Q4 2023 IHS Holding Ltd Earnings Call

Participants

Colby Synesael; Senior Vice President - Communications; IHS Holding Ltd

Sam Darwish; Chairman of the Board, Group Chief Executive Officer; IHS Holding Ltd

Steve Howden; CFO & EVP; IHS Holding Ltd

Michael Elias; Analyst; TD Cowen

Richard Choe; Analyst; JPMorgan

Eric Luebchow; Analyst; Wells Fargo Securities LLC

Stella Cridge; Analyst; Barclays

Presentation

Operator

Good day and welcome to the IHS Holding Limited 4Q and full year earnings results conference call. Please note that today's conference is being webcast and recorded. (Operator Instructions) At this time, I'd like to turn the conference over to Colby Synesael. Please go ahead, sir.

Colby Synesael

Thank you, operator. Thanks also to everyone for joining the call today. I am Colby Synesael, the EVP of Communications here at IHS. With me today are Sam Darwish, our Chairman and CEO; Steve Howden, our CFO. This morning, we filed our annual report on Form 20-F for the full year ended December 31st, 2023, with the SEC, which can also be found on the Investor Relations section of our website. Initiative related earnings release and presentation of the consolidated results of IHS Holding Limited, which is listed on the New York Stock Exchange under the ticker symbol IHF and which comprises the entirety of the Group's operations.
Before we discuss the results, I would like to draw your attention to the disclaimer set out at the beginning of the presentation on Slide 2, which should be read in full, along with the cautionary statement regarding forward-looking statements set out in our earnings release and 20-F filed as well today.
In particular, the information to be discussed may contain forward-looking statements, which by their nature, involve known and unknown risks and 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, may make results to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking statements, including those discussed in the Risk Factors section of our Form 20-F filed today with the Securities and Exchange Commission and our other filings with the SEC.
We'll also refer to non-IFRS measures, including adjusted EBITDA that we view as important in assessing the performance of our business and ALFCF that we view as important in assessing the liquidity of our business. A reconciliation of non-IFRS metrics to the nearest IFRS metrics can be found on 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

