IHS Holding Limited (INFO) Q4 2021 Earnings Call Transcript

IHS Holding Limited (NYSE: INFO) Q4 2021 earnings call dated Mar. 15, 2022

Corporate Participants:

Colby Synesael — Senior Vice President, Communications

Sam Darwish — Chairman, CEO and Director

Adam Walker — Executive Vice President and Chief Financial Officer

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Analysts:

Bora Lee — RBC Capital Markets — Analyst

Phil Cusick — J.P. Morgan — Analyst

Greg Williams — Cowen — Analyst

Michael Rollins — Citi — Analyst

Simon Coles — Barclays — Analyst

Brett Feldman — Goldman Sachs — Analyst

Presentation:

Operator

Good day, and welcome to the IHS Holding Limited Results Call for the three-month period and full year ended December 31, 2021. Please note that today’s conference is being webcast and recorded. [Operator Instructions]

At this time, I would like to turn the conference over to Colby Synesael. Please go ahead, sir.

Colby Synesael — Senior Vice President, Communications

Thank you, operator. Thanks also to everyone for joining the call today. I’m Colby Synesael, the new SVP of Communications here at IHS. With me today are Sam Darwish, the Chairman and CEO of IHS Towers; Adam Walker, CFO; and Steve Howden, Deputy CFO.

This morning, we published our financial statements for the three-month period and fiscal year ended December 31, 2021 on the Investor Relations section of our website and issue to related earnings release presentation. These are the consolidated results of IHS Holding Limited, which is listed on the New York Stock Exchange under the ticker IHS, which comprises the entirety of the Group’s operation.

While we discuss the results, I would like to draw your attention to the disclaimer set out at the beginning of the presentation document on Slide 2, should be read in full along with the cautionary statement regarding forward-looking statements set out in our earnings release and annual report on Form 20-F. In particular, the information to be discussed may contain forward-looking statements, which by nature, involve known and unknown risks, uncertainties and other important factors, some of which are beyond our control that are difficult to predict and other factors which may cause actual results, performance or achievements, or industry results to be materially different from any results, future results, performance or achievements, or industry results expressed or implied as such forward-looking statements, including those discussed in the Risk Factors section or 20-F part of the Securities and Exchange Commission today and our other filings with the SEC. We’ll also refer to non-IFRS measures that we view as important in assessing the performance of our business. Reconciliation of non-IFRS metrics, the nearest IFRS metric can be found in our earnings presentation which is available on the Investor Relations section of our website.

And With that, I’d like to turn the call over to Sam Darwish, our Chairman and CEO.

Sam Darwish — Chairman, CEO and Director

Thanks, Colby. Welcome everyone. Thanks for joining our Q4 and the financial year 2021 earnings results call. The second such call following our listing on the New York Stock Exchange last October. Welcome also to Colby who just joined us at the start of March. Today, I’m going to run through our 2021 highlights, an amazing year for IHS, and also touch on how we are building a global digital infrastructure company that we believe will deliver long-term growth and value creation for our shareholders. I will also discuss how our focus on sustainability with respect [Phonetic] to our business model, a focus that has been at the heart of IHS since I founded the company in 2001, then I will turn things over to Adam and Steve to take you through the results in greater detail, after which we will open the line for Q&A.

Slide 4 of the presentation highlights IHS key accomplishments in 2021, many of which occurred during the fourth quarter, a very exciting time for us. As the leading independent multinational tower company focused only on emerging markets, IHS ended 2021 with over 31,000 towers, spanning nine countries on three continents. We continue to focus intently on executing our organic and inorganic growth strategy, including our objective to further diversify our asset base and lower our cost of capital. And we are pleased with the multiple steps we have taken recently in support of this strategy.

With our current-and near-term growth driven largely by the implementation of 4G in our main market of Nigeria and Brazil, we are very happy to see that 5G is not on the horizon as well. And our recent acquisitions are all designed to position IHS to benefit from the coming technological transition. In addition to our October IPO on the New York Stock Exchange that brought new equity capital and public shareholders into the company, IHS executed a successful $1 billion bond offering and refinancing in November, which lowered our cost of debt and cost of capital. In terms of entering new geographies, IHS also undertook several important steps in Q4 to diversify into attractive market in a disciplined fashion.

In October, we entered Egypt through a license partnership and we are in discussions with the carriers there regarding commercial opportunities. More significantly, in November we announced an agreement to acquire approximately 5,700 towers in South Africa from MTN, which will make IHS the leading independent tower source in Africa’s most advanced economy. Together, Egypt and South Africa have over 160 million in total population. These two transactions further — the transactions further cement IHS stature as the leading tower company on the African continent as we will now be serving the three largest economies and importantly, 5G starting to become a reality in our market. Nigeria just recently started issuing spectrum and South Africa is expected to do that shortly. In Brazil, where 5G spectrum has also just been auctioned, we closed the TIM Fiber transaction early in November to create I-Systems, a leading fiber company in Brazil. The transaction further builds upon our entry into LatAm, which included the acquisitions of Skysites and and Centennial Brazil and Colombia earlier in 2021.

Moreover, we have continued our Brazilian growth in 2022, as we announced an agreement in January to acquire the GTS SP5 portfolio of more than 2,000 towers that complements our existing tower portfolio. When GTS closes imminently, IHS will have over 7,000 towers and a fiber network in LatAm in just over two years following our strategic entry there.

I’m also delighted with the financial performance of the Group in 2021. In financial year ’21, we delivered 12.6% reported growth and 16.1% on an organic basis versus financial year ’20. Demand for communications continues to grow globally and our two principal customers in Nigeria again announced strong results this past quarter, driven particularly by data update. In 2021, IHS added 3,236 net towers, including 1,348 we constructed ourselves, as well as 3,550 tenants and 9,141 new lease amendment. Moreover, we expanded our EBITDA margin in 2021 versus ’20, even in the face of rising — rising energy prices versus the lows of 2020.

Overall, we remain pleased regarding our financial position and the significant opportunities ahead of us. Although as you will hear from Adam and Steve, we are focused on mitigating the impact of the increased macro volatility we are seeing in our markets in the form of higher energy prices, upward inflationary pressures, rising interest rates and supply chain disruptions, also to mention the increased global political uncertainty from Russia’s invasion of Ukraine. As for COVID, while we have experienced no material financial impact from it, we remain vigilant regarding its potential impact. On this front and beyond, we continue to broaden and deepen our commitment to sustainability through numerous initiatives that I will discuss shortly in greater detail.

