IHS Holding Limited: Navigating Currency Fluctuations in Q3 2024

IHS Holding Limited, a leading independent owner, operator, and developer of shared communications infrastructure, recently reported its third quarter 2024 financial results. The company demonstrated resilience in the face of currency fluctuations, particularly the devaluation of the Nigerian Naira, by implementing strategic measures to mitigate the impact on its revenue.
In Q3 2024, IHS Holding's revenue decreased by 3.5% quarter-on-quarter and 10.0% year-on-year. However, the company's organic growth, which includes foreign exchange ("FX") resets and escalations, helped offset the impact of the 52.0% devaluation of the Nigerian Naira ("NGN"). This strategy allowed IHS Holding to maintain a strong financial performance, with adjusted EBITDA increasing by 3.3% year-on-year and reaching an adjusted EBITDA margin of 58.5%.
The devaluation of the Nigerian Naira has significantly impacted IHS Holding's revenue growth in Nigeria specifically. In Q3 2024, the average FX rate for the U.S. dollar to the Naira was 1,601, compared to 1,392 in Q2 2024, leading to a $36 million revenue headwind quarter-on-quarter. Year-on-year, the devaluation was even more pronounced, with the average rate dropping from 768, resulting in a $265 million revenue headwind. Despite these challenges, IHS Holding's revenue decreased by only 10.0% year-on-year, highlighting the company's resilience and the mitigating effect of FX resets and escalations.

IHS Holding Limited has implemented several strategies to mitigate the impact of the Nigerian Naira devaluation on its revenue. Firstly, the company has leveraged foreign exchange ("FX") resets and escalations, which are captured within organic growth, to help offset the 52.0% devaluation of the Nigerian Naira ("NGN"). This has allowed the company to mitigate the impact of the devaluation on its revenue, which decreased by 10.0% year-on-year, but increased by 49.0% organically. Additionally, the company has continued to grow its revenue from Colocation, Lease Amendments, and New Sites, which has partially offset the initial impact of the new financial terms in the renewed and extended contracts with MTN Nigeria. These strategies have enabled the company to maintain a strong financial performance, with adjusted EBITDA increasing by 3.3% year-on-year and reaching an adjusted EBITDA margin of 58.5%.
In conclusion, IHS Holding Limited's third quarter 2024 financial results demonstrate the company's ability to navigate currency fluctuations and maintain a strong financial performance. By implementing strategic measures such as FX resets and escalations, IHS Holding has successfully mitigated the impact of the Nigerian Naira devaluation on its revenue. As the company continues to adapt to changing market conditions, investors can expect IHS Holding to remain a resilient and competitive player in the shared communications infrastructure sector.