Wendel : IHS Holding Limited Announces Third Quarter 2022 Financial Results

FOR IMMEDIATE RELEASE

IHS HOLDING LIMITED REPORTS THIRD QUARTER 2022 FINANCIAL RESULTS

CONSOLIDATED HIGHLIGHTS - THIRD QUARTER 2022

• Revenue increased 30.2% (or 23.1% organically) to $521.3 million
• Adjusted EBITDA was $274.7 million and Adjusted EBITDA margin was 52.7%
• Loss for the period was $52.5 million
• Cash from operations was $294.2 million
• Recurring Levered Free Cash Flow ("RLFCF") was $91.4 million
• Capital expenditures were $174.1 million
• Raise 2022 guidance for revenue by $20.0 million, Adjusted EBITDA by $10.0 million, and RLFCF by $10.0 million at the mid-point and reiterate 2022 capital expenditures ("capex") guidance

London, United Kingdom, November 15, 2022. IHS Holding Limited (NYSE: IHS) ("IHS Towers" or the "Company"), one of the largest independent owners, operators, and developers of shared communications infrastructure in the world by tower count, today reported financial results for the third quarter ended September 30, 2022.

Sam Darwish, IHS Towers Chairman and Chief Executive Officer, stated, "We had a strong quarter driven by continued secular demand, plus incremental recurring revenue and a one-timecatch-up payment after reaching agreement on certain contractual terms with a Key Customer. While resolution including the one-timecatch-up payment had already been assumed in guidance, we expected this to occur in 4Q 2022 opposed to this quarter. Based largely on the strong secular demand as well as additional upside from power revenue and lower withholding taxes, and despite a $11.1 million FX headwind vs. rates previously assumed in guidance, we are raising our 2022 guidance for revenue, Adjusted EBITDA, and

RLFCF.

During the quarter we also extended the maturity on our $270.0 million Group revolving credit facility from 2023 to 2025, and more recently in October 2022 we signed a new $600.0 million Three-YearBullet-Term Loan with which we have repaid the $280.0 million bridge facility and the $75.6 million USD tranche of our Nigerian credit facility. The remaining proceeds will initially be left undrawn and can be used for general corporate purposes. The new bullet-term loan will reduce our interest expense in 2023 and 2024, push out maturities and provide incremental capacity. We appreciate in today's macro environment it is important to be prudent and that having a strong balance sheet is critical. Furthering this point, as of September 30, 2022, our leverage remained at 3.1x or the low-end of our 3x-4x target.

In addition, on October 24, 2022, we announced our Carbon Reduction Roadmap (CRR). The CRR provides a comprehensive strategy for decreasing our emissions, including a goal to reduce the Scope 1 and Scope 2 kWh emissions intensity of our tower portfolio by ~50% by 2030. Under Project Green, the next significant step of our CRR, we expect to spend $214.0 million in capex towards these efforts between 2022 and 2024, including $110.0 million in 2022, and to deliver annual RLFCF savings of $77.0 million in 2025. This in turn is expected to generate an implied return on investment of 30%. We subsequently raised our 2022 capex guidance to $645-685 million (from $545-585 million), as we also narrowed the original range based on actual spend YTD."

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RESULTS FOR THE THIRD QUARTER 2022

The table below sets forth select unaudited financial results for the quarters ended September 30, 2022 and September 30, 2021:

				Three months ended
	September 30,	September 30,	Y on Y
		2022	2021	Growth
		$'000		$'000	%
Revenue	521,317		400,547	30.2
Adjusted EBITDA(1)	274,653		219,718	25.0
Loss for the period	(52,478)	(30,447)	(72.4)
Cash from operations	294,190		205,672	43.0
RLFCF(1)	91,400		73,575	24.2

1. Adjusted EBITDA and RLFCF are non-IFRS financial measures. See "Use of Non-IFRS Financial Measures" for additional information, definitions and a reconciliation to the most comparable IFRS measures.

Results for the three months ended September 30, 2022 versus 2021

During the third quarter of 2022, revenue was $521.3 million compared to $400.5 million for the third quarter of 2021, an increase of $120.8 million, or 30.2%. Organic growth was $92.4 million, or 23.1%, driven primarily by power indexation, escalations, lease amendments, foreign exchange resets and new colocations, as well as fiber and new sites. Revenue for the third quarter of 2022 also included $18.0 million of non-recurring revenue as a result of reaching agreement on certain contractual terms with a Key Customer in Nigeria. Aggregate inorganic revenue growth was $52.4 million, or 13.1%, for the third quarter of 2022 driven by I-Systems, GTS SP5 Acquisition, Stages 4 and 5 of the Kuwait Acquisition and the MTN South Africa Acquisition. The increase in the period was partially offset by the non-core impact of negative movements in foreign exchange rates of $24.0 million, or 6.0%.