I mentioned earlier that I would discuss some of the steps we are taking to build a world-class global company in the digital infrastructure, so I wanted to highlight some of the senior members of the IHS team who have joined us recently as we work to take our company to the next level. As you heard, Colby Synesael joined us two weeks ago from Cowen Senior Vice President of communication to direct our Investor Relations and Communications program and serve on the Executive Committee. Cobly was most recently the number two ranked research analyst in the communications infrastructure sector in the U.S., where he covered American Tower, SBA, Crown Castle’s, among other top companies. We anticipate participating in more investment events to enable investors to become familiar with the team, our company and our strategy, and we look forward to continuing to engage with investors.

Furthermore, Bill Bates joined IHS at the start of 2022 as Senior Vice President and Chief Strategy Officer, and a member of the Executive Committee. Bill will be responsible for the Group’s organic and inorganic strategy, running the M&A and commercial functions, while complementing previously announced transition to CFO, starting April the 1st upon Adam’s retirement. Bill brings over 20 years experience in the telecommunication sector and was instrumental in driving international growth throughout the emerging markets for SBA Communications during his 15 years of it.

Finally, I’ll be remiss if I didn’t specifically thank Adam Walker, our CFO on this, his last earnings call before his retirement on March 31st, ending an executive career during which he has served as Group CFO for 20 years consecutively, culminating in his contribution to IHS during the last five years with us. Adam was instrumental in building out a public company level, corporate reporting and finance function on a global scale and guiding IHS through our multiple bond issuances and the recent IPO, as well as serving on the Executive Committee. I congratulate Adan on his retirement, of course, and welcome Steve to the role of the CFO.

Turning to Slide 5, IHS entered its 21st year of operations in a strong position and firmly focused on executing its strategy of becoming the world’s leading digital infrastructure company targeting emerging market. I mentioned the South African and GTS acquisitions on last slide, but saved the punch line for here. I’m proud to say that pro forma for the anticipated closure of these transactions, IHS will become the third largest independent multinationals tower company globally by tower count based on the current market with nearly 39,000 towers across 11 countries in Africa, LatAm and the Middle East, that collectively serve over 760 million people. Not only we are the largest multinational tower for the solely target emerging markets on a global level, IHS will be pro forma the market leading independent tower source in 8 out of our 11 countries and then the third largest in Brazil.

Our commitment to Africa is a strong as ever, as you can see from the South African deal, but we are also excited to be further building upon our successful 2020 entry into LatAm and MENA as demonstrated by the size, [Indecipherable] I-Systems, and GTS transactions in LatAm and our entry into Egypt, of course. The markets in which we operate have attractive population growth and rely on wireless for connectivity, but are behind the developed world in terms of wireless technology. The majority of our markets are still rolling out 4G, although 5G is now out there on the horizon in several key markets for us, which is exciting news for us in terms of future organic growth opportunity.

Nigeria, today, for example is only 41% 3G, 4G penetrated, although in December the country conducted its first auction of 5G spectrum to enable the winning carriers to begin to develop the technology locally. We expect to see proof of concept type rollout in 2022, which we already have ordered, with commercial rollout beginning in 2023 and onwards. In Brazil, we also saw 5G spectrum allocation take split in November, where the three key carriers TIM, Vivo, and Claro each secured 5G spectrum, as people would have seen more recently that all mobile breakup has now received regulatory and competition approval and has enhanced the way for the three carriers to integrate that carrier consolidation. We believe this will provide further momentum in the communications infrastructure landscape in Brazil. And while we have de minims mobile exposure, we believe the all mobile breakup will pave the way for the remaining carriers to reinvigorate the rollout plan now that they know the shape of the respective network. These wireless technology trends drive our organic growth prospects as we provide colocation, lease amendments and new sites [Indecipherable].

On Slide 6, I wanted to highlight our historical growth and summarize our strategy. As you can see, our long-term revenue target through 2021 is nearly 12% in dollar terms and our EBITDA CAGR is over 19%, reflecting the attractive growth drivers in our markets I mentioned earlier as well as our diversification program starting in 2020. As I have noted before, our business model is very similar to the U.S. towerco [Phonetic] model, while our emerging market footprint provides us access to attractive secular growth going forward. There are two critical elements of our strategy.

First, we will continue to grow organic, focusing on leasing up our existing tower through colocation and improving margins through lease amendments as our customers and new technologies support their offering. We are fundamentally a towers business, but we plan to continue to enhance our revenue to other services such as fiber, data centers, [Indecipherable] towers, rural, in other words ancillary telecom infrastructure that fits our business model and our return expectations and helps us further embed with the customers by providing solutions they need.

Second, we continue to look to diversify our asset base through adding new portfolios of tower as our diversification strategy is aimed at growth. We’re also lowering our group cost of capital. We understand that investors would prefer to see Nigeria as a smaller portion of our overall business, but this won’t happen overnight as Nigeria has its own very strong growth characteristics, which we love and we are, and will be disciplined in executing — in executing our inorganic growth strategy. Broadly, we look to acquire towers from the carriers as we have done successfully in the past, also by existing tower as we have also done several times, also enter new market by focusing on BTS for carriers as we have, as we are doing in Egypt at the moment. Communications infrastructure is a huge landscape of opportunity and we believe that there are very, very few other companies that are focused on emerging market globally as we are.

Finally me on Slide 7. I mentioned that our focus is not just on financial performance, but also on sustainability, which is at the core of our business. First and foremost, we believe that our business model is inherently sustainable and that we deliver shared infrastructure solutions that promote digital connectivity and inclusion and improve the lives of the communities we serve. This encourages greater access to education, healthcare and financial and government services, while the infrastructure sharing reduces the environmental footprint of the telecom landscape in our geography. Imagine the potential differences in the lives of the inhabitants of a small village in Nigeria after gaining access to the Internet and what that could mean for improving their well-being as they access such services. Not to mention the potential positive environmental impact from increased telecommunications and less driving. It can feel that sometimes in the ESG doesn’t receive as much attention from others compared to the E, for example, but is the crucial focus of ours and it benefits delivered by our business model.

