IHS Holding Limited (NYSE:IHS) Q3 2023 Earnings Call Transcript

IHS Holding Limited (NYSE:IHS) Q3 2023 Earnings Call Transcript November 14, 2023

IHS Holding Limited misses on earnings expectations. Reported EPS is $-0.79 EPS, expectations were $0.11.

Operator: Good day and welcome to the IHS Holding Limited Earnings Results Call for the three-month period ended September 30, 2023. 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’m Colby Synesael, the EVP of Communications here at IHS. With me today are Sam Darwish, our chairman and CEO, and Steve Howden, our CFO. This morning we published our unaudited financial statements for the three-month and nine-month periods ended September 30, 2023 on the investor relations section of our website and issued a related earnings release and presentation. These are the consolidated results of IHS Holding Limited, which is listed on the New York Stock Exchange under the ticker symbol IHS. It 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 in 6-K, 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, 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 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 with the Securities and Exchange Commission and other filings with the SEC. We’ll also refer to non-IFRS measures, including adjusted EBITDA, that we view as important to assessing the performance of our business, and ALFCF, that we view as important in assessing the liquidity of our business.

Reconciliation of non-IFRS metrics to the nearest IFRS metrics can be found in our earnings presentation, which is available on the investor relations section of our website. 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 third quarter 2023 earnings results call. We are reporting a solid quarter of performance across our KPIs, with revenue and adjusted EBITDA in line or ahead of our expectations, notwithstanding the recent current devaluation, while CapEx was meaningfully below. As everyone should know from our prior earnings call, these Q3 results are the first full quarter of results post the significant devaluation in the Nigerian currency, the Naira. As a reminder, the Naira devalued by 59% from 472 in mid-June to 753 at the end of Q2. And in Q3, average 768 versus 431 last year, a 78% devaluation that drove a 10.4% reduction in our reported dollar revenue. The Forex protection mechanism in our revenue contracts have begun to reset, and we will see more evidence of this resetting in our Q4 results.

Overall, the business continues to perform well, driven by solid organic growth of 30.6%, with contributions across each of our segments that reflects robust secular demand and the quality of our contract structures. The reduction in CapEx reflects an increasingly more balanced approach we are taking to growth and cash generation, in light of what remains a challenging macroeconomic environment across the world, but particularly in Nigeria, and we now expect to be towards the low end of our CapEx guidance range for the year. On a quarter-over-quarter basis, the Naira represented a negative $139 million impact to revenue, driven by the devaluation that began in mid-June. Positively, we expect to see a notable sequential sell-off in revenue in Q4, as we see the full benefit of our contractual Forex resets kick in.

As a reminder, 53% of our revenue is tied to our currency, of which really all USD contracted revenue resets quarterly or sooner, and nearly all of our revenue has an annual contractual escalator, of which most occur in January. Given these expectations, we are maintaining our 2023 guidance for revenue, adjusted EBITDA and CapEx. I’d also like to point out that we’ve stopped reporting RLFCF, or recurring leveraged free cash flow, and have replaced it with ALFCF, or adjusted leveraged free cash flow, which better reflects our liquidity position. We maintain the same range for ALFCF that we had for RLFCF, but Steve will outline the slight change in definition between these two metrics later on. We expect our heightened focus on cash generation to be even more evident in 2024, as we pursue operational efficiencies through productivity enhancements, cost reductions, and slowing of CapEx versus recent years.

In addition, we are constantly reviewing our portfolio of markets and assets, and will continue to focus our capital allocation on what we believe to be high growth core markets. We believe these initiatives will help enable IHS to sustain healthy double-digit organic growth, while delivering the meaningful cash generation inherent in our business model. We look forward to sharing our 2024 guidance next quarter. Sliding to slide seven, I want to discuss some of our key highlights for the quarter. Starting with Nigeria, as I mentioned earlier, the significant devaluation that began in mid-June, in addition to access to Forex, remain a challenge. We are, however, encouraged by the appointment of a new governor of the CBN in September, and more recently reported efforts to clear approximately $1 billion of the Forex backlog.