Thanks, Colby, and welcome, everyone. To our fourth quarter and year end 2023 earnings results call, we're reporting a strong quarter of performance across our key metrics with revenue, adjusted EBITDA and ALSCS. in line or ahead of our expectations, despite the meaningful Nigerian currency devaluation that began in June. While CapEx was meaningfully below expectations, our results reflect the continued strong secular trends we are seeing across our business, including growth in lease amendments, new tenants, new sites or build-to-suit and targeted fiber rollout for 2023 as a whole, we are reporting 8% revenue growth, 10% adjusted EBITDA growth, 19% FCF growth and an 8% reduction in CapEx.
Organic growth was 37%. Group-wide, we added 1,041 co-locations and 4,929 lease amendments. And we surpassed our expectations for new sites, having built 1,300, 29 new towers, mostly in Brazil with 812 in the country as we continue to prioritize organically growing our asset base in that market. These strong growth trends should continue in 2024 as evidenced by our recently announced deal with Airtel in Nigeria that extended Atos contract to 2031 and included a commitment to add 3,950 new tenancies over the next five years, much of it front loaded to 2024 2025, which may take me to an important point.
These strong fundamental trends are occurring against a challenging backdrop, NATO continues to devalue at levels that sadly are offsetting much of these strong secular trends from January to December 2023, the naira suffered a 98% unfavorable movement. And from January 2024 to date, we have seen a further 75% unfavorable movements. This means a total unfavorable movement of 246% since January 23. Most of this negative movement came as a result of positively viewed government actions of unifying multiple exchange rate, removing the expensive federal subsidies and trying to contain the soaring inflation, which hit 28.9% in December 2023.
While these actions were generally viewed positively by market observers and us other supporting measures are required to contain the naira devaluation. Some of these required changes began to occur recently in Q1 as the Nigerian Monetary Policy Committee high, the main policy interest rate by 400 basis points and are adding much-needed ForEx to the daily market. This has helped stabilize the currency over the past few weeks.
Some analysts, including Goldman Sachs, among others, are even predicting a strengthening naira by end of this year. Market observers expect the Monetary Policy Committee to further increase the main policy interest rate throughout 2024, and they aim to lower inflation and further stabilize the ForEx market from a 2023 results perspective, ForEx protection mechanisms in our revenue contracts helped us offset the majority of this pressure in the year and was evident in our Q4 23 results. However, we expect the additional devaluation that began in January to further impact our results in 2024.
While Steve will discuss this further when he discusses guidance, to give you some context, our guidance for 2024 assumed an average rate of NGN1,610 to the dollar, whereas the average rate in 2023 was NGN638 and that the devaluation in the naira will have a negative $535 million impact on revenue year on year, even after adjusting for the impact of the ForEx reset. Given the macro environment we're operating in, particularly in Nigeria, which represented 63% of revenue in Q4 23. We continue to take what we believe is a more balanced approach to growth and cash generation. We also expect the significant reduction in CapEx that started in the second half of 2023 to continue in 2024, along with a continued focus on improving operating efficiencies through productivity enhancements and cost reduction.
Excitingly, this also includes an increased focus on innovation, including deepening usage of AR and how we used to live, maintain and operate on our towers. And it's something I'm very passionate about and personally spearheading a dedicated team has been working for a while on developing use cases that can help us improve our efficiencies using the massive amounts of data we have due to our expenses operations over a decade.
Skipping to slide 7 to discuss some of our key highlights, starting with commercial progress. As of year end 2023, we had $11 billion of revenue under contract with an average remaining tenant term of 7.5 years. I think it's important to highlight these metrics as they point to the durability we believe inherent in our business model despite what the perception may be. We continue to make progress on the commercial front across the business as we have signed contract with MTN in Cameroon and in Côte d'Ivoire for a further 10 years in Nigeria, as MTN highlighted in their most recent earnings announcement earlier this month, we continue to engage constructively with constructively with them to find ways to alleviate some of the operating pressure they are under given our key role in running the majority of the network in the country, while also maintaining appropriate appropriate economic results for ourselves.
Also, as previously mentioned, we signed an extended contract with Aspen in Nigeria this past February, taking the turn into the next decade in an agreement that includes a commitment by Airtel Nigeria to us 3,950 new tenancies over the next five years and is front-loaded over the next two. We are very excited about the potential of this mutually beneficial partnership.
Shifting to governance progress. In January of this year, we announced a settlement agreement with Vanda in relation to the public dispute, which you are aware of reflecting a commitment to strong corporate governance and constructive shareholder engagement. The text of the proposed amendments to the Articles of Association will be made available to shareholders before the next AGM on stock liquidity, more progress here, we have removed all lockups on the TIPO. shareholder. We also estimate approximately 14% of our shares are now owned by post IPO shareholders compared to just 5% at the time of the IPO and almost 300% improvement in flows funds. This is also evident in our average daily trading volume, which is now 574,000 shares, almost five times higher than what it was in May 2022.
During the quarter, we continued to buy shares under our two year buyback program with a total of $10 million worth of shares bought over the past two quarters.
I'd like now to provide an update on Project Green. For 2023, we spent $103 million of CapEx versus guidance, our guidance of $90 million to $100 million and achieved ALFCS. savings of approximately $24 million versus guidance of $22 million. Overall, the project remains on target. As you can see by our results, we will provide a more comprehensive update on the impact project clean and our carbon reduction roadmap is heavy when we publish our annual sustainability report, which we expect to be next quarter.
Moving on to our balance sheet. We continue to feel comfortable with our liquidity position, but also continued to increase our focus on cash generation and continue to evaluate and execute various ways to do such as of year end, we had $724 million of available liquidity, including our undrawn group RCF and the remaining undrawn portion of our group term loan. We continue to actively pursue initiatives to shift more debt into local currency, extend maturities and manage interest expense. This was evident in our recent local currency, $160 million equivalent facility in Cote d'Ivoire.
The proceeds of this local OpCo loans were refinanced USD obligations at the holding company level. Also, as previously announced in November and in November, we extended the maturity of our $300 million group RCF to October 2026. Leverage ended the year at 3.4 times. And we, as we had previously commented, was impacted by the naira devaluation in June, we expect leverage to further increase in 2024 given the additional net devaluation, but expect to remain within our target three to four times and continue to have an adequate liquidity position, which Steve will cover further in his section.
And finally, on shareholder return, I would like to make the following statements. Despite the currency headwinds in Nigeria. We believe in the underlying strength of our business and believe our equity is undervalued, given Africa perceived plays in the global market, for example, Nigeria, when I move to Nigeria, 25 years ago, the Company had approximately 120 million people. Today, it has approximately 225 million people added a total population higher than Germany, France or the UK and is growing by 2.4% a year. That's 5 million people a year.
\To put it into perspective, that's almost the size of Colorado a year. Nigeria also has a young energetic population with the majority of the population younger than the age of 20 as compared to aging developed market, hundreds of millions of people with no landline for roads for transport infrastructure depend on this on their mobile phone for almost every aspect of their life. It has become an important as important as food or water or education, the trend in mobile phone and their adaptability and usage. It's irreversible and it's shown through our growth and also through the massive growth in the underlying number of our key customers in Nigeria. Despite the ForEx headwinds, macro conditions will tighten and loosen in cycles, but the growth in mobile usage is one way Scott.
And thus, while we believe Nigeria's value still significantly underestimated, especially in our sector value and long-term growth prospects of the Latin America business are also very strong when we move to Latin during the COVID year we had zero base today, we have almost 8,000 towers and one of the largest fiber network in Brazil with the business that generated $146 million in EBITDA in adjusted EBITDA in 2023, more than 800 new towers and 1.3 million more homes passed in 2023 alone. South Africa is growing Sub-Saharan Africa is growing. We own and operate 40,000 towers across 11 markets covering approximately 800 million people. We need their phones for almost every basic aspect of their life and IHS sits at the heart of enabling such kind of connectivity as the leader of its domain. It is for these reasons that we believe IHS tower is under appreciated at our current valuation. And then we have and that we have to consider ways of unlocking value for our shareholders.
So under the guidance of our Board of Directors, we have commenced work with our advisers, including JPMorgan, to evaluate strategic alternatives for the business across our portfolio and our capital allocation priorities. This exercise is intended to generate the best value for investors we will provide an update on this as appropriate, including any potential action.
And with that, I will turn the call over to Steve.

