IHS Holding Ltd has begun to shrink its physical footprint while squeezing more cash from its remaining assets, marking a strategic shift ahead of its planned $6.2 billion sale to MTN Group, according to its latest earnings report.
The Africa-focused tower operator reported modest revenue growth for 2025, but a deeper analysis of its financials shows a company moving away from expansion and towards cash optimisation, even as underlying demand shows signs of pressure.
Revenue from continuing operations rose 3.6 percent to $1.58 billion for the year, while fourth-quarter growth slowed to just 1.2 percent. However, organic revenue, which strips out currency movements, declined in the final quarter, pointing to weakening underlying performance.
The company’s turnaround to a net profit of $126.8 million from a loss of $1.64 billion a year earlier was driven largely by reduced foreign exchange losses and lower financing costs, rather than strong operational growth.
That distinction is critical, analysts say, because it suggests that much of the improvement is tied to macroeconomic factors, particularly currency movements in Nigeria, rather than a rebound in demand for tower infrastructure.
Read also: MTN to absorb 2,762 IHS staff in $2.2bn deal, as telcos rethink tower dependence
Shift from growth to efficiency
The clearest sign of the shift lies in IHS’s operational metrics. The total number of towers fell to about 37,600, down by more than 1,600 year-on-year, while the number of tenants dropped by over 4,400.
The decline reflects both asset disposals and customer churn, including the exit of thousands of tenancies linked to contract changes and the sale of operations in markets such as Rwanda.
Despite the shrinking footprint, IHS increased the number of lease amendments, a measure that reflects upgrades and additional equipment installed on existing towers. This suggests the company is focusing on extracting more value from each site rather than building new ones.
The company’s colocation ratio, a key efficiency metric that measures how many tenants share each tower, declined slightly, indicating that efficiency gains are not fully offsetting tenant losses.
Cash flow improves but momentum slows
IHS reported strong cash generation for the full year, with operating cash flow rising nearly 27 percent to $983 million and free cash flow jumping 47 percent to $448 million.
However, quarterly figures point to emerging pressure. Operating cash flow in the fourth quarter fell by more than a quarter, while free cash flow declined by about 19 percent, reflecting higher interest payments and increased spending on maintaining existing sites.
Capital expenditure also fell for the year, reinforcing the view that the company is scaling back investment in new infrastructure. Instead, spending is increasingly directed at maintaining and upgrading existing assets.
This tightening of investment aligns with broader strategic moves, including the disposal of non-core businesses and the planned sale of the company to MTN.
FX drives performance
Currency movements, particularly in Nigeria, played a significant role in shaping IHS’s results.
Foreign exchange gains added tens of millions of dollars to both revenue and earnings, offsetting what would otherwise have been a decline in underlying performance.
Nigeria, the company’s largest market, accounted for a significant portion of these gains. However, this also increases the company’s exposure to currency volatility, a longstanding risk in the market.
In the fourth quarter, foreign exchange effects boosted revenue by nearly 10 percent, masking a drop in organic revenue.
Regional pressures emerge
Outside Nigeria, performance was more mixed. Revenue in other Sub-Saharan African markets grew modestly, but profitability declined, as rising energy costs and regulatory pressures weighed on margins.
Diesel prices, a key cost driver for tower operators that rely on generators to power sites, remain a major source of volatility.
The company has exited the Middle East and North Africa region entirely and is continuing to streamline its portfolio, focusing on markets where it sees stronger long-term returns.
Balance sheet clean-up
IHS also made progress in reducing its debt burden, with total borrowings declining and leverage improving to 3.1 times earnings before interest, tax, depreciation and amortisation (EBITDA), from 3.7 times a year earlier.
The company ended the year with more than $800 million in cash and has not drawn on available credit lines, suggesting a cautious approach to liquidity management.
These moves are widely seen as part of efforts to strengthen the balance sheet ahead of the MTN transaction.
Read also: IHS Towers’ profit squeeze forces asset sales as MTN steps in to absorb $4.8bn debt burden
Valuation signals limited growth
The agreed $6.2 billion enterprise value for the MTN deal implies a multiple of roughly six times EBITDA, a level that suggests the market views IHS as a stable but low-growth infrastructure asset.
That valuation reflects both the company’s strong cash generation and the challenges it faces, including currency volatility, customer concentration, and slowing organic growth.
Looking ahead
IHS did not provide financial guidance for 2026, citing the pending transaction with MTN. The absence of an outlook further underscores the extent to which the company’s future is now tied to the deal.
For now, the numbers paint a clear picture: IHS is generating more cash, carrying less debt, and focusing on efficiency, but it is doing so while shrinking its footprint and facing pressure on underlying growth.
As the MTN acquisition moves forward, the key question will be whether this leaner, more cash-focused model can sustain performance in a volatile operating environment, or whether the recent improvements will prove temporary.
For investors and industry watchers, the message is that the turnaround is real, but it is being driven as much by financial and strategic repositioning as by fundamental growth.
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