These represent positive developments, but there is still much more for the government to do. We have not upstreamed from Nigeria since the $65 million completed in H1 2023, but we will continue to assess opportunities for upstreaming as they arise in the remainder of 2023. I would like to remind our audience that we have operated in Nigeria in particular for over 22 years, and over that period we’ve gone through other outsized devaluations, including most recently in 2016. And each time our business continued to grow thereafter, and we have confidence we will do so again this time. For example, the Naira devalued from approximately $1.97 to $3.05 in 2016, a devaluation of 55%. Back then, we saw a similar next quarter negative impact to revenue and profitability as we are seeing now, but then we saw revenue and profitability build back over the next few quarters as our Forex reset and escalation mechanisms kicked in, leading to the Nigeria business delivering revenue growth of 22% in dollar terms the year after 2017, an indication of how resilient our business was to devaluation as contract resets and escalations kicked in.

Moving on, first to Brazil and then to South Africa. In Brazil, we remain focused on our sizable build-to-suit program, and during the quarter we built 294 towers in LATAM and remain on target to achieve our goal of 750 or more builds for the year. We also refinanced our existing tower co-term loans via the issuance of local debentures, as we continue our focus on raising more debt in local currency to better align our debt profile with our revenue profile. The Brazilian Central Bank again reduced interest rates by 50 basis points in early November, the third consecutive time over the past few months. Now to South Africa, while we are encouraged by the improvement we have seen in the level of load shedding since last quarter, we continue to evaluate our Power Managed Service business with MTN and others.

We will update you as appropriate and if necessary. On stock liquidity, on October 16th, we freed up another 180 million shares, and therefore all of the shares that had been subject to lock-up under our shareholder agreement are now freely tradable, albeit certain holders remain subject to Rule 144 requirements. The expiration of the lock-ups over the past 18 months appears to have had a positive impact on our trading liquidity, which has more than tripled from 122,000 to over 400,000 shares per day on average. During the third quarter, we also repurchased nearly 950,000 shares and spent $4.8 million as part of our up to $50 million share buyback program that expires in August 2025. Shifting to our balance sheet, we have over $850 million of available liquidity between cash and undrawn facilities, plus various undrawn facilities at the OpCo level.

This reduction by $100 million from last quarter is because we have reduced the undrawn portion of our 2022 term loan by $100 million to $130 million, but extended the availability period of the undrawn balance from October 2023 to April 2024. Additionally, derisking our capital structure remains a focus of ours, and we have successfully extended the maturity of our 300 million group revolver from March 2025 to October 2026. With net leverage of 3.2 times, we are still comfortably within our target range of 3 to 4, and please remember that we have no meaningful debt maturities until Q4 2025. We feel good about our balance sheet position, but we continue to monitor the market and evaluate ways to further strengthen our position as we have again recently done.

Lastly, regarding shareholder considerations, we continue to engage in constructive dialogue with Wendel and are making progress towards our mutual goals. We also continue to engage with MTN group to better align on various commercial and governance matters and will provide additional updates at the appropriate time. With that, I will turn the call over to Steve.

Steve Howden: Thanks, Sam, and hello, everyone. Turning to slide nine, as Sam mentioned, we’re pleased to show our Q3 performance was in line or better than expected, considering the backdrop of the significant currency devaluation in Nigeria, which I’ll reference at various points today. As you see here, towers are up almost 1% and tenants up more than 2% in the third quarter 2023 versus third quarter of 2022, while lease amendments again increased by double digit percentages. On a reported basis, revenue and adjusted EBITDA declined in the quarter, consistent with our prior expectation and guidance that the full impact of the June devaluation would not be reflected in our results until this Q3. Specifically in Q3, revenue declined by 10.4%, adjusted EBITDA by 15.5%, and ALFCFL by 11.2% in each case on a reported basis and driven largely by the impact of the devaluation, more than offsetting the continued strong organic activity across our markets.

However, it’s worth noting that the period on period comparison is a bit distorted by the presence of some one-off revenue and adjusted EBITDA in the third quarter of 2022. And as we noted last quarter, we did see some pull forward of anticipated Q3 23 revenue into our Q2 results. Our adjusted EBITDA margin decreased by to 49.7%. Again, I draw your attention to what Sam said earlier about having seen a similar devaluation in Nigeria in 2016 and the build back of our earnings the following quarters as our contractual protections kicked in. You also see total CapEx fell by nearly 40% in the quarter, largely due to lower capital expenditure for Nigeria and the SSA segments, partially offset by an increase in LATAM, all of which I’ll discuss shortly.

