IHS Towers increased first-half revenue as a stronger naira and higher sales supported results, but rising energy costs and expenses tied to its proposed sale to MTN Group weighed on profit. Revenue from continuing operations rose 8.2% to $844 million in the 6 months through June from $780.3 million a year earlier. Second-quarter revenue gained 10.4% to $428.6 million.
Power costs were the main pressure. IHS spent $205.4 million on power generation, mainly diesel, in the first half, up 24% from $165.4 million a year earlier. Diesel prices rose across Nigeria following increases in global energy prices. Operating income fell 38.4%, while the company reported a $7.5 million net loss in the second quarter compared with a $32.3 million profit a year earlier.
Costs linked to MTN's planned acquisition also affected earnings. IHS recorded $83.1 million in accelerated share-based payments and employee incentives related to the transaction and asset sales. Adjusted EBITDA still rose 2.6% to $514 million in the first half. A stronger naira added $40.7 million to second-quarter revenue and $22.6 million to adjusted EBITDA.
Underlying growth was weaker. Organic revenue declined 0.6% in the first half as new tenants, sites and lease changes were offset by lower foreign-exchange-linked revenue and site exits. About 1,050 sites were vacated under IHS's renewed agreement with MTN Nigeria. IHS operated 37,672 towers at the end of June, down 1,512 from a year earlier, with the sale of its Rwanda business accounting for most of the reduction.
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IHS is also exiting Latin America ahead of MTN's $8.50-a-share takeover. Shareholders approved the deal in August, with regulatory clearances still pending. IHS sold its stake in Brazilian fiber company I-Systems for $183 million and completed the sale of its Brazil and Colombia tower operations. It ended June with $1.5 billion of liquidity and $3.11 billion of borrowings.
Key Takeaways
IHS's results show why the MTN transaction comes at a point of change for the tower company. Revenue is growing, but part of that increase came from the stronger naira rather than more activity at its sites. Organic revenue fell 0.6%, while power generation costs rose by $40 million in 6 months. That matters because tower companies earn long-term lease income but must keep sites running regardless of diesel and electricity prices.
Higher energy costs can therefore reduce the benefit of revenue growth. IHS is responding by narrowing its footprint, selling Latin American and other assets and focusing on Africa, where MTN is already its largest customer. The takeover would bring a major tower supplier and tenant under the same group, giving MTN more control over infrastructure costs but ending IHS's run as an independent listed company. IHS's $1.5 billion liquidity position provides room to meet obligations, though $3.11 billion of borrowings remains on the balance sheet. The next issue is regulatory approval for the MTN deal. Until it closes, investors should watch underlying revenue, energy expenses and cash generation rather than headline sales growth. Those figures show whether the core African tower portfolio is improving before ownership changes.
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