Steve Howden

Thanks, and hello, I've got Turning to Slide 9. As I mentioned, we're pleased to show our FY 23 and 4Q 20 results were in line or better than expected against the challenging macro backdrop in Nigeria throughout the year. The business has shown its resilience in FY 23, posting good results, but it's clearly not immune to such significant FX headwinds as we've seen in 2023 and continue to see in Nigeria in the early part of 2024.
On slide 9,000 tenants are up by 1% and 2%, respectively, year over year, while lease amendments increased by double digit percentage on a reported basis in the quarter, revenue declined and adjusted EBITDA increased modestly. Both metrics impacted by the devaluation in the naira in 2023. Specifically in Q4, revenue declined by 3.1%, but adjusted EBITDA increased by 0.6%, while ALSCF. increased 22% for the full year, our revenue grew by 8%, adjusted EBITDA by 10% and ALFC. up by 19%, all on a reported basis. Our level of CapEx investment decreased by 33% in the fourth quarter and 7.5% for the year, largely due to lower capital expenditure for our Nigeria and SSA segments, partially offset by an increase in Lat-Am, all of which I'll discuss shortly.
And finally, our consolidated net leverage ratio increased to 3.4 times following the naira devaluation, albeit still within our target three to four times range.
Slide 10 shows the components of our 8.4% reported consolidated revenue growth for the full year 2023 organic revenue growth of 36.9% for the year was driven primarily by FX reset, CPI escalations and new lease amendments, power related revenue, five, our new co-location and new sites also contributed to our organic growth in 2023.
On the right, you can see the organic growth rates in each of our segments for the year with Nigeria delivering 47% organic growth, including a large impact from FX reset. Inorganic growth for FY 2023 was 2.9%, primarily driven by the full-year benefit of the MTNSA. and GTSSP. five acquisitions and the fifth and six stages of the Kuwait acquisition. Inorganic growth will be immaterial in 2024. Given we are now beyond the 12 month anniversary as the most meaningful recent acquisitions we did in South Africa and Brazil in 2022.
Turning to our consolidated revenue growth for the quarter, you can see how the continued devaluation turn turned a quarter strong organic growth into a 3.1% decline. The naira devalued 15% in Q4 from 776 naira to the dollar at the beginning of the quarter to NGN912 to the dollar. At the end of the fourth quarter, we had organic revenue growth at 48.4%, driven primarily by FX resets that reflects a full quarter reset impact after the original June devaluation, CPI escalations and new lease amendments. Fiber Power related revenue, new co-location and new sites also contributed to the organic growth in the quarter. The right side again showed the organic growth rates of each of our segments where our Nigeria segment grew approximately 66%, including a large impact from FX resets.
On Slide 12, you can see our consolidated revenue, adjusted EBITDA and adjusted EBITDA margins for the fourth quarter 23 and the full year 23 and 4Q 23, IHS generated $510 million in reported revenue, 3.1% decline versus the prior year. While the night, while the naira devaluation drove the decline, organic revenue growth of 48% reflects the contribution from our FX resets and CPI escalators as well as the strong secular growth trends of the business. Q4 23 reported revenue included $25 million FX headwind versus FX rates of last quarter and a $16 million headwind when including all FX assumptions that were assumed in our guidance. For full year 2023, we delivered over $2.1 billion of revenue, an 8% increase, while organic revenue increased by almost 37%. Aggregate inorganic revenue was $57 million, equating to 2.9%, again reflecting the acquisitions previously discussed. Non-recurring items also made up $48 million this year compared to $18 million the year before and partially distorts the comparisons regarding adjusted EBITDA and adjusted EBITDA margins in Q4 23, adjusted EBITDA of $274 million increased by approximately 1% versus Q4 22. And adjusted EBITDA margin was 53.8%, up 200 basis points from the prior year for the full year, adjusted EBITDA was $1.1 billion, a 9.9% increase versus the prior year. And adjusted EBITDA margin was 53.3% up 70 basis points from full year 2022 year-on-year. Changes in adjusted EBITDA and adjusted EBITDA margin primarily reflect the increase in revenue we've already discussed. Whilst the cost base was positively impacted by reducing power costs, but net negatively impacted by FX related impacts. As previously highlighted, through Project Green, we continue to prioritize alternative sources of power, reduce our dependency on diesel.
On Slide 30, we first review our adjusted levered free cash flow or ALSCF. In Q4 23, we generated a FCF of $118 million, a 22% increase versus Q4 22, primarily due to a reduction in maintenance CapEx, lease and rent payments made and withholding tax, partially offset by the increase in net interest paid ALSDF. cash conversion rate increased to 43.1% versus 35.6% in the prior year's quarter. For the full year, we generated ALFCS. $433 million, a 19.2% increase versus FY 22. And our ALSCF. conversion rate was 38.2%, up from 35.2% in FY 22. One-time items in each year impacted that comparison. However, the year-on-year increase in ALFCF. is primarily due to underlying business growth we've already discussed, as well as a reduction in maintenance CapEx.