As Sam mentioned, we are taking a sharp look on CapEx for the remainder of this year and into next year, focusing on the projects that we believe promised the highest returns and are the most strategic. Finally, our consolidated net leverage ratio was 3.2 times at the end of Q3, essentially flat with last year and a 0.1 times increase versus Q2 2023. Again, this is consistent with the expected increase we flagged last quarter due to the devaluation, albeit still within our three to four times range as we had guided. Turning to our revenue on a consolidated basis, you can see how the devaluation turned a quarter of strong organic growth into a 10.4% reported decline in consolidated revenue for the third quarter. Organic revenue growth of 30.6% was driven primarily by FX resets, CPI escalations and lease amendments.

Power-related revenue slightly increased due to increased power pass through in South Africa. On the right-hand side, you can see the organic growth rates of each of our segments for the quarter, with Nigeria delivering 36% organic growth. In organic growth, the Q3 was less than a million dollars, primarily due to the fifth six stages of acquisition. On slide 11, you can see our consolidated revenue adjusted EBITDA and adjusted EBITDA margins for Q3 2023. As we’ve discussed, the Nigeria devaluation drove a 10% decrease in reported revenue in the third quarter, despite quarterly organic revenue growth of over 30% that again demonstrated the continued strong top-line growth trends of the business, led by Nigeria. In Q3 2023, reported revenue now reflects a full quarter’s impact from the Nigeria devaluation and includes $139 million headwind versus rates last quarter, albeit with a $2 million tailwind versus the $775 Naira to the dollar FX rates and $3 million when including all FX assumptions assumed for last quarter in our guidance.

While our quarterly FX resets on the U.S. dollar denominated portion of our Nigeria contracts did kick in on the 1st of July as expected, we have previously noted that some of these resets are calculated using the average rate of the prior quarter and therefore wouldn’t yet fully make up for the mid devaluation in these third quarter’s results, but will be reflected in our Q4 results. Furthermore, the comparison is distorted a bit due to the $18 million of one-off revenue and adjusted EBITDA in the third quarter of 2022. In Q3 2023, adjusted EBITDA of $232 million decreased 15.5% and adjusted EBITDA margin was 49.7% down from the prior year. The year-over-year changes in adjusted EBITDA and margin for the third quarter primarily reflect the decrease in reported revenue I’ve already discussed and the absence of the one-off items alongside an increase in administrative expenses.

Power generation cost of sales decreased by almost $24 million, driven by a $35 million diesel cost decrease, primarily due to a 38% decrease in the price and a 5% decrease in consumption of diesel in Nigeria. It was offset by an $11.6 million increase in electricity costs, including as a result of Project Green. As previously highlighted through Project Green, we continue to prioritize alternative sources of power to reduce our dependency on diesel. On slide 12, we first review our adjusted levered free cash flow or ALFCF, which as Sam pointed out, replaces the RLFCF metric. The primary differences from RLFCF is that when reconciling from cash from operations, ALFCF only includes the cash costs of business combination transaction costs, other costs and other income.

ALFCF also excludes the reversal of movements in the net loss allowance on trade receivables or bad debts and impairment of inventory. This better reflects the liquidity position in each period. In Q3, 2023, we generated ALFCF of $80 million, an 11% decrease versus Q3 of 2022, due to a combination of factors, including the decreased revenue and adjusted EBITDA we’ve discussed already, and increases in net interest paid and income taxes paid, all partially offset by decreases in maintenance CapEx withholding tax and lease payments made. However, as a reminder, the ALFCF growth rate includes the $18 million of one-off revenue in the third quarter of 2022. Our ALFCF cash conversion rate increased to 34.3% versus the prior year’s quarter. Turning to CapEx, in Q3, 2023, CapEx of $105 million decreased nearly 40% year-on-year.

This decrease was primarily driven by a lower capital expenditure for our Nigeria and SSA segments of $72 million and $22 million respectively, partially offset by an increase in capital expenditure of $25 million for our LATAM segment. The decrease in Nigeria was primarily driven by decreases related to maintenance capital expenditure, Project Green and new sites capital expenditure, while the decrease in the SSA segment is primarily driven by decreases related to new sites capital expenditure and some other capital expenditure we had. The increase in LATAM is primarily driven by increases related to new site CapEx. Our spending for Project Green was $8.3 million during the third quarter of 2023 and the year-to-date spend was $83 million, while we have spent a total of $187 million since we began the project versus the original $214 million total CapEx forecasted.