In 2021 and Q4, we continue to advance our ESG efforts on multiple fronts across our markets, delivering numerous initiatives devoted to education, healthcare infrastructure and combating COVID-19 as we have been doing for many years. We are also gratified to have been recognized on multiple occasions for this work in our communities. Importantly, in September we launched the frontline workers initiative, a program through which we will pay for the entirety of a college education at a top school for the qualifying children of those of our employees who have worked so hard during the pandemic to maintain the towers and network performance in such a difficult period. We recognize their effort. We already have students enrolled in the program across seven universities at the moment and I believe that education is empowering and life-changing, and through this initiative we are creating opportunities that simply do not exist for many children in our market. I’m very, very proud about this project in particular.

Furthermore, I’m pleased to highlight that in January 2022 we expanded our partnership with UNICEF to the group level, announcing a three-year international partnerships to support the Giga objective to map the internet connectivity of all schools worldwide. Through this three-year partnership with UNICEF, which also includes a contribution of $4.5 million, the IHS team work closely with Giga to help strengthen its work, mapping schools and their connectivity levels on an open source map using machine learning and satellite imagery.

Importantly, on the environmental front, we have continued evolving the analysis of our Scope 1 and Scope 2 greenhouse gas emissions in connection with developing a carbon emissions reduction strategy as we anticipate announcing in 2022, investing further to replace diesel generation where we can with the latest renewable technology not only makes environmental sense to reduce our CO2 emissions, but it will also make smart business sense in terms of our desires to drive opex and capex out of the business. We look forward to sharing our progress on this topic with you later this year.

As I believe strongly and I have said repeatedly in emerging markets there is no way you can become a fail unless you operate as a long-term sustainable business, you need to be accretive to your environment as the resources around are limited. This is not a tick the box exercise for us, but it’s something that I’m very passionate about. I look forward to sharing our fourth annual annual sustainability report with you in Q2, and to future announcements in this area.

And with that, I will turn the presentation over to Adam and Steve, who will walk you through the results.

Adam Walker — Executive Vice President and Chief Financial Officer

Thanks, Sam, and hello everyone. Today, I will cover our key tower tenant and lease amendment KPIs and discuss our revenue EBITDA and RLFCF [Phonetic] results for the year just ended. Turning to Slide 8, as mentioned, the business performed really well in 2021, and you can see our towers, tenants and lease amendments have all increase versus the prior year. Moreover, IHS delivered double-digit growth in both consolidated revenue and adjusted EBITDA in 2021 versus 2020, whilst expanding our EBITDA margins and our recurring levered free cash flow grew by 8% versus the prior year. Our level of investments in capex to grow the business organically increased by over 75% and given our high levels of cash generation, our consolidated net leverage ratio has decreased versus the prior year despite the inorganic activity.

Turning to Slide 9, our tower count is now over 31,000, up by over 3,000. This was driven largely by our acquisitions in LatAm and the ongoing new signed programs there as well as the new site activity in Nigeria, with both new build programs accounting for most of more than 1,300 towers that we built during the year, 597 of which in Nigeria and 600 in LatAm. Please note that unlike the U.S., our markets have characteristically pay minimis. Therefore, tenants grew 8.3% year-on-year to 46,440 with the colocation rate of 1.5. Two things to remember in relation to the colocation, right, which we define as total number of tenants divided by the total number of towers.

First, lease amendment, which are a significant factor in the growth in our Nigerian segment are not included. Second, when you are a significant acquirer and builder of towers as we are, they you are typically adding to the denominator period on period even as we continue to lease up the more mature parts of our portfolio. We see no reason why we can’t get to 2 times or greater on our overall portfolio over the long term as our more mature portfolios of towers currently are. Lease amendments increased by over 50% year-on-year as our customers added equipment to their size, particularly 3G and 4G upgrade in Nigeria.

On Slide 10 you can see our consolidated revenue for both Q4 and full year ’21. In the full year and in Q4, IHS delivered both double-digit reported and organic revenue growth. Full year ’21 reported revenue of almost $1.6 billion grew by 12.6% and full year organic revenue growth was 16.1%. It has been another strong year for top line growth led by Nigeria and LatAm. As a reminder, in the chart we have call out the $24 million of revenue recognized in Q2, ’21, which although normal course of business as previously discussed, nevertheless inflated the usual quarterly run rate. Overall, we continue to grow well in line with our stated objective of seeking double-digit revenue growth on an annual basis in dollar terms and Steve will shortly discuss our guidance on this metric and others for 2022.

Slide 11 has the components of our revenue growth. Organic revenue growth was driven primarily by lease amendment, escalations and FX reset, as well as new colocations in new site, with the escalations and FX reset together more than offsetting the negative FX impact of 6%. Inorganic growth was 2.4% and included the Skysites, Centennial and TIM Fiber acquisitions in LatAm, and the acquisition of an additional 162 sites in Rwanda and 193 in Kuwait, pursuant to our 2020 purchase from [Indecipherable], all of which we’ve previously discussed. The Q4 comparison which is shown in your appendix shows our organic revenue growth up 14.5%, inorganic growth of 3.2% and a negative 5.6% impact from FX.

Slide 12 covers adjusted EBITDA and adjusted EBITDA mark. In the full year, we generated strong consolidated adjusted EBITDA and margins, although these results were impacted by higher power generation costs as we anticipated and have discussed previously as well as incremental costs associated with our transition to a public company like. Adjusted EBITDA in the full year was $926 million, a 13.1% increase from 2020 and adjusted EBITDA margin was 58.6%, up from 58.4% last year. Again, we point out, but this year includes a $61 million impact in Q2 relating to the $24 million revenue I just mentioned and a $37 million debt reserve release that again we previously disclosed.

