EM CEEMEA CREDIT: IHS Towers: Q3 Earnings

(IHS; NR/B+/B+)

• Supportive read for credit sentiment. London HQ, Nigeria focused tower business IHS Towers posted Q3 earnings, showing organic growth and a deleveraging trajectory. In secondary markets, IHS seasoned bonds have tightened some 50-60bp over the quarter to date, in line with higher rated, smaller footprint and similarly levered peer Helios Towers (see chart below).
• Operationally, Q3 shows tenancy ratio sit at 1.48x, with tenancies approaching 58k for just over 39k towers, a small up when adjusting for disposal of Kuwait ops. For context, Helios Towers posted a higher and rising 2.16x tenancy ratio for Q3.
• Rev’s are +8.3% y/y at USD455.1mn on organic growth (despite impact from disposal of Kuwait ops) and reversals of FX impact in Nigeria, adj. EBITDA is reported +6.3% y/y at USD261.5mn, with margin at 57.5%. Net profit at USD147.4mn. Cash from ops is +42.3% y/y at USD259.6mn on favourable changes in W/C and positive contribution from Op. Inc. Capex consumption was up 16.3% y/y at USD77.3mn (mainly Nigeria), but lower y/y tax and interest dents. FCF reached USD157.8mn, +81.2% y/y. 

• Net leverage stands at 3.3x, within lower end of target at 3.0-4.0x. FY guidance has been confirmed.