IHS Towers, the world's fifth-largest multinational tower company, has reported a significant decline in revenue, falling to $1.7 billion in 2024 from $2.1 billion in 2023. The company's heavy reliance on the Nigerian market, which contributed 58.3% of its total earnings, has raised concerns over its exposure to economic instability and customer dependence.

The Nigerian market, where IHS Towers generates the majority of its revenue, is facing significant economic challenges, including a sharp devaluation of the naira since 2023. This has intensified inflation and increased financial uncertainty for tower businesses operating in the country. As a result, IHS Towers' growth and profitability are at risk of being hindered by further economic deterioration.

The company's revenue is heavily dependent on just three mobile network operators: MTN Nigeria, Airtel Africa, and MTN South Africa. Any downturn affecting these key customers, including economic instability, currency devaluation, or regulatory changes, could substantially negatively impact IHS Towers' financial performance. In fact, 98.5% of its earnings are tied to these three operators, highlighting the company's vulnerability to market fluctuations.

IHS Towers is also grappling with rising operating costs, driven mainly by rising fuel expenses, site maintenance, and security. Power generation remains its largest expense, making up 39.2% of the company's cost of sales in 2024, up from 33.5% in 2023. To mitigate these costs, the company has invested in hybrid energy solutions, combining diesel generators with solar and battery systems. As of December 2024, 41% of its sites ran on hybrid power, 33% used grid electricity with backup generators, and 18% relied solely on generators.

Despite these challenges, IHS Towers' CEO, Sam Darwish, remains optimistic about growth opportunities, particularly in Nigeria. The recent approval of a tariff increase by the Nigerian Communications Commission (NCC) is expected to boost investments in telecom infrastructure. Darwish expressed confidence that the tariff adjustments will positively impact the industry in 2025 as telcos expand their networks to enhance service delivery.

However, the company's heavy reliance on Nigeria and a narrow customer base means it will need more than just towering ambitions to weather the storms ahead. IHS Towers will need to diversify its revenue streams and reduce its dependence on a handful of key customers to ensure long-term sustainability.

In conclusion, IHS Towers' revenue decline and heavy reliance on the Nigerian market have raised concerns over its exposure to economic instability and customer dependence. While the company is taking steps to mitigate costs and capitalize on growth opportunities, it must prioritize diversification and risk management to ensure its long-term success.