Turning to CapEx in Q4 23 total CapEx was $131 million, which decreased 33% year on year and full year 2023 CapEx of $586 million decreased 7.5% year on year. The decrease in full year 23 was primarily due to a lower CapEx spend in Nigeria related to new site CapEx and fifth and SSA related to refurbishment, but that was offset by higher CapEx in LatAm related to new site builds. In the latter part of the year, we started to pull back our capital allocation for growth CapEx in certain markets like Nigeria, which was one of the reasons our FY 23 total CapEx of $586 million was lower than our $610 million to $650 million CapEx guidance. More of this when we come to the FY 24 guidance, surely Slide 14, looks at our returns and capital allocation. In FY 23, we continued to focus on driving returns and delivered a return on invested capital of 14.6% versus 9.9% in the prior year. Our improved 2023 rate reflects amongst other things growth in cash flow, the first full-year contribution from the MTN South Africa and TKSSP. five acquisitions completed in 2022 and the 1st year in numerous years when we have not deployed capital on M&A transactions. And of course, the impact of the naira devaluation.
In terms of capital allocation, you can see that a significant portion of our spend in FY 23 or $352 million was related to discretionary CapEx that excluded new sites followed by maintenance or nondiscretionary CapEx and new site CapEx, where we are a leading builder of new sites in Brazil. But we also allocated $10 million towards our share repurchase program that was authorized in August 2023 with $352 million. Our discretionary CapEx, excluding new sites, was largely spent on fiber rollout Project Green augmentation for colocation and lease amendments and other cost-saving initiatives.
Turning to the segment review on slide 16. First walk through our Nigeria business. When the new president was sworn in last May, we saw swift action to unify multiple exchange rates and then the Petro subsidy. Nigerian macro environment, however, remains complex. And while we're still encouraged by the actions taken by the new government. The additional steps taken in January had a meaningfully negative impact on the naira, which obviously is not showing in these results today. But you will see it in our 2024 guidance. We remain in close contact with our key customers, regulators, our vendors and our local banking partners to continue to best position. Ihs FX reserves decreased to NGN32.9 billion in Nigeria at the end of 2023 from NGN37.1 billion in 2022. More recently, the Nigerian Monetary Policy Committee raised interest rates by 400 basis points to 22.75% and move designed to curb inflationary and FX pressures. Meanwhile, the price of both oil and gas oil has decreased recently. Looking at ICE gasoil, it was $792 per ton in Q4 of 23, and that's down from $911 per ton in P. three of 23, moving to real GDP growth and expanded by 3.5% in the quarter, bringing the full year 2023 growth rate 2.7%. Inflation jumped to 28.9% this past December versus 21.3% in December 2020 to bring the full year 23 average CPI rate to 24.7% for IHS Q4 23. Revenue in Nigeria of $321 million decreased 10% year on year on a reported basis, reflecting the devaluation in the quarter, but increased 66% organically. Organic growth was driven primarily by FX resets and escalations. The negative FX impact was $267 million or 75.3% due to the devaluation at Tower and tenant count decreased 3.5% and 0.8% respectively, versus Q4 22, which continued to reflect the planned decommissioning that occurred in Q1 2023 with no impact on revenue. Our co-location rate consequently improved to 1.59 times, up from 1.54 times in Q4 22. And lease amendments continue to be a strong driver of growth, increasing 12.5% year-on-year as our customers added additional equipment to our sites, particularly 5G upgrades.
Q4 23 segment adjusted EBITDA in Nigeria was $200 million, a 3% decrease from a year ago. While segment adjusted EBITDA margin was up 430 basis points to 62.3%, primarily reflecting a reduction in cost of sales, mostly coming from diesel savings in our sub-Saharan African segment thousand tenants increased by 1.5% and 20% and 2.6% respectively versus Q4 22. Revenue increased by 5.6%, of which organic revenue grew 12%, driven primarily by escalations and FX resets. Segment adjusted EBITDA decreased by 6.3%, which primarily reflects an increase in cost of sales, partially offset by the increase in revenue segment, adjusted EBITDA margin decreased to 50.3% from 56.6% in Q4 2022 as a result of higher power generation costs, permit and fees and data and diesel costs. We continue to monitor the macro environment South Africa, particularly the ongoing power load shedding by the national utility, which did moderate versus the previous quarter. We also continue to evaluate our power managed service offerings in our Lat Am segment thousand tenants grew by 9.3% and 6.6% respectively versus Q4 2018, revenue increased by 24%, of which organic revenue growth was 17%, driven primarily by an increase in fiber escalations and those new sites segment adjusted EBITDA increased by 31%, leading to a 75.6% segment adjusted EBITDA margin, 400 basis point increase versus Q4 2022.
In Brazil, our second largest market with 7,663 towers. Macro conditions were largely positive as FX rates marginally strengthened. Interest rates came down and inflation stayed relatively flat in Neenah thousand tenants grew by 9.2% and 9.7% respectively, while revenue increased by 13%, including 6% organic revenue growth and that driven primarily by new sites and escalations segment adjusted EBITDA grew by nearly 8%, mainly as a result of the revenue growth and a decrease in cost of sales. The Q4 23 segment adjusted EBITDA margin increased to 73.5%.
On to Slide 16, I'll briefly highlight KPIS. As of December 31st, our tower count was 40,075, up 1.1% from the end of 2022, driven primarily by ongoing new sites in LatAm and some in Nigeria. As you can see in the chart on the top right. Collectively, we built more than 1,300 towers during the year, exceeding our guidance of approximately 1,250. Total tenants grew 2% with the co-location rate of 1.49 times, up slightly versus last year. And lease amendments continue to be a significant factor of our growth, particularly in our Nigerian segment, given the historic 4G and now increasing 5G activity, we have seen lease amendments increased by almost 16% year on year.