The increase in adjusted EBITDA primarily reflects the increase in revenue, partially offset with year-on-year increases in cost of sales mainly due to higher power generation costs and increased staff costs and professional fees. Power generation cost of sales increased by $51 [Phonetic] million primarily in our Nigeria segment due to a 32% higher U.S. dollar-denominated cost of diesel as well as a 14% year-on-year increase in overall consumption resulting from increased tenants and lease amendment activity. We continue to mitigate the pressure of the increase in oil prices by forward buying where possible, looking at both international and local suppliers, as well as prioritizing alternative sources of power solutions to reduce our overall dependency on diesel. More to come from Steve shortly on powerful and thoughts for 2022 given the recent increase in crude prices. In terms of Q4, we generated adjusted EBITDA of $217 million, a 0.9% [Phonetic] increase, adjusted EBITDA margin decreased to 52.1% from 57.9% due to the concentration in the quarter of the increased public company costs and also higher power generation costs.

And on Slide 13, we review our recurring levered free cash flow which we report in a manner consistent with our U.S. peers. We generated RLFCF of $406 million in full year ’21, an increase of $31 million or 8.4%. But this does include the $61 million positive impact that I’ve just called out. While adjusted EBITDA was higher for the year as discussed, this growth was partially offset by $19 million increase in revenue withholding tax due to higher revenue growth in Nigeria. Higher these payments to support growth and higher taxes due to expiring tax credit. It also includes high interest cost from the new bond we issued in Q4 and an increase in the Nigerian education tax rate. Our RLFCF cash conversion was 43.8%.

In terms of Q4, RLFCF was $88 million, a decrease from the prior period, driven largely by the timing of maintenance capex incurred in Q4 ’20, as well as higher lease payments in the current period resulting from the assets acquired during 2021. Additionally, interest was impacted negatively by $10 million from our bond transaction in Q4 from early settlement of accrued interest on the prior bonds and the increased interest quantum on the new bonds. Our RLFCF cash conversion rate decrease to 14.4% [Phonetic] as a result.

And with that, just as I should be relinquishing all [Indecipherable] formally in two weeks time, let me pass the baton to Steve to take you through the rest of the presentation.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Thanks, Adam. On to Slide 14, you see the capex is $402 million in FY ’21, a 76% increase versus last year primarily due to us investing in the business for growth. Driving the increase was increased augmentation in new site capex in Nigeria in connection with lease amendments delivered for our customers and for our rural solution, as well as the increased new site capex in LatAm. Capex was $151 million in Q4, a 131% increase versus last year’s period in light of the same drivers just mentioned.

However, as we discussed on our Q3 call, we did under-spend in terms of capex during the year as a result of the global supply chain issues rippling across our market. Similar to companies around the world, we are seeing a slowdown in the supply chain continue into 2022, which we are trying to mitigate by ordering equipment earlier in some cases one to three months earlier. Financially speaking, this impact is small and has been factored into our guidance for FY ’22, but note from the continued uncertain macroeconomic world in which we live at the moment.

Slide 15 looks at average turns in capital allocation. In FY ’21, we continue to focus on driving our returns and delivered a return on invested capital of 11.2%. We invested significantly in both organic and inorganic growth opportunities during the year, including new site build investment in Nigeria and LatAm, closing and integrating acquisitions in LatAm, albeit with only partial contributions in the year from some of those acquisitions.

In terms of capital allocation, you can see on the right there is a significant portion of our FY ’21 spend of $401 million related to acquisition investment, and this was deployed to build upon our 2020 entry into LatAm. As I mentioned earlier, we believe the Brazilian business we have built through this acquisition and the forthcoming GTS transaction it’s very well positioned for the upcoming rollout of 5G, which commenced recently. Moreover, IHS continues to be a leading builder of new sites in the country, the 600 such site during the course of last year. Our investment in Nigeria also constituted much of the new site in discretionary capex last year given our large footprint in the country and the underlying growth opportunities in the market.

Turning to the segmental review on Slide 16, we look at our Nigerian business. The Nigerian macroeconomic environment in Q4 continued slight improvement with GDP growth coming in at about 3.4% in 2021. However, inflation increased 17% for the year versus 13.3% for 2020. And FX currency right ended Q4 at 435 [Phonetic] to the dollar, although it did normalize back to 415 since. Whilst FX reserves have increased to $40 billion at the end of the year from $36.5 billion at the end of Q3. As we know, Brent crude oil price has been moving significantly and that’s stood at $77 per barrel at the end of 2021, up nearly 50% from the end of 2020, which should ultimately have a beneficial impact for the Nigerian economy. Telecommunications remains an important part of the Nigerian economy, accounting for around 11.9% of GDP in Q3 last year.

Against this backdrop, our business once again delivered strong results tracking well on our key metrics. Top line growth continues to be driven by new site, by escalations, by colocation and by new lease amendment. Our tower count at the end of FY ’21 grew by 317 versus FY ’20, driven in part by the delivery of our new rural solution for major customer, although partly offset by planned decommissioning as well as de minimis churn. Our total tenant count increased by 3.2% for the year and our colocation rate was up 1.52 time. These amendments continue to be a strong driver of growth with these increasing by 52% year-on-year as our customers added additional equipment to our sites, particularly 3G and 4G upgrades.

Our improved operational performance is reflected in our Nigerian financial results, FY ’21 revenue of $1.5 billion increased 10.5% year-on-year on a reported basis and almost 19% on an organic basis. FY ’21 adjusted EBITDA was $784 million and almost 12% increase from the prior year period and adjusted EBITDA margin was 68.3%. Year-on-year increase is primarily due to the revenue growth, including the non-recurring items as described before, but partially offset by an increase in power generation cost of $51 million and an increase in the regulatory payment costs and security services of $13.8 million and $3.4 million respectively.

Slide 17 presents the results all of our other segment. In sub-Saharan Africa, towers and tenants were 7,878 and 13,416 at the year-end. Revenue and adjusted EBITDA was $344 million and $191 million respectively with an adjusted EBITDA margin of 55.4%. As we have mentioned, on LatAm and MENA segments are new as of February 2020 and we completed the three additional acquisitions in LatAm during the course of last year. As such, the year-on-year comparison reflects meaningful inorganic growth which we expect to continue in 2022 with the GTS acquisition.

In Brazil, our second largest market with 4,630 towers, macro conditions were somewhat neutral as FX rate and inflation stabilized but we have seen interest rates rising materially in Brazil. In our LatAm segment overall, towers and tenants were 4,909 and 5,961 at year-end and revenue and adjusted EBITDA was $6 million and $43 million respectively with adjusted EBITDA margin of 7.5%. In MENA, towers and tenants were 1,402 and 1,416 and 2021 revenue and adjusted EBITDA with $29 million and $13 million respectively with an adjusted EBITDA margin of 44.6%.

