F-1 1 tm201525-15_f1.htm F-1 tm201525-15_f1 - none - 80.2816791s
As filed with the Securities and Exchange Commission on September 16, 2021.
Registration No. 333-
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
IHS Holding Limited
(Exact Name of Registrant as Specified in its Charter)
Not Applicable
(Translation of Registrant’s Name into English)
Cayman Islands
(State or other Jurisdiction of
Incorporation or Organization)
3669
(Primary Standard Industrial
Classification Code Number)
Not Applicable
(I.R.S. Employer
Identification Number)
1 Cathedral Piazza
123 Victoria Street
London SW1E 5BP
United Kingdom
+44 20 8106 1600
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
C T Corporation System
28 Liberty Street
New York, NY 10005
(212) 894-8940
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of all communications, including communications sent to agent for service, should be sent to:
Marc D. Jaffe, Esq.
Ian D. Schuman, Esq.
Benjamin J. Cohen, Esq.
Latham & Watkins LLP
1271 Avenue of the Americas
New York, NY 10020
(212) 906-1200
Roxane F. Reardon, Esq.
Jonathan R. Ozner, Esq.
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
(212) 455-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933. Emerging growth company. ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
CALCULATION OF REGISTRATION FEE
Title of each class of securities
to be registered
Proposed maximum
aggregate offering
price(1)(2)
Amount of
registration fee
Ordinary shares, par value $0.001 per share
$ 100,000,000 $ 10,910
(1)
Includes the aggregate offering price of additional ordinary shares that may be acquired by the underwriters if the underwriters’ option to purchase additional ordinary shares is exercised.
(2)
Estimated solely for purpose of calculating the amount of registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
Subject To Completion, Dated September 16, 2021.
[MISSING IMAGE: lg_ihstower-4c.jpg]
           Shares
IHS Holding Limited
Ordinary Shares
This is the initial public offering of ordinary shares of IHS Holding Limited. We are selling        of our ordinary shares, and certain of our existing shareholders identified in this prospectus, or the Selling Shareholders, are selling                 of our ordinary shares in this offering. We will not receive any proceeds from the sale of ordinary shares being sold by the Selling Shareholders.
The underwriters may also exercise their option to purchase up to                 additional ordinary shares from us and an additional                 ordinary shares from the Selling Shareholders at the public offering price, less the underwriting discount, for 30 days after the date of this prospectus.
Prior to this offering, there has been no public market for our ordinary shares. It is currently estimated that the initial public offering price per share will be between $      and $      . We have applied to have our ordinary shares listed on the New York Stock Exchange under the symbol “IHS.”
We are eligible to be treated as a “foreign private issuer” under applicable Securities and Exchange Commission rules, and, as such, have elected to comply with certain reduced disclosure requirements for this prospectus. See “Prospectus Summary — Implications of Being a Foreign Private Issuer.”
See “Risk Factors” on page 25 to read about factors you should consider before buying our ordinary shares.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
Per Share
Total
Initial public offering price
$     $    
Underwriting discount(1)
$ $
Proceeds, before expenses, to us
$ $
Proceeds, before expenses, to the Selling Shareholders
$ $
(1)
We refer you to “Underwriting” for additional information regarding underwriting compensation.
The underwriters expect to deliver the shares against payment in New York, New York on           , 2021.
Joint Global Coordinators
Goldman Sachs & Co. LLC
J.P. Morgan
Citigroup
Joint Book-Running Managers
RBC Capital Markets
Barclays
Absa Bank Limited
Co-managers
Cowen
Investec
RenCap
RMB
Academy Securities
Loop Capital Markets
Ramirez & Co., Inc.
Siebert Williams Shank
Tigress
Financial Partners
Prospectus dated                 , 2021.

 
TABLE OF CONTENTS
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F-1
Through and including                 , 2021 (the 25th day after the date of this prospectus), all dealers effecting transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to a dealer’s obligation to deliver a prospectus when acting as an underwriter and with respect to an unsold allotment or subscription.
For investors outside the United States: Neither we nor the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of our ordinary shares and the distribution of this prospectus outside the United States.
We are incorporated in the Cayman Islands, and a majority of our outstanding securities are owned by non-U.S. residents. Under the rules of the U.S. Securities and Exchange Commission, or the SEC, we are currently eligible for treatment as a “foreign private issuer.” As a foreign private issuer, we will not be required to file periodic reports and financial statements with the SEC as frequently or as promptly as domestic registrants whose securities are registered under the Securities Exchange Act of 1934, as amended, or the Exchange Act.
 
