IHS (IHS) Q3 2025: Organic Revenue Climbs 9% as Brazil and Nigeria Drive Growth
IHS delivered its strongest quarter since 2023, propelled by nearly 9% constant currency organic revenue growth and robust execution in Brazil and Nigeria. Management raised full-year guidance on the back of FX tailwinds, disciplined cost control, and accelerating cash generation, while signaling an imminent shift in capital allocation as leverage approaches the low end of the target range. Investors should watch for upcoming updates on shareholder returns and further portfolio streamlining as IHS positions for sustained growth in its core markets.
Summary
- FX Tailwinds Fuel Outlook Raise: Stronger Naira and Brazilian Real underpinned guidance uplift and margin resilience.
- Brazil and Nigeria Anchor Organic Growth: New site rollouts and lease amendments offset churn and asset disposals.
- Capital Allocation Pivot Nears: Management signals dividends or buybacks as leverage approaches target floor.
Performance Analysis
IHS posted consolidated revenue of $455 million in Q3 2025, with constant currency organic growth approaching 9%—a notable achievement given asset disposals and ongoing site churn in Nigeria. The company’s adjusted EBITDA reached $261 million with a margin of 57.5%, reflecting continued cost discipline despite higher power and admin expenses in Africa. Cash generation accelerated, with adjusted leverage free cash flow (ALFCF) up over 80% year over year, fueled by a lower interest burden post bond refinancing and operational improvements.
Segment dynamics were mixed but constructive. Nigeria, the largest contributor, delivered 5% organic growth despite MTN churn and NineMobile site reductions, while LATAM (primarily Brazil) led with 11% organic growth and margin expansion of 560 basis points. Sub-Saharan Africa saw double-digit revenue gains but modest EBITDA contraction due to normalized regulatory fees. Capex rose 16% year on year, largely to support Nigerian maintenance and augmentation, and leverage fell to 3.3x, not yet reflecting $175 million in Rwanda sale proceeds received post-quarter.
- Organic Growth Outpaces Churn: Net 1,652 new tenants added after adjusting for disposals and churn, demonstrating underlying demand.
- FX and Indexation Dynamics: Revenue benefited from Naira and Real appreciation, while lower diesel prices reduced power indexation but also cut costs.
- Balance Sheet Strengthens: Net leverage declined 0.6x year over year, now at the lower end of the 3-4x target, with liquidity topping $950 million pre-Rwanda proceeds.
Overall, IHS is executing well on its organic growth and deleveraging playbook, with disciplined capital deployment and a clear path to shareholder returns as the portfolio is streamlined.
Executive Commentary
"Our top-line momentum is strong, our focus on profitability is yielding results, our cash generation is accelerating, and we continue to deliver the balance sheet as planned. Looking ahead, our priorities remain clear: maintain our focus on reducing debt while driving continued organic growth, remain disciplined in capital allocation, and as we near the lower end of our leverage target, consider introducing dividends and or share buybacks."
Sam Darwish, Chairman and Chief Executive Officer
"We’re really pleased with our third quarter results, which again came in ahead of expectations with positive operating and financial progress supported by the continued favourable macroeconomic environment in Nigeria. We expect our leverage to be three times to 3.1 times by the end of the year. That obviously goes into the wider capital allocation question, which we will update fully at the year end results."
Steve Howden, Chief Financial Officer
Strategic Positioning
1. Core Market Focus and Portfolio Optimization
IHS is doubling down on its two largest markets, Nigeria and Brazil, as the primary engines of growth. The company exited non-core assets like Kuwait and Rwanda, redeploying capital and management attention to regions with higher returns and scalable demand. Management is also open to further disposals, with a disciplined lens on value creation and capital recycling.
2. Organic Growth Engines: Lease Amendments and New Sites
Organic growth is underpinned by CPI-linked escalators, new co-locations, and a surge in lease amendments, particularly in Nigeria and Brazil. The recent agreement with TIM in Brazil (up to 3,000 new sites) and ongoing Airtel rollouts in Nigeria illustrate a multi-year runway for tenancy expansion as 5G densification accelerates. These drivers are offsetting churn from contract renewals and customer consolidation.