On Slide 18, we look at our capital structure. At 31 December, we had approximately $3 billion of external debt in IFRS 16 liabilities, up from year-end 2020 following our billion dollar bond offering in November. The offering IHS issued $500 million of 5.65% senior notes due 2026 and another $500 million of 6.25% senior notes due 2028, and we used a portion of the proceeds to refinance $510 million outstanding 7.125% senior notes. Consequently of the $3 billion of debt, $1.94 billion of our bonds and approximately $381 million senior credit facilities at our Nigeria segment.

We increased that group revolving credit facility to $278 million upon consummation of our IPO this past October. Cash and cash equivalents increased to $916 million at year end following the October IPO and the November bond transaction. In terms of where that cash is held, approximately $645 million was held in dollars almost entirely at the Group level, next up $81 million equivalent was held in Naira at our Nigeria business and the remaining cash was held in local currency across our other market, primarily Cameroon and Brazil.

In terms of upstreaming cash, during the year we up-streamed $171 million of cash from Nigeria to group, including $121 million of bond coupon payment with the total sourced at a weighted average rate NGN579 to the dollar. H2 sourcing accounted for $100 million of this and we have seen U.S. dollar availability in Nigeria tighten somewhat during the second half of the year and that’s continued into 2022, but that we are closely monitoring the situation and believe that the continued high oil price together with the $4 billion Nigerian Sovereign issue in September last year should lead to improved U.S. dollar availability later in 2022. As U.S. dollar supplies reduced in recent months, we’ve started look at sourcing larger amounts directly from our local banks using funded forward. We also continue to use non-deliverable forwards around the bond coupon payments, the hedge against Naira devaluation in the interim.

Outside of Nigeria, we up-streamed $4 million to $5 million of cash from our SSA segment during the year. Our consolidated net leverage was approximately $2.1 billion with a consolidated net leverage ratio of 2.2 times. While this is below our net leverage target range of 3 to 4 times, again indicating the strength of our balance sheet, this ratio would increase to approximately 3 times at the year end, pro forma for the payment of both the GTS acquisition and the related financing we expect to utilize.

Slide 19, the details of the key strategic growth initiatives that we’ve recently announced or closed which Sam has previously highlighted, but I’ll just add a couple of points. Regarding the GTS deal, we expect that to close imminently. And in terms of South Africa, we expect the closing to be Q1 or possibly Q2 pending ongoing discussions with the Competition Commission. Regarding Egypt, our integration and commercial teams are already on the ground and we have commenced discussions with the carriers. No further significant news to report at this point, but we will keep everyone updated as we progress.

On to Slide 20, we introduced our guidance for FY ’22. Before discussing the specific metrics and targets, I’ll walk you through some of the key assumptions behind our guidance. First off, for 2022, this includes contribution from the GTS acquisition starting in Q2 this year, including approximately $100 million of local debt on the business. As we previously disclosed, we guided that the GTS assets should generate revenue and EBITDA of approximately $38 million and $36 million in the first full year of operation post closing. Guidance, however, does not include the impact of the setup transaction or expectations regarding the commercial rollout net in Egypt.

Regarding South Africa, we previously indicated we expect the asset to generate revenue and EBITDA of approximately $220 million and $80 million, again in its first full year of operation post closing. However, given the precise timing of the closings and we will update our guidance to include these on our future earnings call. As for Egypt, as I said, the carriers — the discussions with the carriers are ongoing and we will update you as we make progress.

Other key things to highlight of the incremental net $23 million of interest costs following the recent bond transaction as well as non-recurring items in FY21 mentioned previously as you think about the comparisons as past year. Oil and FX, we’ll come to in a short moment. Taking all of this into account, we believe the revenue for FY ’22 range between $1.795 billion and $1.815 billion on a reported basis, which represents a 14% increase at the midpoint of the range from our FY ’21 revenue of $1.58 billion. Key drivers of this growth include our organic growth programs in all of our markets, in particular our projections from new site growth in Nigeria and Brazil, as you see outlined on the page as well as the full year contributions from I-Systems and then the GTS assets in Brazil.

In terms of adjusted EBITDA, we are projecting it range between $960 million and $980 million. Key drivers of the EBITDA forecast, obviously the revenue growth aspects just mentioned as well as the negative impact of oil price at $120 per barrel for Q2 to Q4, which is our assumption.

With respect to recurring levered free cash flow, we are projecting it to range between $310 million and $330 million. Here the key point is that we are carrying the $23 million increased interest costs from the recent bond for the whole year of 2022, but GTS only kicking in, in Q2, and the guidance as we said reflects no assumptions yet regarding South Africa and Egypt contribution.

Clearly, the oil price impact on our diesel spend drops straight down into RLFCF metric. One other thing to keep in mind about RLFCF metric from a comparability perspective is the Nigerian withholding tax comes off revenue as opposed to operating profit which means there is an outsized impact as we grow the top line in our largest market.

In terms of capex, we are anticipating spending $500 million to $540 million of capex in 2022, which includes new site capex in connection with the build program as well as discretionary and non-discretionary capex. We are monitoring the ongoing supply chain precious closely which could impact this projected capex and we will keep you updated on the subject through the course of the year.

On Slide 21, we discussed the key energy costs and FX sensitivities regarding our guidance. With respect to the oil price, our guidance assumes an oil price of $99 per barrel for Q1 of this year and a $120 a barrel for Q2 to Q4. The Russian invasion of Ukraine has introduced tremendous uncertainty into oil price forecasting and the spot price has been as high as $135 recently. Consequently, we thought it prudent to employ $120 assumption for the remainder of the year that things will evolve and we will update you quarterly on this metric. From a sensitivity perspective, we believe that a $5 move in the price of crude would have a $7 million impact on EBITDA. Although, as previously mentioned, we take various steps to try and mitigate its. In terms of FX sensitivity, a 5% devaluation in the Naira from our starting assumption of an average of 439 [Phonetic] per dollar would have about a negative $30 million impact on revenue and a negative $19 million impact on EBITDA.

