounded like you were discussing it within the context of being more focused on where you would deploy capital. So it's a big capital projects, but I'm curious whether the portfolio review is broader and navy looks into whether they are assets you could sell.
Monetize whether it's markets or just yet unique pieces of the portfolio. I saw you had some assets held for sale and your sub Saharan African markets and I wasn't entirely sure with the context on that was and then <unk>.
<unk> of the answer one way or the other you would have more excess capital either because you were spending less on capital projects or perhaps generating capital and selling assets.
Or would you go ahead and prioritize that that additional capital would it mostly go towards further strengthening the balance sheet or could that be something that could fund the buyback program, which still has a lot of capacity Andre. Thank you.
Thanks, Brett.
Look Brett.
I think the important part is again, our main focus at the moment the business the balance sheet, making sure basically that we remain as resilient as we've always been now having said that again will always said, we are extremely mindful of where the share the share situation is.
And this company constantly reviews every option that is out there I mean, there is no stone that we want to leave unturned basic need to drive and get ourselves into a better place in terms of.
Exports into the world showing how undervalued, we believe our share is and in addition of course, maintaining and panelized keep moving along the lines of strengthening cash flow generation and our balance sheet. So I think going into details.
Unless things kind of like get decided and announced but.
All options are on the table to be honest and in terms of the extra cash that we will.
We hope to kind of like sure.
And then in achieved again all options are open we are constantly reviewing remember we are a growth company at core. So so we'll always review and look at potential growth opportunities, but every other option.
Loading potentially buybacks or other things are on the table.
Brian I'll, just add I think Paypal just Saturday keep in mind as we think about just one bucket of that question, which is the capex that we spend each year and whilst without getting into guidance for 2024 at this point in time and just remember that in the last couple of years and we'll spend in excess of $600 million per year on a variety of projects growth.
Towers fiber project Green and some of those things will have a different flavor next year project Green as we know was a heavy spend in 2022 and 2023.
It will be a much lighter spend in 2020 for purely because of the program that we've announced publicly and likewise with Tau as a viable good really thinking about.
They.
Gross versus cash generation and cash preservation and within the business such that it would make the right decisions and again as Tom said trying to generate maximum value for shareholders.
Thank you.
Your next question comes from the line of Michael Rollins from Citi. Your line is open.
Thanks, and good morning.
Two questions if I could the first is you mentioned and referenced that you have low churn in the business was just curious if you could articulate what those churn rates look like for the company.
As well as for any of the key geographic regions.
And then secondly, just taking a step back just curious if you can remind us.
Where you have common ground with MTN, and Wendell and where there are differences in perspective, and if any of those differences have evolved changed.
Over the last few months as we're just trying to.
Appreciate the kind of the background to the situation. Thank you.
As Mike said the SaaS one.
Good.
As you know the guidance increase.
Revenue growth, but it is an offsetting factor principally because it's quite small.
We've been discussing with you and others for a while.
In the quarter just gone it was certainty.
The base of 60000 tenants.
70.
In prior quarters, sometimes it's one hundreds sometimes 150, sometimes is next to zero. So that showed rates over a period of time of this sort of 1%, maybe even sub 1%.
And then when you look at Allstate JV those tenants are.
That tends to be on what we call the non key customers, we define key customers in our disclosure material.
Top tier customers, who represent most of 90% to 93% of our revenue base and actually the majority of the shares that we do see albeit small comes out of the non key customers.
Sure.
On the second question.
Mike.
Again.
I've spoken about that few minutes ago, our shareholders in particular, our pre IPO shareholders fund MTN have been vocal about the governance requirements.
Which on this side, we perceive more as efforts to change the balance of influence.
Between.
Then in the us and the post IPO shareholders and given that one of them. In particular is a client is actually a large client this as a substantial complexity to the situation. So there's demand the requirements are a clear it's a complex.
Discussion.
We'll report Mike.
Brokerages.
If I could just follow up with one more.
In the past.
On this call you referenced.
Different actions that the company is trying to take to improve shareholder value.
Is there a higher level set of goals or four principles that you want to.
Bring into the company to continue to.
<unk>.
Create forward progress on that goal.
<unk> improved shareholder value is there anything that you've been able to simplify or.
Determining the best course, if you do.
<unk> three things this can have the best results for shareholders.
And Mike I'll, maybe I forgot that.
We expect on this call and previously around resolving the matters with MTN is better on the shareholders' side, we're very cognizant of that and we've also been.
Bit more forthcoming on this call around how we're going to look at Capex on the organic side of capital deployment.
I'd say youre starting to see some things conservative we'll continue adding to over time, a recognition of where we are as a business within our markets will stay within the globe within the wells incentive.
The macroeconomic situation that everybody is facing and so those are just a couple of the initial elements of thinking that youre starting to see more of.
We're looking forward to pushing those couple of initiatives forward.
And then as we continue progressing as Tom said, a few months ago.
Compared to border constantly Saint Kate and nobody is happy with how the company is valued today and we're constantly thinking about ways that we can look to improve upon that and then we will communicate on those as and when they become announced.
Absolutely.
But don't forget.
We have multiple.
Issues, we're dealing with we are.
The global macro situation, which is not conducive.
Our concentration in Nigeria, which we trying to kind of like full four or diversified hall.
Relatively.
Some elevated client concentration, which also needs to be addressed.
In addition to all of these we have daily trading situation, which I'm happy to say that has improved.
As I said earlier, our daily trading volume tripled almost tripled over the past.
So moving in the right, but there are multiple issues that we need to deal with and we're trying to deal with each of these in a different way in terms of the trading for example, we have recently removed all lockouts on all shareholders.
We announced a potential buyback now.
Advisory just 65, a small part of it but again, we need to be mindful of how do we allocate our capital so that our initiatives to address basically the various levels of why do we see the share price is undervalued and we may come back with other things on different.
On some of these other different.
Its challenges, but again Rome was not built in a day and we need to be thoughtful and careful especially navigating this.
The challenging global and shareholder.
Tuition.
Thank you.
Thanks, Mike.
That brings us to the end of the IHS holding limited third quarter 2023 earnings results call should you have any questions. Please contact the investor relations team via the E Mail address investor relation at IHS towers Dot com.
The management team. Thank you for your participation today and wish you a good day.
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Yes.
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