Moving on to Slide 17. We look at our debt profile and related items. At December 31st, 2023, we had approximately $4.1 billion of external debt from IFRS 16 lease liabilities of $4.1 billion of debt, $1.94 billion. Our bond financing and other indebtedness includes $370 million. That was that had been drawn down from the $500 million three year bullet term loan at IHS Holding Limited level, we've undertaken various balance sheet initiatives to extend maturities, manage interest rate expense, swap dollar obligations into local currency, where possible and add flexibility to our capital structure. As mentioned in October, we reduced the available undrawn commitments under the term loan by $100 million to $130 million and extended the availability period of this undrawn balance to April 2024. We've reduced the available undrawn commitments by another $70 million earlier this month in March as a result of pushing this USD exposure down into the Cote d'Ivoire market with a $116 million equivalent term loan that matures in December 2028 in November, we extended the Group asset maturity from March 25 to October 2026, which continues to have a $300 million capacity and is undrawn. Most recently, we've signed a $270 million bilateral loan to refinance, essentially all of our letters of credit. And in Nigeria, this will extend the maturity of these obligations, reduced the interest expense by approximately 300 basis points. And really it's approximately $115 million equivalent of cash collateral previously held against the letters of credit. As you can imagine, we are pleased to have completed these initiatives, which further de-risk the balance sheet and increased our financial flexibility.
Cash and cash equivalents decreased $294 million at December 31st, in terms of where that cash is held, approximately 12% was held in naira at our Nigeria business. Moreover, in 2023, we upstreamed a total of $65 million from Nigeria nine at an average rate of approximately NGN699 to the dollar versus $207 million at a rate of approximately NGN550 million in 2022, despite the USD shortages in the second half of 23 and more positively, we see an increase in daily FX turnover or USD availability since government actions taken in January 2024. But we do caution it remains to be determined. Such an increase will be sustained. Consequently, from all these moving elements. At the end of the fourth quarter 23, our consolidated net debt was approximately $3.8 billion, and we had a consolidated net leverage ratio of 3.4 times, up 0.2 times year on year. In light of the continued Nigeria devaluation, we do expect leverage to increase over the coming quarters. However, our debt metrics are expected to remain within our target three to four times net leverage ratio.
Now moving to slide 18, and we are introducing 2024 guidance that includes revenue in the range of $1.7 billion to $1.73 billion, adjusted EBITDA in the range of $935 million to $955 million less gas in the range of $285 million to $305 million and total CapEx in the range of $330 million to $370 million.
Three points I'd like to make here. Number one. Revenue guidance includes an approximate $17 million reduction compared to 2023 as a result of an expected change in our accounting methodology on power pass-through revenue in South Africa, which will likely be accounted for as net revenue going forward rather than gross revenue and gross power cost. This, however, will have no impact on adjusted EBITDA or LALFCF. As historically, we've recognized an equal amount of power costs and power revenue and number two, I'll speak more about FX rates in a moment, but excluding the change in how we recognize that power pass through in South Africa, the expected year-on-year reduction in financials is entirely the result of the naira devaluation and as Sam mentioned, is expected to be a $535 million year-on-year headwind to revenue after adjusting for the impact of FX reset.
And lastly, you may have seen in our disclosures, we have signed an agreement to sell our Peru business to SBA it while immaterial, given the small size of the business of 61 towers. Our guidance assumes that this transaction closes at the end of Q2 2024. You'll also see that CapEx is expected to come down significantly year on year as we increase our focus on cash generation, while still upholding the goal to maintain double digit organic revenue growth, which includes 49% in 2024. This does include as remaining small portion for Project Green of approximately $10 million spend for the year, we expect to build approximately 850 towers, including approximately 600 in Brazil.
And turning the page on Slide 19. On the left, you can see revenue by reporting currency for Q4 and the year, whereas on the right hand, side, we provide the breakout of revenue based on contracts split at the bottom of the slide shows the annual average FX rate assumptions used in our 2024 guidance for the year, we're assuming in guidance, NGN1,610 to the dollar, which includes NGN1,315 in Q1 of 2024 based on actual through February and NGN1,815 on average in Q4 of 2024.
And then finally, on Slide 28, we provide the estimated full year financial impact a theoretical 10% devaluation in the naira would have on our financials. While our 2024 guidance already assumes an average and an average annual NGN1,610 to the dollar for the full year with Eniro rate getting to 1,850 by December 2024. Here we've shown the impact of a 10% devaluation beyond what we've assumed in the guidance, the figures in the middle of the page, including the approximate $40 million to $45 million and $20 million to $25 million impact to revenue and adjusted EBITDA respectively, provide a sense of what the 12 month run rate impact would be using our 2020 24 expectations. However, as you'll see on the right hand side, the illustration in the middle of the page exclude an incremental approximately $15 million impact. That could impact, of course, the devaluation actually occurs, assuming the devaluation was to occur at the beginning of the quarter. This represents the maximum lag that could occur between the devaluation and when most of our FX resets would start to kick in the next quarter. And as a reminder, the vast majority of resets a quarterly. This now brings us to the end of our formal presentation, and we thank you for your time today. And Operator, please now open the line for questions.