On slide 22, just more detail on how energy cost impact our business, as you know we provide power management services to our customers principally in Africa, and in Nigeria the grid has historically been non-existent or unreliable. Therefore the cost of fuel can cut both ways in terms of our return. First, in a positive fashion, either in a falling price environment as we saw during much of 2020 or as we implement renewable power solutions to increase efficiency and bring down the capex cost associated with power generation, whilst charging a fixed to our customers. Or conduct in a rising price environment like we’re seeing today, the diesel input cost can be a headwind, albeit, one that we worked and managed through smart sourcing and inventory management.

As you see on the slide, the cost of diesel is reflected in our cost of goods sold and equated to 14% of revenue last year, although 5% of revenue was also linked to diesel through power indexation causes and was hence passed through to customers. As we look at our forecast, our average oil input cost for Q1 is $99, in our guidance as discussed on the prior page, the average cost reflects this $99 for Q1 and a $120 per barrel for each of Q2 to Q4. Price per barrel was around $115 this last Friday, it’s come down in the last day or two and it’s been moving around significantly in recent weeks. The situation in Ukraine will continue to impact this dynamic and we will keep you updated as events impact our results and thinking.

Importantly, long term we believe we have the opportunity to further reduce our reliance on diesel and take capex costs out by adding more renewable solutions and thus improving margins. We are currently examining these possibilities as part of our development to the carbon reduction plan and look forward to updating on this later this year. This now brings us to the end of our formal presentation. We thank you for your time today, as well as your continued support for the business.

Operator, please. Now open the line for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question is from Jonathan Atkin of RBC Capital Markets. Jonathan, go ahead.

Bora Lee — RBC Capital Markets — Analyst

Hi, Bora Lee on for Jonathan. Thank you for taking the questions. You note on Slide 22 that other key components of diesel in your cost structure include percentage mix of imports versus locally sourced diesel. And if be buy it in the spot market or futures, should do a bit of a deeper dive into what that sourcing mix is currently and what are the factors that would impact the mix as imports versus local and spot versus futures purchases?

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Hi Bora, its Steve here. So a variety of different items go into that, into that sourcing strategy and we don’t sort of disclose my initial detail around that. But we look at what is the price at the local market, what is the price of the import market, what is the availability at the right times in terms of delivery for what we need and how much of that availability can we forward purchase, and all of that sort of supply together with pricing combines to give us a constantly moving mix between whether we’re sourcing likely or importing. So it’s a complete balance and it’s dynamic, it keeps moving, that’s sort of the key way we can — we can control supply and price.

Bora Lee — RBC Capital Markets — Analyst

Thanks. And can you also provide some color around what you’re seeing in facing of losing activity in Nigeria and touch on deployment of spectrum following the auction?

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Yeah, I mean, we’ve had another very significant year and certainly H2 of last year 2021 coming from leasing activity in Nigeria, a lot of it coming through in lease amendments as you’ve seen through Q3 and Q4 results. The revenue guide we’ve given you is another 14% headline growth and a significant amount of that’s organic activity being driven out of Nigeria, as well as we expect to see colocation, some new site builds as well but also lease amendment activity continue. Most of that lease amendment activity still driving up 4G. And we — as we said, we have now seen 5G spectrum allocated and we have some, what I would call de minimis orders for FY ’22 on 5G rollout. So great news for the industry, the carriers is just starting to think about how best to deploy that network. I don’t think we’re going to see a huge impact of it in 2022, but certainly we have some initial orders and it will be a 2023 onwards item in our view.

Bora Lee — RBC Capital Markets — Analyst

Thanks. And if I could, sorry, just squeeze one last one in. The industry has seen telcos use sales of minority interest to financial sponsors and formation of JVs as alternative sources of funding growth. Just curious what your views are on these types of funding vehicles? Thank you.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

I think it’s — I think as a business, we’re always looking at the optimal way to finance ourselves and also create shareholder value. We’ve utilized minority stakes in joint venture partnerships within certain OpCo’s around the group and we have one of those in LatAm right now with TIM in the fiber business that we started, Zain a very small element in Kuwait, and in South Africa we’re going to have a minority partners in that particular acquisition when it closes as well. So we’ve looked at it. From a broader scale, I think that just depends on the value proposition. I think we like where the business is positioned, and we feel it’s — it’s an incredibly well placed business. So if something like that would come along, we’d consider it.

Bora Lee — RBC Capital Markets — Analyst

Thank you.

Operator

Our next question is from Phil Cusick of J.P. Morgan. Phil, go ahead.

Phil Cusick — J.P. Morgan — Analyst

Hi, thank you. Thanks for the detail on oil impact. Margins in ’22 are much better than we would have thought given that, which is great to see. So that $7 million adjusted EBITDA impact for a $5 increase in oil prices, how is that split between Nigeria and the rest of the business?

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Nearly all of it is, Nigeria, so. So in terms of how people think about the oil environment around IHS stock, it is, it is almost entirely not totally, but almost entirely a Nigeria facet and if people remember that are meanest segment and our LatAm segment is effectively clear of energy, but given the power pass through mechanisms that we have in place in those particular segments, and then our Sub-Saharan African business, there is some diesel in those, in that particular segment, but there is also significant grid connectivity. So really we’re talking about Nigeria when we’re talking about oil, so that $7 million is almost all Nigeria.

Phil Cusick — J.P. Morgan — Analyst

Thank you. And then let’s dig more into the repatriating cash from Nigeria. Steve, I think you gave a number of scenario in portion of your cash balance. What was that a quarter ago? And can you dig more into sourcing dollars from banks and we talked about hedging as well. Thanks.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Obviously, the quarter on quarter cash balance in Nigeria is dependent on where we are in the collection cycle, say [Indecipherable] was significantly higher balance is more like $200 million can get the exact number for you, but that was because of when we had collected from our customers. As we went through the course of Q4, we have obviously deployed capital into the business on upstream some as well, and hence the $81 million cash equivalent balance in Nigeria at the end of the year. And that’s something that we spoke about before that we continue to look to do as we collect from customers we will ultimately look to service the needs of the business and then with excess cash have to upstream that and get it offshore.