3. Capital Allocation and Shareholder Returns
With net leverage approaching the low end of the target range, IHS is preparing to pivot toward direct shareholder returns. Management flagged the possibility of dividends and share buybacks in early 2026, pending further deleveraging and debt maturity management. Growth capex will remain targeted, with Brazil identified as a priority for incremental investment given its robust telecom sector fundamentals.
4. Technology and Efficiency Initiatives
Efficiency gains are a strategic priority, with management emphasizing the integration of technology and artificial intelligence into operations to drive margin resilience and cash conversion. Cost controls remain central, particularly in power management and regulatory expense containment, supporting the company’s margin and free cash flow objectives.
Key Considerations
IHS’s Q3 performance highlights a business at an operational inflection point, with macro, execution, and capital structure levers all working in its favor. The company’s ability to sustain organic growth while managing churn and executing disposals will be critical as it transitions to a more shareholder-focused capital allocation strategy.
Key Considerations:
- FX Sensitivity Remains High: Revenue and margin outlooks are increasingly tied to Naira and Real strength, amplifying translation risk.
- Churn Management in Nigeria: MTN and NineMobile site reductions are largely one-off, but ongoing vigilance is needed as carrier strategies evolve.
- Portfolio Rationalization to Continue: Management is actively evaluating further asset disposals to sharpen focus and unlock capital.
- Shareholder Returns on the Horizon: With leverage targets in sight, direct capital returns are likely in 2026, pending year-end review.
- Brazil as a Growth Anchor: The TIM rollout and sector tailwinds position LATAM as a multi-year capex and earnings driver.
Risks
Macro volatility in Nigeria and Brazil, especially currency swings and inflation, could materially impact reported results and cash flows. Churn from major customers, while currently described as one-off, remains a latent risk if market dynamics shift. Regulatory changes, power cost fluctuations, and refinancing execution are additional watchpoints as IHS manages a complex, multi-jurisdictional capital structure.
Forward Outlook
For Q4 2025, IHS guided to:
- Continued organic revenue growth, supported by CPI escalators and new site deployments
- Adjusted EBITDA margin stability, with further cost efficiencies expected
For full-year 2025, management raised guidance:
- Revenue: $1.72 to $1.75 billion (up $20 million from prior)
- Adjusted EBITDA: $995 million to $1.015 billion (up $10 million)
- ALFCF: $400 to $420 million (up $10 million)
Management highlighted:
- FX assumptions are more favorable, especially for Naira and Real
- Power indexation benefit will be lower, but offset by reduced diesel costs
Takeaways
IHS is executing a disciplined growth and deleveraging strategy, with strong organic performance in its core markets and a clear roadmap to shareholder returns.
- Organic Growth and Margin Resilience: Underlying demand in Brazil and Nigeria is driving revenue and EBITDA, offsetting churn and disposals.
- Capital Allocation Pivot: With leverage nearing the lower bound, dividends and buybacks are on the table for 2026, contingent on year-end review.
- Watch for Execution on Disposals and Capex: Further asset sales and targeted growth investments, particularly in Brazil, will shape the next phase of value creation.
Conclusion
IHS’s Q3 2025 results underscore a business entering a new phase of maturity. With organic growth drivers intact and capital structure optimized, the company is poised to transition from balance sheet repair to capital returns. Investors should monitor upcoming year-end capital allocation updates and execution on Brazil’s growth opportunity.
Industry Read-Through
IHS’s results highlight a supportive macro and sector backdrop for emerging market tower operators, with CPI-linked escalators and 5G densification driving multi-year growth in core markets. FX volatility and churn management remain sector-wide risks, but disciplined capital allocation and portfolio optimization can unlock shareholder value. Peers with exposure to Brazil and Nigeria may see similar tailwinds, while those lagging on cost control or portfolio focus could face margin compression and strategic drift.