Question and Answer Session

Operator

(Operator Instructions) Michael Elias, TD Cowen.

Michael Elias

Ray, thanks for taking my questions. A few.
If I may just start off relating to the valuation of the strategic alternatives. I'm curious, could you give us a sense for the intended scope of these alternatives and specifically, what I mean by that is, is the intention to consider the sale of the entire business or just perhaps parts of the business? And second, what makes now the right time to explore these alternatives? And would you be exploring these alternatives if it were not for the devaluation that we saw in the naira?
I have a follow-up question after that. But any color on these alternatives would be great.

Sam Darwish

Thank you. Hi, Michael. This is Sam. We believe the business is undervalued. It is not a direct reflection of where the naira is the business, as you've seen, is reporting solid numbers. I mean, we've been reporting solid numbers quarter after quarter. Of course, the naira devaluation situation will have an impact. But again, it is within manageable a remedy. The strategic evaluation is largely because we feel the frustration of shareholders. We believe that market have not given higher shares, the necessary credit when it comes to our value and where our valuation should be. So it is our duty in addition to running the business well in a good and solid matter, it is our duty to leave no stone unturned basically to try and unlock value for shareholders.
Not in terms of details, unfortunately, I won't be able to go into details. I will comment that we're doing that, that work at the moment, together with our adviser, JPMorgan included and we will communicate as and when appropriate.

Michael Elias

Thanks for the color there. So I just have a follow-up question. With the volatility that we've seen of the naira, how would you describe the ability to upstream cash in 2024? Thanks.

