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LONDON - IHS Towers, a leading global provider of shared telecommunications infrastructure, has solidified its partnership with MTN Nigeria by renewing and extending all tower Master Lease Agreements (MLAs) in Nigeria until the end of December 2032. This move affects approximately 13,500 tenancy contracts, including the renewal of 1,430 tenancies due to expire by 2025.
The agreements underscore the critical nature of IHS Towers' infrastructure in supporting mobile connectivity, particularly for MTN Nigeria, the nation's largest mobile network operator with roughly 79 million subscribers. The revised contracts introduce new financial terms aimed at a more balanced division between local and foreign currencies, along with a novel diesel-linked component designed to mitigate the impact of diesel price fluctuations and foreign exchange volatility.
Financial specifics of the deal reveal a USD component with annual escalators tied to the US Consumer Price Index, a NGN component linked to the Nigerian Consumer Price Index, and the new diesel-indexed component. This strategic arrangement reflects the companies' commitment to navigate the challenges of emerging markets and expand mobile connectivity in Nigeria.
Sam Darwish, Chairman & CEO of IHS Towers, expressed satisfaction with the agreement, emphasizing the importance of the extended partnership with MTN Nigeria and the company's role in enabling mobile connectivity through its infrastructure.
IHS Towers, listed on the New York Stock Exchange (NYSE:IHS), is one of the world's largest independent owners and operators of shared communications infrastructure, with nearly 40,000 towers across ten markets focused on emerging economies.
In other recent news, IHS Holding reported mixed first-quarter results for 2024, with the company's financial performance affected by the Naira devaluation. Despite these challenges, the company has managed to maintain solid organic growth and is on track to potentially sell assets valued between $500 million and $1 billion within the next 12 months. This strategic review aims to streamline operations and improve the company's financial position. TD Cowen has revised its outlook on IHS Holding, reducing the price target to $13 from $15, while maintaining a Buy rating for the company's shares.
Additionally, IHS Holding reported a steady first quarter in 2024, achieving 35% organic growth and adding 270 tenants along with 523 lease amendments. The company also signed a new agreement with Airtel in Nigeria and renewed leases with MTN in Zambia and South Africa. Despite the devaluation of the Nigerian Naira, the company expects better results in the second quarter due to foreign exchange resets.
InvestingPro Insights
In light of IHS Towers' MLA renewals with MTN Nigeria, it's worth noting the company's current financial health and market performance based on real-time data from InvestingPro. A glance at the company's recent activity suggests a challenging environment, with significant price drops over various timeframes. The stock has experienced a one-week total return of -9.19%, a one-month return of -14.33%, and a staggering three-month return of -34.94%, indicating a bearish trend.
Despite these figures, an InvestingPro Tip highlights that the company's valuation implies a strong free cash flow yield, which could be seen as a positive signal for investors looking for potential value. Moreover, analysts have predicted that IHS Towers will be profitable this year, which could provide a silver lining against the backdrop of recent price declines. However, it's important to note that the company has not been profitable over the last twelve months, and analysts anticipate a sales decline in the current year.
InvestingPro Data further reveals a market capitalization of $856 million, with a negative P/E ratio reflecting the company's past unprofitability. On the operational front, IHS Towers maintains a substantial gross profit margin of 46.7%, although revenue growth has decreased by 8.36% over the last twelve months.
For readers interested in a deeper dive, there are additional InvestingPro Tips available on the platform that can provide more nuanced insights into IHS Towers' performance and outlook. These tips could be particularly valuable for investors considering the company's strategic moves and its potential for recovery and growth in the dynamic telecommunications infrastructure sector.
For further details and to access more tips, visit InvestingPro's IHS Towers page at https://www.investing.com/pro/IHS.
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