In terms of what we’re doing, I don’t think the strategy has particularly changed through the last three months. What I would say is we are continuing to push our banking relationships and our access to banks within Nigeria to see what different products we can access and that is with the aim of trying to target larger amounts rather than smaller slow and steady as sourcing. So it’s not an easy market, but there is — there is donor availability and we’re working hard to continue sourcing what we want further year of 2022. Sorry, I did I get all of your points.

Phil Cusick — J.P. Morgan — Analyst

Yeah, that was good. And then one for Sam, if I can. Sam, what does the acquisition pipeline look like? And can you talk to us about, you talked about Asia in the past, and does your stock price impair your ability to acquire portfolios? Thanks, guys.

Sam Darwish — Chairman, CEO and Director

Hi, Phil. Look, the strategy remains what we’ve discussed. We want to diversify. We see ourselves as a global emerging market infrastructure company, that’s how we see ourselves. We will continue to look beyond where our market are. Now having said that, we recently made moves into large markets. We made a move into Egypt. We made a move into South Africa. While we continue looking outside these markets, I would say the focus this year would be largely on these, like Brazil, of course. Now if something comes out that is so transformation and so strategic for us that is outside these markets, we’ll definitely consider.

The share price is definitely not helping. But again, I see that as just a point in time. Other alternative funding could be available if something needs to happen quickly. But to be honest, at the moment I think would largely focus on our existing markets, especially given the uncertainties around the globe and where things are, well Ukraine, Russia. China yesterday now starting the massive lockdowns again, etc., etc. So that’s how we see 2022.

Phil Cusick — J.P. Morgan — Analyst

Thanks very much.

Sam Darwish — Chairman, CEO and Director

Thanks.

Operator

Our next question is from Greg Williams of Cowen. Greg, please go ahead.

Greg Williams — Cowen — Analyst

Great, thanks for taking my questions. Just on the guidance for revenue. What level of organic growth is factored in, in the other regions. You noted Nigeria has some strong leasing activity, but hoping you could provide some color on organic growth in the other regions? Second question is just on Egypt. I realize it’s not in guidance, but what’s your expectations on the cadence of signing new carriers? It is a first half story or is it back half loaded? Thanks.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Hi, Greg. So in terms of the guide, the revenue range we’ve given you is 14.2% total reported growth at the midpoint of the range. That is roughly split 15% organic, 4% inorganic given the acquisition activity we’ve seen and with a 5% FX headwind. So that gives you an idea of the organic element 15%. And a big chunk of that’s coming through Nigeria and through LatAm where we are expecting more leasing activity, more build activity. We haven’t got into disclosing the exact breakdown of each building block of the growth components. But what we have also said is from a new build site perspective, we expect 1,250 new sites in Nigeria, and we’re forecasting around 700 new sites in LatAm [Indecipherable] Brazil and at around 270 in Sub-Saharan Africa and approximately 110 in MENA. Those numbers are slightly around it. So that’s how we’re thinking about the business. So obviously, Nigeria and LatAm are our key growth factors for the guide next year.

Greg Williams — Cowen — Analyst

In Egypt.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Yeah, and then, Egypt. Look I think, work in progress. Can’t say much until we have something to say. There’s lots of conversations going on, lots of discussions with carriers, different projects we’re looking at in assessing. So as I’ve said on the last quarter, we will endeavor to keep you update quarter-on-quarter and as soon as we have something significant to report to you, we’ll let you know. Best guess, yes it would be second half before it starts impacting the business. But we will update you properly when we know more.

Sam Darwish — Chairman, CEO and Director

I mean, please remember that Egypt does not have a tower industry at the moment. I mean, we have the task of developing the business, but we also have the sort of developing that industry somehow, I mean it don’t exist at the moment. People are not used to the idea. So if we have to do that part plus the actual part of getting the business, but we’re making some strong headway at the moment.

Greg Williams — Cowen — Analyst

Got it. Thank you.

Sam Darwish — Chairman, CEO and Director

Thanks, Greg.

Operator

Our next question is from Michael Rollins of Citi. Michael. Please go ahead.

Michael Rollins — Citi — Analyst

Thanks and good morning. I’m curious if we could focus a little bit more on the Slide 11. Can you remind us where churn in this bridge and what you saw from churn in the fourth quarter as well as for the full year 2021?

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Yeah, so churn was about 1,200 for the full year. But of that 1,283 to be precise for the full year. But of that, 826, well what we call non-key customers. So outside of our of our important customers and that was really a cleanup exercise in terms of those, those customers that we were not booking revenue for and so we cleaned them up at the year-end and took them out of the tenant count. So consider that 1,283 churn, 75% of that does not go to revenue. Another chunk of that churn was what we’ve disclosed previously around the the 9 mobile [Phonetic] piece. So 269 of those was 9 mobile, which was part of our agreement earlier in 2021 to rationalize that business that we talked to previously. So actually in terms of true genuine churn, very, very small through the course of the year.

Michael Rollins — Citi — Analyst

And so where does that fit in these boxes on Slide 11? Which bucket is it in?

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

So it would come through either new sites or new colocation depending on what it is, that’s coming off, whether it’s a [Indecipherable] or anchor tenant. But as I said, 3/4 of that was not showing a revenue impact anyway, so it would not be — it would not be picked up in a revenue bridge because there wasn’t revenue associated with it.

Michael Rollins — Citi — Analyst

And you just in a previous question gave us a sense of what the total organic growth for ’22. Can you break that out a little bit more into what the expectation should be for escalation, amendments and colocation? Just a sense of the drivers of internal organic growth for the business.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Yeah, as I said on the previous coming by [Phonetic] we haven’t — we haven’t broken that out in terms of the guidance. And what I would say to help people think through, it is, we think that is going to be pretty similar to what we’ve seen in FY ’21,lease amendments will continue to lead the way and new sites and colocation will probably be similar type percentage contributions to what you see on Slide 11 of the presentation, and so reasonably similar. Organic growth as I mentioned to about 4%. So that’s a little bit higher given the acquisitions that we brought into the business during 2021. But from a kind of percentage contribution split, it will be not dissimilar to Slide 11.

Michael Rollins — Citi — Analyst

And in the markets that you’re operating in and acquiring, should we be mindful of any carrier customer consolidation that might impact your future revenues from those regions?