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We are responsible for the information contained in this prospectus. Neither we, the Selling Shareholders nor the underwriters have authorized anyone to provide you with any information or to make any representations other than those contained in this prospectus or in any free writing prospectuses we have prepared, and neither we, the Selling Shareholders nor the underwriters take responsibility for, and can provide no assurance as to the reliability of, any other information others may give you. We, the Selling Shareholders, and the underwriters are not making an offer to sell, or seeking offers to buy, these securities in any jurisdiction where the offer or sale is not permitted.
You should not assume that the information contained in this prospectus is accurate as of any date other than its date, regardless of the time of delivery of this prospectus or of any sale of the ordinary shares.
ABOUT THIS PROSPECTUS
Prior to the consummation of this offering, IHS Holding Limited, a company incorporated in the Republic of Mauritius under the Mauritian Companies Act 2001 as a private limited liability company, will be registered by way of continuation as an exempted company limited by shares under the Companies Act of the Cayman Islands. On the date of this prospectus, the Company’s share capital will be reorganized, all of the outstanding Class A and Class B shares of IHS Holding Limited will be exchanged on a      basis for ordinary shares, the outstanding options granted pursuant to IHS Holding Limited’s existing long-term incentive plan will be converted into ordinary shares, the Articles will be adopted and the Company will cease to be incorporated in the Republic of Mauritius and will be incorporated and registered by way of continuation as an exempted company limited by shares under and subject to the Companies Act (as amended) of the Cayman Islands. We refer to this as our Migration. Except where the context otherwise requires or where otherwise indicated, the terms “IHS Towers,” “the Company,” “the Group,” “we,” “us,” “our,” “our company” and “our business” refer to the company named IHS Holding Limited, incorporated in the Republic of Mauritius prior to the Migration and in the Cayman Islands following the Migration, in each case together with its consolidated subsidiaries as a consolidated entity.
 
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PRESENTATION OF FINANCIAL AND OTHER INFORMATION
We report under International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or the IASB.
Use of Non-IFRS financial measures
Certain parts of this prospectus contain non-IFRS financial measures, including Adjusted EBITDA, Adjusted EBITDA Margin, Consolidated Adjusted Funds From Operations, or Consolidated AFFO, and Adjusted Funds From Operations, or AFFO. The non-IFRS financial information is presented for supplemental informational purposes only and should not be considered a substitute for financial information presented in accordance with IFRS, and may be different from similarly titled non-IFRS measures used by other companies.
We define Adjusted EBITDA as profit/(loss) for the period, before income tax expense/(benefit), finance costs and income, depreciation and amortization, impairment of withholding tax receivables, business combination transaction costs, impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites, net (profit)/loss on sale of assets, share-based payment (credit)/expense, insurance claims, costs relating to this offering and certain other items that management believes are not indicative of the core performance of our business. The most directly comparable IFRS measure to Adjusted EBITDA is our profit/(loss) for the period.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue for the applicable period, expressed as a percentage.
We believe that Adjusted EBITDA is an indicator of the operating performance of our core business. We believe Adjusted EBITDA and Adjusted EBITDA Margin, as defined above, are useful to investors and are used by our management for measuring profitability and allocating resources, because they exclude the impact of certain items which have less bearing on our core operating performance. We believe that utilizing Adjusted EBITDA and Adjusted EBITDA Margin allows for a more meaningful comparison of operating fundamentals between companies within our industry by eliminating the impact of capital structure and taxation differences between the companies.
Adjusted EBITDA measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies comparable to us, many of which present an Adjusted EBITDA-related performance measure when reporting their results.
Adjusted EBITDA and Adjusted EBITDA Margin are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Adjusted EBITDA and Adjusted EBITDA Margin as reported by us to Adjusted EBITDA and Adjusted EBITDA Margin as reported by other companies. Adjusted EBITDA and Adjusted EBITDA Margin are unaudited and have not been prepared in accordance with IFRS.
Adjusted EBITDA and Adjusted EBITDA Margin are not measures of performance under IFRS and you should not consider Adjusted EBITDA or Adjusted EBITDA Margin as an alternative to profit/(loss) for the period or other financial measures determined in accordance with IFRS.
Adjusted EBITDA and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation. Some of these limitations are:

they do not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness;

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often need to be replaced in the future and Adjusted EBITDA and Adjusted EBITDA Margin do not reflect any cash requirements that would be required for such replacements;

some of the items we eliminate in calculating Adjusted EBITDA and Adjusted EBITDA Margin reflect cash payments that have less bearing on our core operating performance, but that impact our operating results for the applicable period; and
 
