IHS Towers, Africa’s largest telecom tower company, has secured a $439 million loan to strengthen its operations. The loan will help manage currency risks and refinance its existing debt.
The company will use the funds to pay off a $430 million debt from October 2022. This was due to mature in 2025. IHS Towers refinanced early, which could allow it to secure better terms, reduce interest costs, and extend its repayment timeline.
The transaction will not significantly change the company’s debt-to-equity ratio, as it is described as “leverage neutral.”
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IHS Towers Loan Structured in Two Currencies
Almost half of the new loan, $255 million, is in US dollars, while the rest is in South African Rand. Both parts of the loan have a 4.50% interest rate.
The US dollar portion is tied to the three-month SOFR, and the South African Rand portion is tied to the three-month JIBAR. These rates fluctuate with the market, which could impact the total borrowing cost.
The entire amount is structured as a bullet-term loan. This means that IHS Towers will repay the full amount at the end of the five-year term, rather than making regular payments.
This structure gives the company immediate access to the full loan, but it must prepare for a large lump-sum repayment.
“This is a group-level financing and therefore has no direct impact on any particular market,” an IHS Towers spokesperson told TechCabal.
Tough Financial Times Amid Losses and Layoffs
IHS Towers is working to manage its financial situation after reporting significant losses in 2023. The company posted a $1.9 billion loss, a sharp increase from $469 million in 2022.
In mid-2024, IHS Towers laid off 100 employees as it struggled with currency devaluation in its primary market, Nigeria, which squeezed its profit margins.
The company has also renegotiated contracts with major clients like MTN Nigeria. It now collects fees in both US dollars and local currency, with an additional component for diesel costs to manage fluctuations.
This loan marks a significant step in IHS Towers’ efforts to stabilize its finances and navigate the complexities of operating across multiple regions with varying currencies.