On the segment review on slide 13, I’ll first walk through our Nigeria business, the Nigeria macro environment remains complex as we discussed in our prior earnings calls this year. We are still encouraged by the swift initial actions taken by the new government, although it is clear that more work needs to be done. We remain in close contact with our key customers, two of which have again recently published healthy top-line results in their businesses, albeit also showing the impacts from the Nigeria devaluation. We also continue to work closely with various regulators, our vendors and our local banking partners to continue to best position IHS. While we remain cautiously optimistic, U.S. dollars continue to be difficult to source, with FX reserves in the country having decreased to $33.2 billion at the end of September 2023 from $34.1 billion at the end of June 2023.

Market participants continue to believe that the CBN will need to step in at some point to inject liquidity into the system and clear the backlog of FX transactions, and there have been published stories recently regarding potential government actions already underway. Meanwhile, the price of both oil and ICE Gasoil have increased recently. Looking at ICE Gasoil, it was $911 per tonne in Q3 of 23, up from $687 per tonne in Q2 of 23. Moving to real GDP growth, it expanded by 2.3% in the quarter, but with a now lower projected full year 2023 growth rate of 2.9%. Inflation jumped to 26.7% this September versus 20.8% in September 22, with the removal of the petrol subsidy a large factor therein. Overall, however, we continue to believe the business remains well positioned for long-term success and to endure the continuing macroeconomic challenges.

To this point, our Nigeria business once again delivered strong organic results in the third quarter, tracking well on all key metrics. Revenue of $271 million decreased 24% year-on-year on a reported basis, but increased 36% on an organic basis, in each case reflecting the devaluation over the quarter and the other items we’ve discussed. Organic growth was driven primarily by FX resets, escalations and lease amendments, and the negative FX impact was $213 million, or 59.9% due to the devaluation. Our tower count decreased by 3% and our total tenant count increased by 0.3% each versus the third quarter of 2022, largely reflecting the planned decommissioning discussed earlier this year, which does not impact revenue. Our co-location rate consequently improved to 1.58 times, up from 1.53 times in the third quarter of 2022.

Lease amendments continue to be a strong driver of growth, with these increasing by 14.3% quarter-on-quarter, as our customers added additional equipment to our sites, particularly 5G upgrades. Q3 2023 segment-adjusted EBITDA in Nigeria was $158 million, a nearly 25% decrease from a year ago, and segment-adjusted EBITDA margin was down 90 basis points to 58.2%, in each case largely driven by the Naira devaluation impacting revenue, partially offset by an overall decrease in cost of sales. In our Sub-Saharan African segment, towers and tenants increased by 1.6% and 2.7% respectively versus the third quarter 2022. Revenue increased by 16%, of which organic revenue grew 21%, driven primarily by escalations, new sites, co-locations, and FX resets, while FX was a 4.4% headwind.

Segment-adjusted EBITDA increased by 4.4%, driven primarily by the increased revenue, partially offset by increases in cost of sales and administrative expenses. Segment-adjusted EBITDA margin decreased to 49.7% from 55.3% in Q3. We continue to monitor the macro environment in South Africa, particularly the ongoing power load shedding by the national utility, which appears to have moderated recently, and as previously discussed, will continue to evaluate our power managed services offerings. In our LATAM segment, towers and tenants grew by 6.6% and 5.2% respectively, whereas revenue and segment-adjusted EBITDA increased by 23% and 27% respectively, in all cases versus Q3 2022. In Brazil, our second largest market with 7,388 towers, macro conditions were largely positive as FX rates held steady and interest rates came down.

While inflation did go up Q-on-Q we saw it take back down again in October. In our LATAM segment overall, Q3 2023 organic revenue increased 15%, driven primarily by an increase from I-Systems fiber deployment and escalations. Segment-adjusted EBITDA grew by 27% in the quarter, with a segment-adjusted EBITDA margin of 73.6%, a 240 basis point increase. In the MENA segment, towers and tenants grew by 10.1% and 10.6% respectively in Q3 2023, and revenue grew by 13%, including 7.4% organic revenue growth. Segment-adjusted EBITDA grew by 35% in the quarter, with a segment-adjusted EBITDA margin of 50.2%, reflecting the increased revenue and a decrease in cost of sales. On to slide 14, and I’ll briefly highlight our KPIs. As of September 30th, our tower count was 39,739, up 0.9% from the same period last year, driven primarily by ongoing new sites in LATAM and Sub-Saharan African segment.

