Our target price of $8.75 is based on the average of the following three methods: Our DCF analysis incorporates revenue rising to $2.5 billion by 2030 and that adjusted cash EBITDA (EBITDAaL) margins expand to 53%.

Based on the financial model contributions and a WACC of 13% (using a target debt-to-total-capital ratio of 10%), we arrive at an operating EV of $5.6 billion. From this, we subtract year-end 2025E net debt of ($2.4 billion) and non-controlling interest of ($181 million) to derive an equity value of ~$3.1 billion, or $9.09 per fully diluted share.

On an EV/TGPaL basis (tower gross profit after leases), we value IHS shares using a 5x multiple on our 2025 estimate. We prefer to consider tower gross profit multiples in valuation because they can be better compared with other transaction multiples by the strategic tower companies that have the overhead to support local operations. This method supports an implied EV/EBITDAaL of 6.1x. This method yields a value of $8.75 per share.

We believe that IHS shares should trade at 7x our 2025E AFFOPS, yielding a value of $8.13 per share.

We rate IHS shares High Risk given the high degree of exposure to emerging markets.


Risks to our thesis and target price for IHS include: Emerging market exposure risk and specific risks to its operations in the African continent broadly, and Nigeria specifically, that include regulatory, currency, market structure, variability to energy prices, and possible complications to upstream/export cash from local in-country operations back to the holding company. We also believe risks for IHS include disclosure-related risks given the specific differences between IFRS and GAAP accounting presentations, as well as the specific format of disclosures that IHS provides that differ from other tower companies we cover. IHS also faces operating execution risk in the existing markets as well as in new markets in which the company enters. Tower industry risks include: Revenue and profitability is subject to the capital and maintenance budgets of wireless telecom carriers and broadcast providers. Investment risks include: Wireless customer carrier consolidation or customer distress could reduce colocation revenues for IHS, which could meaningfully dilute its profitability and value given the high-operating leverage associated with tower revenues. Also, IHS relies on a small number of customers for a large portion of its revenues, while high financial leverage creates sensitivity to any rapid rise in interest rates.

Also, if IHS is not able to upstream cash at either a reasonable cost or at all, it may create a risk of financial distress that could substantially reduce the value for equity holders. We also see risks that the company is unable to execute on recent transactions or that carrier customer consolidation within its markets picks up. The limited float could also create added share price volatility if and when the float increases, while a small percentage of float could also limit investor interest.

Other risks to valuation include unexpected shifts in investor sentiment, substantially higher Treasury rates, or the risk of a stronger US dollar versus IHS local currency exposures, including the possible risk that the currency in Nigeria could be at risk for episodic market devaluations.