Steve Howden

Believe the state and say, yes, you're right. Volatility is a good way to describe it. And 2023 was challenging. No doubt incentive and sourcing at those network streaming, although we did, we did get $55 million out in 2023, I think from a 2024 perspective, and we have seen more liquidity in the markets, January, February and March to date. And so that is certainly the positive. I would say that's off the back of a number of moves by the Nigerian government, central bank, monetary policy, et cetera, around currency devaluation, but also interest rate increases. And so that's I hope that's the positive. But obviously, we have to caution that we want to see it continue for a period of time, and we've seen as public school and fall stores in the last nine or 10 months in terms of reforms. And so we're again seeing a point where we had this positive outlook and certainly in terms of vehicle of liquidity. But let's see. And we yes, we want to see more moderate liquidity and then we'll we'll be entering spring. Thanks for the color. Thank you.

Operator

Richard Choe, JPMorgan.

Richard Choe

I wanted to ask about the Latin America business on. Where should we expect that percentage of revenue to go to by the end of this year and maybe longer term, given the growth you're seeing there, how big of a business could that get Irish estate say second question.

Steve Howden

I think one thing to note, obviously, in terms of the overall contribution mix, is that now Lat-Am as a segment has been growing at sort of between 15% and 17% and a year on year and continues to grow nicely as revenue for full year was I am and over $7 million. And so you end up becoming a really significant component of our overall mix. And given the opposite direction, if you like, of Nigeria in the devaluation and it becomes an increasing percentage of Asia by favor, this growing Nigeria's development that will get a little bit smaller. So we haven't set a target on it right now focused with that time is to grow organically and for the short term and but obviously, that's a key element of our value makeup, and that's the business we want to continue growing organically.

Richard Choe

Okay. And I guess a little bit more color on the mix between the tower growth and the fiber growth, it seems like both are growing better, healthy foods.

Steve Howden

Yes, I'm going to help pay. So we don't actually split out the financials in too much detail the boat business. But as you probably know from our prior discussions, there is a disclosure on it buried in the year in the 20 F and the flow business grew 30% last year and from a renewable perspective and the talents and just move it less than that, but still growing still growing strong.

Richard Choe

Thank you.

Operator

(Operator Instructions) Eric Luebchow, Wells Fargo.

Eric Luebchow

Great. Thank you for taking the question on. I wanted to touch on the MTN agreement to move 2,500 sites. It's I know it's tied up in the courts right now, but kind of any update on your base case and how many sites you think could eventually again move to your competitor in that market?

Sam Darwish

Hi, Eric, this is Sam. Look, we've been public about our view here and we remain consistent. I think it's a very, very, very tall order to be able to move equipment covering 20 million users or so on 2,500 towers that most of which do not exist in a country like Nigeria where power infrastructure permits, regulation is all an uphill battle I mean that conversation we've had in October today we are in February or March actually with another, maybe eight, nine, 10 months left before the expiry. And no significant work has occurred on the towers, largely because of some of the things we just mentioned. So that remains a very, very tall order for us. But again, I mean, MTN is a partner of ours. We've been we've been we've been we've been in partnership for more than two decades there. Discussions are always ongoing.

Eric Luebchow

Okay. Appreciate that. And just one follow-up on your guide this year kind of implies a 55% EBITDA margin, a nice uptick versus last year. So anything you could walk us through in terms of areas you're seeing cost efficiencies between lower diesel cost, Project Green and then kind of the longer-term path to get to 60% EBITDA margins. You know how you see that transforming over the next few years?

Steve Howden

I would say a few things on the cost side, though, you're right, the guide implies and effectively the margin. So a couple of percentage point higher than where we finished 2023 and what's driving that. And a lot that's driving that is around sort of the cost action that we've been taking and that they've broadly different heritage equity note upwards agree, we've been driving down diesel consumption and therefore overall costs and within Nigeria, in particular bits and pieces in other markets as well, but mainly in Nigeria. And I know part of it is the reaction to where the macro is globally, where the macro is now out in markets like Nigeria, we've been I mean, looking out at our cost structure and where we can be more efficient will not write business in more so than intelligent ways. And so that cost. So there's a lot of focus from us right now, a strategy to 2024 around cash generation. And you see that embedded in our lower CapEx goes significantly lower CapEx over 2024 versus even a couple of prior years. And CapEx spend is also evident in the margins in terms of where we're looking to drive efficiency in our cost base was in earlier.