As you can see in the chart on the top right, collectively we built over 400 towers during the third quarter of 2023, and as we continue to see the ramp up in build through the quarters of 2023 to achieve the full year target of approximately 1,250 new build sites. Total tenants grew 2.3%, with the co-location rate at 1.49 times, up slightly versus last year. We continue to point out that lease amendments are a significant factor for us, particularly in our Nigerian segment, given the historic 4G and now increasing 5G activity we are seeing. Lease amendments increase by almost 17% year-on-year. On slide 15, we look at our capital structure and related items. At September 30th, 2023, we had approximately $4.14 billion of external debt and IFRS 16 lease liabilities.

Of the $4.14 billion of debt, $1.94 billion represent our bond financings, and other indebtedness includes $370 million that we drew down in 2022 from the $600 million three-year bullet term loan at the IHS Holding Limited level. However, in October, we reduced the available undrawn commitments, as Sam mentioned, under this term loan by $100 million, now down to $130 million, and extended the availability period of this undrawn balance to April 2024. Capacity under the Group RCF has increased from $270 million to $300 million in the quarter, and in November, we extended the maturity of this facility from March 2025 to October 2026. There are currently no amounts outstanding under either the Group RCF or the local currency RCF we have in Nigeria.

Additionally, during the quarter, in Brazil, we issued debentures for R$1.2 billion, approximately $238 million, that amortized semi-annually until maturity in August 2031. The proceeds of the issuance of the debentures were used to repay in full the existing principal debt of R$714 million, which is approximately $142 million, as well as for general corporate purposes. This Brazilian local currency refinancing extended the maturity of the outstanding debt and reduced the interest rate versus the prior debt. Cash and cash equivalents was essentially flat at $425 million at September 30, and in terms of where that cash is held, approximately 15% of the total cash was held in Naira at our Nigeria business. Consequently, from all these moving elements, at the end of Q3 2023, our consolidated net debt was approximately $3.7 billion, and our consolidated net leverage ratio was 3.2 times, up 0.1 times from June, and still at the low end of our net leverage target range of three to four times, further demonstrating our strong balance sheet.

However, similar to what we said last quarter, I would note that in the light of the Nigeria devaluation, we do expect leverage to tick up slightly more into the first half of 2024. Moving to slide 16, we are maintaining our guidance for revenue, adjusted EBITDA, and CapEx. However, we are replacing our LFCF guidance with ALFCF. Although we have retained guidance in absolute terms, we have reduced our expectations for the Naira for the fourth quarter to 775 Naira to the dollar from the previous 750 Naira to the dollar. As a result, we now expect to be at the low end of the range for adjusted EBITDA. We also expect to be at the low end of the range for CapEx, but this is more a reflection of proactive decisions we are making to curtail our spend, and that will continue into 2024.

Our ALFCF guidance is the same range we previously had for our LFCF. However, it includes an approximate $8 million benefit in terms of the difference in calculation, which offsets the otherwise FX headwind we expect to see in adjusted EBITDA. As a reminder, we expect to see a step up in revenue in Q4 2023, as we see the full benefit of our FX resets tied to the Nigerian devaluation that began in mid-June. Guidance also continues to include approximately $25 million in power pass-through revenue in South Africa, of which we have recognized $13 million through Q3. I do want to again caution that timing of such moves is difficult to predict and could be delayed, although we do not anticipate that this would impact adjusted EBITDA or ALFCF. For the year, we now expect to build approximately 1,250 towers.

This includes an additional 50 towers in Nigeria versus our previous guidance. And on slide 17 on the top, you can see revenue by reporting currency for Q3 2023, whereas on the bottom we provide the breakout of revenue based on contract split. The right side shows the average annual FX rate assumptions used in our 2023 guidance and has been updated since last quarter. This equates to $11 million downside for the year versus rates assumed last quarter. And that now brings us to the end of our formal presentation. We thank you for your time today, and operator, please now open the line for questions.

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Q&A Session

Operator: Thank you. [Operator Instructions] Your first question comes from the line of Greg Williams from TD Cowen. Your line is open.

