Wireless Rollout In Africa And Latin America Will Boost Demand

Key Takeaways

• Strong mobile data demand and digitalization drive revenue and margin growth, supported by focused technology upgrades and strategic lease management in key emerging markets.
  
• Enhanced operational efficiency and disciplined capital management boost free cash flow and earnings, creating flexibility for future shareholder returns.
  
• Reliance on few large customers, currency devaluation, elevated debt, and disruptive industry trends threaten earnings stability, growth prospects, and long-term competitive advantage.

Catalysts

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

• Sustained mobile data consumption growth and widespread smartphone adoption in key markets such as Nigeria and Brazil are driving higher leasing activity, colocations, and lease amendments, supporting double-digit organic revenue growth and underpinning future topline expansion.
  
• The ongoing transition to advanced wireless technologies (5G and ongoing 4G densification) across Africa and Latin America is increasing carrier pressure to improve service quality, resulting in accelerated infrastructure rollout and greater demand for IHS towers, further supporting revenue and tenancy growth.
  
• Digitalization across emerging economies is prompting operators to invest in additional equipment on existing sites, with CPI-linked escalators and consistent lease amendments leading to revenue resilience and improvements in operating leverage and margins.
  
• Operational efficiencies through technology adoption, AI, and disciplined cost controls continue to expand adjusted EBITDA margins, with management targeting further margin improvement-directly boosting net income and free cash flow generation.
  
• Proactive debt reduction and capital structure optimization have meaningfully lowered interest expense (average cost of debt down 100 bps), enabling rising ALFCF, creating optionality for future shareholder returns, and enhancing earnings growth.

IHS Holding Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming IHS Holding's revenue will grow by 4.1% annually over the next 3 years.
• Analysts assume that profit margins will increase from 6.4% today to 13.7% in 3 years time.
• Analysts expect earnings to reach $268.3 million (and earnings per share of $0.74) by about September 2028, up from $110.9 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $304.0 million in earnings, and the most bearish expecting $157.8 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.8x on those 2028 earnings, down from 21.9x today. This future PE is lower than the current PE for the US Telecom industry at 15.4x.
• Analysts expect the number of shares outstanding to grow by 0.69% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 7.9%, as per the Simply Wall St company report.

IHS Holding Future Earnings Per Share Growth

Risks

• Persistent and significant currency devaluation in core markets-especially Nigeria's Naira-could continue to offset reported revenue and EBITDA growth, leading to stagnant top-line results in USD terms and putting pressure on net income and earnings.
  
• Customer concentration risk remains elevated, as IHS relies heavily on a few large telecom operators (notably MTN) for revenues; any renegotiation, contract loss, or MNO consolidation could directly reduce revenue stability and compress net margins.
  
• Ongoing elevated leverage and substantial debt obligations, while decreasing, still constrain capital allocation flexibility; higher debt servicing costs or limited refinancing options may restrict investment in growth initiatives, undermining future earnings potential.
  
• Market trends such as industry consolidation among mobile network operators and greater infrastructure sharing may reduce long-term tenancy ratios on IHS's towers, potentially resulting in lower revenue per tower and squeezed EBITDA margins.
  
• Long-term risks from disruptive technologies (like satellite-based internet) or regulatory pressures (mandating infrastructure sharing or stricter energy/environmental compliance) could erode IHS's long-term competitive advantage, diminishing growth prospects and impacting revenue and free cash flow.

Valuation

• The analysts have a consensus price target of $9.212 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 $6.25.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.0 billion, earnings will come to $268.3 million, and it would be trading on a PE ratio of 14.8x, assuming you use a discount rate of 7.9%.
• Given the current share price of $7.23, the analyst price target of $9.21 is 21.5% 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.