IHS Towers, the world’s fifth-largest multinational tower company, experienced significant financial dependence on a limited number of key customers in 2024, with MTN Nigeria and Airtel Nigeria comprising 57% of its revenue. Despite securing long-term agreements with wireless operators, IHS reported a revenue decline to $1.7 billion in 2024 from $2.1 billion in 2023, primarily influenced by Nigeria, which contributed 58.3% of its total earnings.
Economic challenges in Nigeria, such as the sharp devaluation of the naira, heightened inflation, and other financial uncertainties, pose risks to IHS Towers’ growth and profitability. Currency devaluation, coupled with regulatory changes, could impact its core customers’ financial stability and their capacity to meet lease obligations, putting additional pressure on IHS Towers.
Operational Challenges
Managing rising operational costs has been another challenge for IHS Towers. Expenses related to power generation, maintenance, and security have increased, with power generation representing the highest portion of its cost of sales at 39.2% in 2024. This is up from 33.5% in 2023, amounting to $348 million spent on power. In response, IHS Towers invested in hybrid energy solutions to mitigate high energy costs, deploying a combination of diesel, solar, and battery systems across its sites to improve efficiency.
Financial Demands and Expansion
- Expanding its network is financially demanding, with costs for building new towers in Africa reaching between $50,000 to $100,000.
- Access to financing and foreign exchange remains constrained, complicating expansion efforts.
While IHS continues to maintain its position as a leading independent tower operator in its markets, its heavy reliance on Nigeria and a narrow customer base highlights vulnerability. The company’s future growth will significantly depend on its ability to diversify its customer base and manage economic pressures in its key markets.
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