Currency devaluation results in $1.9 billion in losses in the 2023 fiscal year
The world’s fourth-largest independent tower company, IHS Towers ($IHS), has reportedly laid off over an 100 of its workforce. Currency devaluation in Nigeria which represents its biggest market has squeezed its profits tight. According to an insider account of the move, the layoffs cut across several departments within the company.
The most affected members of the company were senior employees and the network surveillance team. The same person revealed that most of the affected senior employees have spent as much as a decade as IHS Towers. They also added that these senior members of the staff have received significant severance packages.
The company made it clear to to them, according to the insider, that they will laid off not because of underperformance, but because of how the economy has adversely affected the company. IHS Towers did not immediately respond to requests for comments.
IHS Towers has been facing immense pressure from investors over its poor financial performance in 2022. The company lost $409 million in the fourth quarter of 2023 after a currency devaluation in Nigeria shrunk revenues and caused FX losses from USD loans.
The company, which currently boasts of a workforce of about 1,600 people, reported a $1.9 billion loss in 2023, a 304% increase from the previous year’s losses. Its market capitalisation is $1.3 billion, a $6 billion decline since 2021.
While its share price has slightly rebounded in August to $3.56 after trading at $2.98 in July, it is still a far cry from the highs of 2021, when it sold for $21.
IHS Towers operates over 40,000 towers in Africa. These towers represent roughly 25% of the continent’s entire tower infrastructure, which it leases to telcos like MTN and Airtel. This service is crucial for Africa’s digital economy plans, as towers provide the backbone for internet connectivity. However, rising fuel prices, maintenance costs, inflation, and FX volatility in Nigeria, which accounts for over half of IHS’s sales and revenue , have threatened the business.
In the first quarter of 2024, the business spent $88.8 million on power, its largest operating cost.
“The company used more than $1.5 billion in cash last year for investing activities, but the line items on the company’s published statement of cash flows for such investing activities are not explained in any meaningful way,” a shareholder said in a June 2023 letter.
Gimba Mohammed, the director of government and external relations at IHS Towers, said at a conference in August that it cost the business more than ₦14 billion to fix fibre cuts between 2022 and 2023.
As IHS Towers continues to navigate the economic challenges in Nigeria, the recent layoffs serve as a stark reminder of the impact that macroeconomic factors can have on even the largest players in the telecommunications infrastructure sector. The company will need to strategically manage its resources and optimize operations to weather the ongoing financial storm and restore investor confidence.
