Brazil And Africa 5G Expansion Will Boost Telecom Infrastructure

Key Takeaways

• Focus on high-growth emerging markets and advanced technologies is driving operational efficiency, margin expansion, and improved profitability.
  
• Strategic contracts and industry outsourcing trends bolster revenue stability and recurring growth despite macroeconomic volatility.
  
• Currency volatility, customer churn, asset disposals, industry disruption, and high leverage collectively threaten revenue stability, growth prospects, and financial flexibility.

Catalysts

Develops, owns, and operates shared communications infrastructure in Nigeria, Sub-Saharan Africa, the Middle East and North Africa, and Latin America.

• Robust double-digit organic revenue growth is being driven by increasing mobile data demand and ongoing 4G/5G network expansion across emerging markets, leading to higher occupancy and more frequent lease amendments-which supports top-line growth and earnings visibility.
  
• The company's streamlined portfolio, focusing on high-growth markets like Brazil and select African countries, enhances operational efficiency and reduces exposure to low-growth or overly concentrated geographies, helping drive scalable margin expansion and more predictable free cash flow.
  
• Integration of advanced technologies (particularly AI) and green power solutions is expected to further lower operating costs and improve profitability over time, contributing to both higher net margins and better cash conversion from EBITDA.
  
• Multi-year, strategic contracts with large MNOs and mechanisms like quarterly FX resets and power indexation add resilience to currency and inflation headwinds, leading to more stable revenues and protecting EBITDA margins despite local macro volatility.
  
• The industry-wide trend towards infrastructure outsourcing and colocation continues to boost tenancy rates, supporting recurring revenue growth and stronger ROI per tower-an accelerating tailwind as telecom carriers shift investments toward asset-light models.

IHS Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming IHS Holding's revenue will grow by 3.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from -2.6% today to 15.4% in 3 years time.
• Analysts expect earnings to reach $296.5 million (and earnings per share of $0.69) by about July 2028, up from $-45.5 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.4x on those 2028 earnings, up from -45.0x today. This future PE is lower than the current PE for the US Telecom industry at 15.8x.
• Analysts expect the number of shares outstanding to grow by 0.68% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.25%, as per the Simply Wall St company report.

IHS Holding Future Earnings Per Share Growth

Risks

• Continued currency devaluation and foreign exchange volatility in IHS's key markets, especially Nigeria, represent a persistent risk-Naira depreciation of 14% YoY in Q1 '25 already weighed on top-line results and ongoing FX fluctuations threaten to erode revenue and net margins even when contract resets and indexation mechanisms are in place.
  
• Ongoing customer consolidation and churn among major tenants, exemplified by MTN Nigeria's planned vacation of 1,050 sites in 2025 and site churn in renewals, increase exposure to contract renegotiations and concentration risk, potentially leading to lower recurring revenue, heightened earnings volatility, and reduced occupancy rates.
  
• The program of asset disposals (recent exits from Kuwait, Peru, Egypt, and now Rwanda) streamlines operations but also shrinks the revenue and EBITDA base, puts greater dependency on fewer geographic markets, and may limit future growth potential if not offset by strong organic expansion-potentially impacting long-term revenue and earnings growth.
  
• Structural industry shifts like increased adoption of network-sharing, emergence of new connectivity technologies (such as satellite internet or small cell 5G/6G), and evolving regulatory landscapes could diminish demand for traditional macro towers, making some assets less relevant and directly pressuring future revenue streams and asset utilization.
  
• Elevated leverage, substantial outstanding bond and debt liabilities (approximately $4 billion debt, 3.4x leverage), and high capital expenditure needs for ongoing upgrades/build-outs heighten refinancing and liquidity risks, especially if macroeconomic instability or rising interest costs worsen-impacting future cash flow, cost of capital, and ultimately net margins.

Valuation

• The analysts have a consensus price target of $8.457 for IHS Holding based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $17.0, and the most bearish reporting a price target of just $5.5.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.9 billion, earnings will come to $296.5 million, and it would be trading on a PE ratio of 12.4x, assuming you use a discount rate of 8.2%.
• Given the current share price of $6.1, the analyst price target of $8.46 is 27.9% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.