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the fact that other companies in our industry may calculate Adjusted EBITDA and Adjusted EBITDA Margin differently than we do, which limits their usefulness as comparative measures.
Accordingly, prospective investors should not place undue reliance on Adjusted EBITDA or Adjusted EBITDA Margin.
We define Consolidated Adjusted Funds From Operations, or Consolidated AFFO, as profit/(loss) for the period, before income tax expense/(benefit), finance costs and income, depreciation and amortization, impairment of withholding tax receivables, business combination transaction costs, impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites, net (profit)/loss on sale of assets, share-based payment (credit)/expense, insurance claims, costs relating to this offering and certain other items that management believes are not indicative of the core performance of our business, adjusted to take into account interest paid, interest income received, revenue withholding tax, income taxes paid, lease payments made, amortization of prepaid site rent, maintenance capital expenditures and routine corporate capital expenditures.
We define AFFO as Consolidated AFFO, excluding the impact of the portion of Consolidated AFFO attributable to non-controlling interests.
We believe Consolidated AFFO and AFFO are useful to investors because they are also used by our management for measuring our operating performance, profitability and allocating resources. While Adjusted EBITDA provides management with a basis for assessing its current operating performance, in order to assess the long-term, sustainable operating performance of our business through an understanding of the funds generated from operations, we also take into account our capital structure and the taxation environment (including withholding tax implications), as well as the impact of non-discretionary maintenance capital expenditures and routine corporate capital expenditures, to derive Consolidated AFFO. Consolidated AFFO and AFFO provide management with a metric through which to measure how the underlying business is performing by further adjusting for expenditures that are non-discretionary in nature (such as interest paid and income taxes paid), as well as certain non-cash items that impact profit/(loss) in any particular period.
AFFO measures are frequently used by securities analysts, investors and other interested parties in their evaluation of companies comparable to us, many of which present an AFFO-related performance measure when reporting their results. AFFO measures are used in the telecommunications infrastructure sector as they are seen to be important in assessing the long-term, sustainable operating performance of a business. We present Consolidated AFFO and AFFO to provide investors with a meaningful measure for comparing our operating performance to those of other companies, particularly those in our industry.
Consolidated AFFO and AFFO, however, are used by different companies for differing purposes and are often calculated in ways that reflect the circumstances of those companies. You should exercise caution in comparing Consolidated AFFO and AFFO as reported by us to Consolidated AFFO and AFFO as reported by other companies. Consolidated AFFO and AFFO are unaudited and have not been prepared in accordance with IFRS.
Consolidated AFFO and AFFO are not intended to replace profit/(loss) for the period or any other measures of performance under IFRS, and you should not consider Consolidated AFFO or AFFO as an alternative to operating profit/(loss) or profit/(loss) for the period or other financial measures as determined in accordance with IFRS. Consolidated AFFO and AFFO have limitations as analytical tools, and you should not consider these in isolation. Some of these limitations are:

not all cash changes are reflected, for example, changes in working capital are not included and discretionary capital expenditures are not included;

some of the items that we eliminate in calculating Consolidated AFFO and AFFO reflect cash payments that have less bearing on our core operating performance, but that impact our operating results for the applicable period;

the fact that certain cash charges, such as lease payments made, can include payments for multiple future years that are not reflective of operating results for the applicable period, which may result in lower lease payments for subsequent periods;
 
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the fact that other companies in our industry may have different capital structures and applicable tax regimes, which limits its usefulness as a comparative measure; and

the fact that other companies in our industry may calculate Consolidated AFFO and AFFO differently than we do, which limits their usefulness as comparative measures.
Accordingly, prospective investors should not place undue reliance on Consolidated AFFO or AFFO.
 