Sam Darwish

I think you went through the wire also and this is why also kind of like artificial intelligence and the proliferation of artificial intelligence is critical to whatever we're doing at the moment on on Crown for uses of the operating infrastructure, which has a lot of challenges in terms of logistics. These are delivery feed maintenance, given the complex nature of what we operate now, suddenly all the data because of the elevated level of compute we find ourselves available to us through the LL and what the big guys have created. Suddenly, we have now this massive tool available to us with a lot of data that we've accumulated over the decades. And we are now in the middle of kind of like redefining how we operate, using that a massive compute availability and part of what you're seeing here is because of that, and you're going to see more of that over the next few months.

Eric Luebchow

Thanks, Sam.

Sam Darwish

Thank you.

Steve Howden

Thank you.

Operator

Stella Cridge, Barclays.

Stella Cridge

Good afternoon, everyone, and thank you. Next for all the updates. I was wondering if I could ask about the status of the other contracts which you have coming up. So annual deals update on Ivory Coast, you've got Zambia to relent the two. And despite that, of course, this year, just wondered if there was any update on the status there in terms of the related question, and you also referenced the Comex Mexican nitrogen division are seeing because I was looking at changes to existing tower leases, what kind of changes would you be open to from a cost side?

Sam Darwish

Okay. But look, we don't comment on ongoing discussions, MTN and us in particular as I alluded earlier, we've been partners for two decades. We are engaged on multiple fronts at any given point in time. And we do like to announce things that are kind of like that happened that are basically dusted and cleared, and that's why we announced basically Cote d'Ivoire and Cameroon at the moment. To be honest, the only thing I would say is that everyone has seen from MPNs most recent announcement from our clients and numbers in Nigeria that they're under pressure. I mean, this massive negative movement of the currency, which is roughly 250% negative in almost 14 months. It's definitely taking its toll on them. And these guys are mostly local currency revenue generating companies. And at the moment, we feel our job and our duty is just to stand by them and find ways to help elevate the pressure. I mean, this is not our first rodeo. We've seen this before we've stood up before and we've supported them. And at this stage of time, that's what we're going to continue to do that. That's what I can say.

Stella Cridge

And then just quick follow-up may add, obviously appreciate questions in relation to that yet. And hopefully The update is posted in terms getting current CRD and cover any kind of what's behind this data and more are coming on some of the smaller ones as well. But also just to kind of reiterate DSL announcement that we put out in January in Nigeria, which was covering 39 hundred tenancies over five year period. And a question on the co-location.

Steve Howden

So whilst obviously there's directly a lot of focus on MTN, and that's the case with the IHS as well. And we're also making sure we continue progressing and moving forward in a material way with other key customers as well and any mix benefit of taxes.

Stella Cridge

And I think if they can pay bills to a hosting of their liquidity stock that site. Could you just comment on that?
In terms of the cash back to the comment, how much is the holdco versus opcos. This $115 million release of cash collateral is this included in the cash balance at the end of 2023.

Steve Howden

Interestingly, this Ivory Coast refinancing strictly debt, what percent of what was actually the benefit at the holdco in terms of center of intercompany loans as Sure.
As I said on the bilateral, that was a phone PDA. I note the proxy $115 million cash collateral is not included in the December 31st cash flow. So that is additional cash liquidity. And as we said that that will reduce interest on that both specific obligation by about 3%. So and I stated interest stream of cash leverage and positive. And so that lowers the risk of doing that on the COVID wireline. And so that was. And so is there I know you and I spoke about before and spoken with many other valves.
Well with yes, we have US dollar obligations at the top and can we utilize our local markets and the global currency markets trying rotate them that dollar obligation down back into the country that low price level. So that was just one example of that. And $116 million equivalents, and both of which have been shifted down into COD. So what we've done is we've raised that money and Cote d'Ivoire, and there was a tiny stub of existing debt in COVID. Whilst we'd refinance that, we're in the process of upstreaming that capital up to the holdco where we will extinguish the US dollar obligations against that that was signed just before the end of the year by the upstreaming, the drawdown, the upstreaming was done. It hasn't increased yet, but it did the price being completed last year and the year end cash numbers. And so that's another upside to the business as a nice example, we were able to get extremely comparative, if not slightly cheaper interest rate in the local market versus US-dollar obligations. So again, managing maturities and managing as currency and the balance sheet, but also making sure we take care of interest expense as well.
And the split of the holdco OpCo cash pursuant to sorry, we emphasized that it hasn't moved materially in the last quarter or so ago. So that's another $3 billion of cash around the Group and as a comfortable balance sitting at a single show.

Stella Cridge

Yes. Thank you.

Operator

That brings us to the end of the IHS Holding Limited 4Q and full year earnings results conference call. Should you have any questions, please contact the Investor Relations team via the e-mail address investor relations at IHS Towers.com. The management team. Thank you for your participation today and wish you a good day.