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

No, not at this point, Mike. I think our markets are reasonably stable from a carrier consolidation perspective and the one that obviously jumps out is Brazil in terms of Oi mobile, but we have de minimis next zero Oi mobile exposure. So that one, that one won’t impact us.

Michael Rollins — Citi — Analyst

Thanks.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Thank you, Mike.

Operator

Our next question is from Simon Coles from Barclays. Simon, go ahead.

Simon Coles — Barclays — Analyst

Hi guys, thanks for taking the questions and the extra detail in the presentation this quarter. And first one is just on capex. So you said that you obviously had some supply chain issues. Should we think of the guidance that 2022 is of more normalized level? And how should we think about the mix versus the — the mix you provided on Slide 15?

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Hi, Simon. So I think you’ve seen its the slightly wider range around capex in the guide and that’s on purpose given the items you mentioned around supply chain issue, the Russia, Ukraine pace, just at the point where supply chain was starting to free up again and we obviously as the world were hit with the Russia, Ukraine situation, so hence the slightly wider range on guide. We will keep you guys updated through the course. We’ve already factored in pricing increases, which we’ve seen around the business, which hasn’t been significantly material, but enough to factor in. So that’s already baked in that range and we will — we will keep you guys updated as we go through.

In terms of the mix. Again, we haven’t really broken it down. Anything I would say is, people often ask us from maintenance capex or the non-discretionary element, that’s going to be roughly 20% higher we think than FY 2021, reflective of the slightly larger business around new builds across different African portfolio, LatAm, but also obviously the introduction of full-year of the fiber business as well. So we think maintenance capex about 20% roughly, higher than the 2021 and then the rest is split between — between new builds and fiber, etc.

Simon Coles — Barclays — Analyst

That’s great. Thank you. And just on that withholding tax comment you made in Nigeria and what that means for the recurring levered free cash flow. Could you just elaborate a bit more on that just to make it clear? Thank you.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Yeah, I think we just want to make, it’s the same as we’ve been talking about you since before we left, but just wanted to continue making it clear to people that as we grow in Nigeria, we typically don’t suffer corporate income tax which is at about 30% in Nigeria. We suffered withholding tax on revenue, which offsets any corporate income tax that we have given it’s a higher level. So we saw for 10% withholding tax on revenue in Nigeria and then obviously as we are growing and adding more revenue that tax is coming at source rather than further down — down the income statement where you get operational leverage. So because we show our all our RLFCF inclusive of cash tax paid, you see that withholding tax line running through the RLFCF to give you a true cash metrics. So, as we’re growing we suffer that tax as source, you’ll see the impact come through in the RLFCF.

Simon Coles — Barclays — Analyst

That’s very clear. Thanks very much.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Thanks, Simon.

Operator

Our final question is from Brett Feldman from Goldman Sachs. Brett, go ahead.

Brett Feldman — Goldman Sachs — Analyst

Hi, yeah, thanks for taking the question and congratulations to Adam and Steve and Colby and some exciting career transitions for all of you. I wanted to follow up a little bit around power. So on Slide 22 you highlighted that 42% of your sites in your African markets had hybrid power solutions. And I was wondering where could that go? Could the substantial majority of your sites potentially take advantage of hybrid or maybe what percentage of your sites would you think of as being suitable and what makes them suitable? So it’s really a question is what is your opportunity over time to maybe meaningfully augment the profile of your power costs? And I’m curious what you’re planning on doing this year in terms of capital investment around hybrid solutions?

Nd then you also on the same slide pointed out that it basically looks like last year about a third of your diesel costs were pass through to your tenants under the leases. And I’m wondering has it literally worked that way? Is it essentially that in any given year about 1/3rd of that power cost is going to be pass through and is that what’s embedded in your guidance for this year or is it just that’s the way it worked out last year?

Sam Darwish — Chairman, CEO and Director

Hey, Brett, this is — maybe I can take the first one. And then can I like to hand over to Steve on the next part. Look, we need to remember that Nigeria has a power problem. Nigeria, given its scale and size, geography and population is a massive country, but does not have electricity basically. We see ourselves as kind of like the sources of this problem. That’s why it’s like a very, very complex situation that five years ago we did a major investment in to kind of shifting away from diesel into solar, into battery and kind of like resulted in around 40%, 50% reduction in our opex then. This time around feels to be like this is something that we need to do. We started late last year immediately after the IPO a drive into kind of like what can be done again. We definitely intend to go deeper into investing into renewable. We want to solve this problem more I would say by replicating diesel. This is now that I think to do whether on a conscience basis and of course on a numbers basis. So do we expect indeed from us an announcement to that effect this year, Brett. It’s definitely something we want to do.

Now having said that, Brett, I also want to highlight something. The guidance has oil at $120, still our margins remain over 50%. I mean, that’s a message of resilient, that’s how resilient this business. And then having said that, we will definitely invest further and hopefully drive diesel at some point completely out of the business.

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

And then, Brett, your comment around the pass through. So I think we are doing, as you take 5% of revenue and dividing that into our total cost of power, so I guess you do just done, its about 29% that could be passed through and which is correct. Just keep in mind where we do see diesel volatility is particularly in Nigeria, where we have certain elements of those pass through revenues yet, but some of it is in LatAm, for example, which and doesn’t have any volatility in it anyway, so, yeah, you’re correct, it’s about 29% gets passed through to customers on FY ’21 numbers.

Brett Feldman — Goldman Sachs — Analyst

And that’s essentially what you’re assuming in your guidance for this year or something in that range?

Steve Howden — Senior Vice President and Deputy Chief Financial Officer

Yeah, correct. It carries forward because those are all long-term contracts.

Brett Feldman — Goldman Sachs — Analyst

Great. Thank you for taking the questions.

Sam Darwish — Chairman, CEO and Director

Thanks, Brett.

Operator

Great. Well, this now brings our to the end.

Colby Synesael — Senior Vice President, Communications

Thank you very much and we’ll talk to you at later. Thank you.

Operator

That brings us to the end of the IHS Holding Limited Q4 full year 2021 results call. Should you have any questions, please contact the Investor Relations team via the email address, Investor Relations at ihstowers.com.

[Operator Closing Remarks]