Greg Williams: Great. Thanks for taking my question. My questions are really around the migration of MTN over to American Tower. It sounds like it’s becoming a reality. And just wondering if you’re preparing for this migration and what the impacts would be in the past. I think you noted it’s $45 million a quarter, but back then the Naira was at $508 million, and with the deval, just hoping for an update on the exposure, the impact, and how it ramps out and sunsets in 2025 and beyond. And the second question is just how practical is it to move 2,500 towers in a short timeframe? And the risk is how much further can MTN go as you think about your contracts with the Ivory Coast and Rwanda and Zambia, and if there’s a threat, they could go further from here. Thanks.

Sam Darwish: Hi, Greg. This is Sam. Thanks for the question. Many questions. Let me try to dissect them into maybe two or three categories. I’ll start by talking about probably the materiality to the business going forward. I mean, look, even if they successfully move these tenancies, which is very questionable, we’ll talk about in a second, it is still not material to the business. We have around 60,000 tenants across 40,000 sites of the group, and these 2,500 tenants in Nigeria barely represent 4% of the total towers, maybe 7%, 8% of our group revenue. And the majority of the other renewals with MTN in Nigeria are coming up in 2029 and beyond. The average tenure of our contracts over seven years out, with many beyond 2030.

So we feel good about that part. And given our organic growth rate, which has been more than 20% in Nigeria over the past three years, we believe that we can make up for the impact of these towers through our various commercial relationships. Now also, I think it’s important to note that the market situation across all our markets, Greg, is that they are underserved. It’s an important point because, for example, we have more than twice the SIM cards per tower in Nigeria than in mature markets like the United States. Thousands of villages remain without even cell phone coverage. This calls for more towers to be built, even before we deal with issues like density requirements for 5G, the increasing subscriber demand for capacity, the quality of service, the expanding coverage.

So we firmly believe that capital and resources will continue to flow to growth and not to swapping towers from one operator to another. So that’s in terms of materiality. Now, in terms of other renewals in other markets, look, outside Nigeria, many of our — I mean, in Nigeria in particular, I need to highlight that we are the largest by far. You remember our closest competitor, we have 16,000 towers. Our closest competitor has 8,000. That’s half of our size. Outside Nigeria, many of our other markets even lack a credible case alternative. It may take time and engage negotiations, but we feel good about our prospects given the alternatives or actually lack of their own to be more accurate. So that’s on this matter. Now, in terms of the third matter, do we think that transition or that relocation is practical or pragmatic?

Look, maybe let me start by addressing it from a different perspective. Moving business from one tower operator to another globally is very rare. And we have, as a sector, one of the lowest customer churns for good reason. So to better put this into perspective, maybe let’s look at the United States and the situation many of you guys are familiar with during the 2016-2019 period when AT&T engaged in a very public dispute with the tower cause with public declarations to move towers and legal action threats and this and that over a two and a half year period. And after two and a half year period, if you look at the SEC filings, they only moved five, six hundreds out of their 65,000 towers from one operator to another under 1%. Now this is the United States with its relatively advanced infrastructure.

And this is AT&T and barely five, six hundreds towers were moved in a period of two and a half years. Now look at Nigeria by contrast. Unlike the United States, 95% of all towers in Nigeria don’t have even a connectivity to the grid and need power systems, complex to run, complex to build, and of course, polluting the environment. Unlike the United States also, there is a limited local manufacturing and almost all of the materials that need to be built to build the towers and power systems will need to be imported into the country. Then unlike the United States, there are significant security, logistical concerns of transporting and building the tower, causing delays, causing additional costs, causing unnecessary headaches. Then you add the multiple level of environmental and regulatory permits, very complicated permitting framework in Nigeria by the way.

Then after all this, the process of relocating and optimizing the radio network itself that covers the millions of customers that are being served using these towers and they have to do it after they build this tower. Now remember again, we are the largest tower provider in Nigeria with 16,000 towers as I said, and the next nearest competitor has 8,000. This means that if you are moving towers, you need to likely build a substantial portfolio of the new towers and can’t just simply co-locate on existing tower locations that you have. So in a nutshell, the resourceful AT&T ended up relocating 5,600 sites over a two and a half year period in the United States. While this relocation project that is being suggested suggests moving 2,500 in almost a year in Nigeria.

I mean, what do you think? Look, this is why we are comfortable about where we are, but again, we have to be respectful, we have to be mindful of our clients’ relationships, we continue to engage, it’s important to support our customers in every way possible. We are a service-driven company, we understand that and believe that and will continue to think this way.

Greg Williams: Great, thank you for the color, Sam.