IHS Towers: A Comeback Story for 2026

Shares of London-based IHS Towers crashed during the post-COVID turmoil of 2022-2024. But could they rise again?  

Cell towers are a critical element of communications infrastructure, enabling the flow of information that underpins modern life. And in an increasingly digital world, the proliferation of AI and other technologies suggests that the importance of towers will only grow. London-based IHS Towers looks poised to benefit. 

Company Overview 

IHS Towers (IHS $7.50 as of 1/7/26) is an emerging market tower company and the 5th largest independent tower company in the world. It operates approximately 37,000 towers, which provide connectivity to 600 million people in Africa and Latin America. Customers include the largest Mobile Network Operators (e.g., MTN and Orange), and IHS has the #1 market position in five of its seven countries. For 2025, IHS expects revenue of ~$1.7bn, with 10% organic growth and operating cash flow of nearly $1bn.

IHS Tower geographic footprint (source: IHS Investor Presentation)

The Tower Business Model  

U.S. investors are familiar with industry leaders American Tower, Crown Castle, and SBA Communications, which have all delivered remarkable long-term returns to shareholders. The strength of the tower business stems from several factors. 

For one, the primary customers are telecommunications carriers, which sign multi-year contracts (sometimes lasting 10 years or more) to rent space on towers. Once installed, moving equipment to a different tower is costly and disruptive to the network, so it is rarely done. Contract renewal rates are typically 98% or higher, and contracts include built-in rent escalators. Furthermore, zoning laws and "not-in-my-backyard" opposition are significant barriers for new tower construction. As a result, incumbents are well entrenched.

The tower business also features high fixed costs and minimal variable costs. The initial costs are tower construction, ground equipment, and activating the first tenant. However, adding a second or third tenant incurs little expense, which can lead to potentially attractive tower profits (see diagram).

The fixed-cost nature of towers (source: Helios) 

Furthermore, towers benefit from numerous secular growth trends in society. More wireless subscribers, more devices, increased usage, and new technologies (e.g., AI and the Internet of Things) —these factors all contribute to rising tower demand over time. We believe the markets where IHS operates are structurally favorable due to their large and growing populations, low penetration of 4G and 5G wireless technologies, and a high ratio of subscribers per tower (i.e., lower signal quality) compared to developed countries. American Tower Corp., which competes with IHS in both Brazil and Nigeria, forecasts that data usage per smartphone will increase by 14% annually in each of these countries from 2025 to 2030. 

Slide from IHS Investor Presentation showing growth vectors over the next few years

Problems & Solutions 

So what went wrong? Following the COVID-19 epidemic, IHS’ business was jolted by the resetting of interest rates (higher) and significant macroeconomic adjustments in its key markets during the 2022-2024 period. These changes caused currency devaluation and increased customer churn, which disrupted revenue growth and further unsettled investors. Essentially, IHS learned the hard way that its business had both too much debt and too much currency exposure.  
 
However, the founding management team owns over 5% of IHS, and it has moved swiftly to de-risk the company.  It proceeded to divest non-core markets, simplify operations, and deleverage the balance sheet. Assets in Kuwait and Peru were sold, and management swore off acquisitions. The company used sale proceeds, along with continuing operating profits, to pay down debt; IHS is now at the low end of its targeted leverage range (3x net debt/EBITDA) and will soon enjoy an excess cash position. Management also strengthened the business by tying over 60% of revenues to hard currencies and revising contracts to pass energy costs through to customers. 
 
Concurrently, the macroeconomic environment for IHS has stabilized. For example, in its most important market, Nigeria, the currency devaluation and economic reforms of 2023 are now bearing fruit: the World Bank projects GDP growth of 4.4% in 2026, with inflation trending down steadily and the fiscal deficit budgeted at a manageable 4.3%. 

Valuation

Since its 2021 IPO at $21/share, IHS shares have thus far been disappointing. However, at its recent price near $7.50/share, IHS stands out starkly in the global tower landscape. This is evident from several angles, including headline valuation metrics and private market values in the lively global M&A market for towers.¹ 

We estimate that IHS is currently valued at approximately 5.5x 2026 EBITDA. An emerging market peer (Helios Towers) is priced at 8x EBITDA, while leading global tower companies are trading at 12-21x EBITDA, despite their slower growth. (Industry leaders American Tower, SBA, and Cellnex are all active in emerging markets.) This contrast is even more striking when considering the bottom-line cash flow of IHS: 6x free cash flow—for a communications infrastructure company—is remarkable, in relative or absolute terms. And catalysts loom. 

Catalysts & Risks

Since management has ruled out acquisitions, substantial returns of capital to shareholders are now in store for the first time in the company’s history.² This will likely be announced in March 2026 (with the 2025 annual results). Such capital returns could simultaneously attract new investors and further enhance the per-share value of IHS.  

We also expect ongoing organic growth coupled with moderate new tower construction.  In October, IHS announced a new customer agreement in Brazil that aims to build up to 3,000 new towers over five years. Lastly, management reports that the elevated customer churn (which has dampened growth) has run its course; churn should revert to normal levels in early 2026. 

As always, there are risks. IHS Towers operates in emerging markets, and as such, it is exposed to idiosyncratic risks related to political change, currency fluctuations, and other factors. And, like all tower operators, IHS has significant customer concentration.  However, we believe the current valuation of IHS is a legacy of its difficult post-COVID period from 2022 to 2024. Since then, the business has been de-risked, the outlook has improved, and credible catalysts are on the horizon. 

¹ In a deal announced December 29, Japan’s Softbank will pay a 65% premium to acquire DigitalBridge, which owns data centers and towers worldwide.  The purchase price equates to about 20x earnings or 13x adjusted earnings.

² CFO Steve Howden affirmed in a November call, “to be clear, we are not assessing outbound acquisition opportunities...we won't be buying anything.”

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Strategies managed by City Different Investments own shares of IHS as of 1/8/26. This is subject to change at any time.

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