IHS Towers, the largest telecom tower operator in Africa, has successfully acquired a $439 million loan to improve its financial flexibility and manage currency risks across its regions of operation. This new financing consists of two tranches: $255 million in U.S. dollars and 3.2 billion South African Rand, strategically balancing its exposure to foreign exchange fluctuations.
Loan Structure and Purpose
The new five-year bullet-term loan carries an interest rate of 4.50% on both tranches. However, the USD tranche is indexed to the three-month SOFR (Secured Overnight Financing Rate), while the ZAR tranche follows the three-month JIBAR (Johannesburg Interbank Average Rate), reflecting the market volatility associated with these currencies. Bullet loans like this require full repayment at the end of the term, granting IHS immediate access to capital but demanding disciplined financial planning to meet the future lump-sum repayment.
A significant portion of this loan will refinance an existing $430 million debt, originally set to mature in 2025. By restructuring the loan early, IHS aims to secure favorable terms, reduce interest costs, and extend its repayment timeline. According to the company, the transaction is considered “leverage neutral,” meaning it will not increase the debt-to-equity ratio, ensuring the company maintains financial stability.
Strategic Moves Amid Challenges
The loan aligns with IHS Towers’ strategy to reduce exposure to currency risks, especially considering Nigeria’s recent currency devaluation, which has negatively impacted the company’s profit margins. The company had to lay off 100 employees in mid-2024 and reported an increased loss of $1.9 billion in 2023, compared to $469 million the year before.
To counter these financial pressures, IHS has renegotiated contracts with key clients like MTN Nigeria to include payments in both USD and local currency while also adding provisions for diesel-related expenses. This dual-currency strategy mitigates future exchange rate risks and stabilizes revenue streams across different markets.
Outlook and Market Position
Rand Merchant Bank led the refinancing deal, supported by IHS Towers’ long-standing banking partners. The company aims to use this capital restructuring to maintain growth momentum across its multiple regions while handling fluctuating currency conditions. IHS remains committed to expanding its infrastructure services, especially in markets like Brazil, where it sees growth potential despite challenges in regions like South Africa.
With $12.3 billion in contracted revenues and expectations of improved profitability, IHS is positioning itself for sustainable growth. The strategic refinancing not only alleviates short-term financial pressures but also aligns with its broader operational goals