Adjusted EBITDA was $274.7 million for the third quarter of 2022 compared to $219.7 million for the third quarter of 2021. Adjusted EBITDA margin for the third quarter of 2022 was 52.7% (third quarter of 2021: 54.9%). The increase in Adjusted EBITDA primarily reflects the increase in revenue discussed above including the non-recurring revenue, partially offset by an increase in cost of sales resulting from higher diesel costs in 2022 largely due to the current situation between Russia and Ukraine, and an increase in maintenance and repair costs alongside an increase in administrative expenses associated with being a public company.

Loss for the period was $52.5 million for the third quarter of 2022 compared to loss of $30.4 million for the third quarter of 2021. The loss for the period reflects the impact of an increase in net finance costs mainly due to an increase in realized and unrealized foreign exchange losses on financing, an increase in interest expense and the fair value loss on embedded options within the bonds due to the rise in treasury rates since the end of 2021 and market sentiment driven by events such as the current situation between Russia and Ukraine. The loss for the period is also due to an increase in cost of sales, including higher diesel costs and increased administrative expenses associated with being a public company, offset by the increase in revenue as discussed above and an increase in deferred income tax credit.

Cash from operations and RLFCF for the third quarter of 2022 were $294.2 million and $91.4 million, respectively, compared to $205.7 million and $73.6 million, respectively, for the third quarter of 2021. The increase in cash from operations primarily reflects the aggregate impact of the increase in revenue discussed above, including the non-recurring revenue, and net movement in working capital, partially offset by an increase in cost of sales and administrative expenses. The increase in RLFCF is due to the increase in cash from operations as described above, offset by the increase in lease and rent payments and maintenance capital expenditures.

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Segment results

Revenue and Segment Adjusted EBITDA:

Revenue and Segment Adjusted EBITDA, our key profitability measures used to assess the performance of our reportable segments, for each of our reportable segments were as follows:

				Revenue				Adjusted EBITDA
		Three months ended				Three months ended
	September 30,	September 30,			September 30,	September 30,
		2022	2021		Change	2022	2021			Change
		$'000		$'000		%		$'000	$'000		%
Nigeria	355,351		289,078	22.9	210,039	179,489		17.0
Sub-Saharan Africa	114,801		89,272	28.6	63,746	49,833		27.9
Latam	42,104		14,912	182.3	29,993	11,267		166.2
MENA	9,061		7,285	24.4	3,828	3,249		17.8
Other		-	-		-	(32,953)	(24,120)	(36.6)
Total		521,317		400,547		30.2		274,653	219,718			25.0

Nigeria

Revenue for our Nigeria segment increased by $66.3 million, or 22.9%, to $355.4 million for the third quarter of 2022, compared to $289.1 million for the third quarter of 2021. Revenue increased organically by $83.0 million, or 28.7%, driven primarily by an increase in escalations, power indexation, $18.0 million of non-recurring revenue as a result of reaching agreement on certain contractual terms with a Key Customer, as well as Lease Amendments, foreign exchange resets, new sites, colocation and fiber. The increase in organic revenue was partially offset by the non-core impact of negative movements in the Naira to U.S. dollar foreign exchange rate of $16.7 million or 5.8%. Year on year, within our Nigeria segment, Tenants increased by 601, including 656 from new sites, offset by 521 churned, while Lease Amendments increased by 3,620. The movement in Lease Amendments includes the reduction of 1,444 lease amendments during the quarter that are billed variably based on power consumption rather than a recurring use fee.

Segment Adjusted EBITDA for our Nigeria segment was $210.0 million for the third quarter in 2022 compared to $179.5 million for the third quarter of 2021, an increase of $30.6 million, or 17.0%. The increase in Segment Adjusted EBITDA primarily reflects the revenue discussed above and the decrease of regulatory permits accrual of $2.3 million due to agreement with the regulator on final regulatory fees to be paid, partially offset by the increase in cost of sales resulting from higher power generation cost and maintenance cost of $35.7 million and $1.1 million, respectively, and increase in administrative expenses within Segment Adjusted EBITDA of $4.8 million of which $2.5 million is staff costs.

Sub-Saharan Africa

Revenue for our Sub-Saharan Africa segment increased by $25.5 million, or 28.6%, to $114.8 million for the third quarter of 2022, compared to $89.3 million for the third quarter of 2021. Revenue increased organically by $2.8 million, or 3.1%, driven primarily by escalations, new sites and colocation. Revenue for our Sub-Saharan Africa segment also grew inorganically in the period by $29.7 million, or 33.3%, due to the completion of the MTN South Africa Acquisition. The increase in organic revenue was partially offset by the non-core impact of negative movements in foreign exchange rates of $7.0 million or 7.8%. Year on year, within our Sub-Saharan Africa segment, Tenants increased by 7,137, including 233 from new sites and 7,017 from the MTN South Africa acquisition in the second quarter of 2022, partially offset by 462 net churned, while Lease Amendments increased by 130.

Segment Adjusted EBITDA for our Sub-Saharan Africa segment was $63.7 million for the third quarter of 2022 compared to $49.8 million for the third quarter of 2021, an increase of $13.9 million, or 27.9%.The increase in Segment Adjusted EBITDA primarily reflects the revenue discussed above, partially offset by the increase in cost of sales resulting from higher power generation cost, maintenance, and security costs of $2.7 million, $3.6 million and $3.2 million, respectively, due to the increase in asset base and an increase in administrative expenses within Segment Adjusted EBITDA of $2.1 million, mainly as a result of an increase in staff costs of $1.1 million.

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Latam

Revenue for our Latam segment increased by $27.2 million, or 182.3%, to $42.1 million for the third quarter of 2022, compared to $14.9 million for the third quarter of 2021. Revenue increased organically by $5.4 million, or 36.1%, driven primarily by an increase in escalations, fiber, new sites and colocations. Revenue for our Latam segment also grew inorganically in the period by $21.9 million, or 146.6%, due primarily to the impact of the GTS SP5 Acquisition, as well as revenue from our fiber business, I-Systems. The increase in organic revenue in the period was partially offset by the non- core impact of negative movements in foreign exchange rates of $0.1 million, or 0.4%. Year on year, within our Latam segment, Tenants increased by 3,825, including 276 from new sites, and 2,998 from our GTS SP5 Acquisition in the first quarter of 2022.

Segment Adjusted EBITDA for our Latam segment was $30.0 million for the third quarter of 2022 compared to $11.3 million for the third quarter of 2021, an increase of $18.7 million, or 166.2%. The increase in Segment Adjusted EBITDA primarily reflects the revenue discussed above, partially offset by an increase in cost of sales included within Segment Adjusted EBITDA of $3.9 million, as a result of an increase in tower repairs and maintenance and site rental due to an increase in asset base year on year, and an increase in administrative expenses of $4.6 million mainly as a result of an increase in staff costs of $3.1 million.

MENA

Revenue for our MENA segment increased by $1.8 million, or 24.4%, to $9.1 million for the third quarter of 2022, compared to $7.3 million for the third quarter of 2021. Revenue increased organically by $1.2 million or 16.2%, and grew inorganically in the period by $0.8 million, or 10.8%. Year on year, within our MENA segment, tenants increased by 285, including 102 from new sites, and 140 and 43 from the closings of the fourth (in fourth quarter of 2021) and fifth stages (in third quarter of 2022), respectively, of the Kuwait Acquisition.

Segment Adjusted EBITDA for our MENA segment was $3.8 million for the third quarter of 2022 compared to $3.2 million for the third quarter of 2021, an increase of $0.6 million, or 17.8%. The increase in Segment Adjusted EBITDA primarily reflects the revenue discussed above, partially offset by an increase in cost of sales of $0.5 million from higher power generation cost of $0.2 million and an increase in administrative expenses included within Segment Adjusted EBITDA of $0.7 million as a result of an increase in staff costs of $0.3 million and in rent expenses of $0.2 million.

INVESTING ACTIVITIES

During the third quarter of 2022, capital expenditures were $174.1 million compared to $81.6 million for the third quarter of 2021. The increase is primarily driven by increases in capital expenditure in the Nigeria, Latam and Sub-Saharan Africa segments of $46.6 million, $22.8 million and $21.9 million, respectively. The increase in Nigeria was primarily driven by increases of $18.3 million from maintenance capital expenditure and $26.6 million from other capital expenditures, primarily related to our Carbon Reduction Roadmap, partially offset by a decrease in new site capital expenditures of $4.0 million. The increase in Latam is primarily driven by our fiber business capital expenditures of $22.0 million and an increase of $4.4 million of maintenance capital expenditures due to the acquisition of I-Systems. The increase in Sub-Saharan Africa was primarily driven by an increase of $14.6 million from South Africa due to refurbishment capital expenditure associated with the recent MTN South Africa Acquisition and $4.7 million from new site capital expenditure due to the increase in new site builds in other Sub-Saharan Africa markets. Our year-to-date spend for Carbon Reduction Roadmap was $42.4 million, including $26.7 million in the third quarter of 2022.

FINANCING ACTIVITIES AND LIQUIDITY

Below is a summary of facilities we have entered in to or amended during third quarter of 2022. Approximate U.S. dollar equivalent values for non-USD denominated facilities stated below are translated from the currency of the debt at the relevant exchange rates on September 30, 2022.

IHS Holding (2020) Revolving Credit Facility

In September 2022, in accordance with the terms of the agreement, the IHS Holding RCF termination date was extended for a period of two years after its original termination date to 30 March 2025.

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The Group ended the third quarter of 2022 with $3,764.8 million of total debt and $530.5 million of cash and cash equivalents.

FINANCING ACTIVITIES AND LIQUIDITY AFTER REPORTING PERIOD

Below is a summary of facilities we have entered in to or amended after third quarter of 2022. Approximate U.S. dollar equivalent values for non-USD denominated facilities stated below are translated from the currency of the debt at the relevant exchange rates on September 30, 2022.

IHS Holding (2022) Bullet Term Loan Facility

IHS Holding Limited entered into a $600.0 million term loan agreement on October 28, 2022, (as amended and/or restated from time to time, the "IHS Holding 2022 Term Loan").

The interest rate per annum applicable to loans made under the IHS Holding 2022 Term Loan is equal to Term SOFR, a credit adjustment spread plus a margin of 3.75% per annum. IHS Holding Limited also pays certain other fees and costs, including fees for undrawn commitments, arrangement fees and fees to the facility agent.

As of November 7, 2022, $370.0 million of the IHS Holding 2022 Term Loan was drawn. The majority of the proceeds of the drawdown were applied toward the prepayment of the IHS Holding Bridge Facility of $280.0 million (plus accrued interest) and the U.S. dollar tranche of the Nigeria 2019 Facility of $75.6 million (plus accrued interest and break costs). The undrawn portion can be applied toward general corporate purposes and is available for up to 12 months from the date of the agreement.

The IHS Holding 2022 Term Loan is denominated in U.S. dollars and is governed by English law.

Fiberco Soluções de Infraestrutura S.A. ("I-Systems")

I-Systems Soluções de Infraestrutura S.A. (formerly known as Fiberco Soluções de Infraestrutura S.A.) ("I-Systems") entered into a BRL 200.0 million (approximately $37.1 million) credit agreement, originally dated October 3, 2022 (as amended and/or restated from time to time, the "I-Systems Facility"). The I-Systems Facility has an interest rate of CDI plus 2.45% (assuming a 252-day calculation basis) and will terminate in October 2030. The facility was fully drawn down in October 2022.

On October 13, 2022, Itaú Unibanco S.A. provided an additional commitment in an aggregate amount of BRL 200.0 million (approximately $37.1 million) to the I-Systems Facility on the same terms, available in two tranches, the first to be drawn by January 31, 2023 and with an interest rate of CDI plus 2.45% (assuming a 252-day calculation basis), and the second tranche to be drawn by March 31, 2023 and with an interest rate of CDI plus 2.50% (assuming a 252-day calculation basis). Both tranches remain undrawn. Commitment fees of between 2.00% and 2.15% p.a. are payable quarterly on undrawn amounts.

Full Year 2022 Outlook Guidance

The following full year 2022 guidance is based on a number of assumptions that management believes to be reasonable and reflect the Company's expectations as of November 15, 2022. Actual results may differ materially from these estimates as a result of various factors, and the Company refers you to the cautionary language regarding "forward-looking" statements included in this press release when considering this information. The Company's outlook includes the impact of the GTS SP5 Acquisition from March 17, 2022 onwards and includes the impact from the MTN South Africa Acquisition from May 31, 2022 onwards, including $2.0 million of power pass through revenue. Guidance does not include revenue from the Egypt operations.

The Company's outlook is based on the following assumptions:

• Organic revenue Y/Y growth of approximately 17% (previously 15%)

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