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MARKET AND INDUSTRY DATA
We obtained the industry, market and competitive position data and forecasts in this prospectus from our own internal estimates and research as well as from publicly available information, industry and general publications and research, surveys and studies conducted by third parties, including Euromonitor International Limited. Certain industry, market and competitive position data as described under “Industry” and information extracted from that section referred to elsewhere in this prospectus is based on third-party data provided by Analysys Mason Limited, or Analysys Mason, commissioned between May 15, 2021 and May 27, 2021 for use in this prospectus. This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates, as there is no assurance that any of them will be reached. Our and Analysys Mason’s data is derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from our and Analysys Mason’s internal research, and are based on assumptions made by us upon reviewing such data, and our experience in, and knowledge of, such industry and markets, which we believe to be reasonable. Analysys Mason’s third party data is also prepared on the basis of information provided and views expressed by mobile operators, tower operators and other parties (including certain views expressed and information provided or published by individual operators, service providers, regulatory bodies, industry analysts and other third party sources of data). Although Analysys Mason has obtained such information from sources it believes to be reliable, neither we nor Analysys Mason have verified such information. You are cautioned not to give undue weight to these estimates and assumptions.
In many cases, there is no readily available external information (whether from trade associations, government bodies or other organizations) to validate market related analyses and estimates, requiring us to rely on our own internally developed estimates regarding the industry in which we operate, our position in the industry, our market share and the market shares of various industry participants based on our experience, our own investigation of market conditions and our review of industry publications, including information made available to the public by our competitors. While we believe our internal estimates to be reasonable, these estimates have not been verified by any independent sources and you are cautioned not to give undue weight to these estimates.
Industry publications, research, surveys and studies generally state that the information they contain has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Forecasts and other forward-looking information obtained from these sources and from our and Analysys Mason’s estimates are subject to the same qualifications and uncertainties as the other forward-looking statements in this prospectus and as described under “Cautionary Statement Regarding Forward-Looking Statements.” These forecasts and other forward-looking information, are subject to uncertainty and risk due to a variety of factors, including those described under “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the forecasts or estimates from independent third parties and us.
In addition, our and Analysys Mason’s estimates involve risks and uncertainties and are subject to change based on various factors. See “Risk Factors”, “Industry” and “Business” for further discussion.
 
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TRADEMARKS, SERVICE MARKS AND TRADENAMES
We have proprietary rights to trademarks used in this prospectus, which are important to our business, many of which are registered under applicable intellectual property laws.
Solely for convenience, the trademarks, service marks, logos and trade names referred to in this prospectus are without the ® and TM symbols, but such references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights or the rights of the applicable licensors to these trademarks, service marks and trade names. This prospectus contains additional trademarks, service marks and trade names of others, which are the property of their respective owners. All trademarks, service marks and trade names appearing in this prospectus are, to our knowledge, the property of their respective owners. We do not intend our use or display of other companies’ trademarks, service marks, copyrights or trade names to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
 
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CERTAIN DEFINED TERMS
Unless the context provides otherwise, references herein to:

“9mobile” refers to Emerging Markets Telecommunication Services Limited, which was previously known as Etisalat Nigeria.

“Airtel Nigeria” refers to Airtel Networks Limited, a subsidiary of Airtel Africa.

“Articles” refers to our amended and restated memorandum and articles of association, which will be in effect on consummation of this offering.

“CBN” refers to the Central Bank of Nigeria.

“Centennial Acquisition” refers to the acquisition by us on March 19, 2021 of Centennial Colombia and the acquisition by us on April 8, 2021 of Centennial Brazil, both from affiliates of Centennial Towers Holding LP. At closing, Centennial Colombia had 217 towers and Centennial Brazil had 602 towers.

“Centennial Brazil” refers to Centennial Towers Brasil Coöperatief U.A. and its subsidiaries.

“Centennial Colombia” refers to Centennial Towers Colombia, S.A.S. and its subsidiaries.

“CSS” refers to Cell Sites Solutions — Cessão de Infraestruturas S.A.

“CSS Acquisition” refers to the acquisition by us on February 18, 2020 of CSS from affiliates of Goldman Sachs and Centaurus Capital LP. At closing, CSS had 2,312 towers, including 2,251 towers in Brazil, 51 in Peru and 10 in Colombia.

“Churn” refers to the loss of tenancies when services provided by us are terminated, a Tenant does not renew its contract or we have ceased recognizing revenue for sites under a customer’s contract in any particular period. When we decommission a site and move a customer from one of our sites to another site to rationalize our portfolio, this is not included in Churn.

“Colocation” refers to the installation of equipment on existing towers for a new tenant alongside current Tenants.

“Colocation Rate” refers to the average number of Tenants per Tower across our portfolio at a given point in time. We calculate the Colocation Rate by dividing the total number of Tenants across our portfolio by the total number of Towers across our portfolio at a given time.

“Contracted Tenant Lease Revenue” refers to lease fees to be received from the existing Tenants of Key Customers for the remainder of each Tenant’s current contractual site lease term, including lease fees to be received from the existing Lease Amendments of Key Customers for the remainder of each Lease Amendment’s contractual term, as of a specified date. In aggregating Contracted Tenant Lease Revenue, we have taken the average quarterly lease rate for our Key Customers as of June 30, 2021, which is applied to the remaining term of the tenancies and lease amendments of each Key Customer, assuming constant foreign exchange rates, no escalation of lease rates despite contractual provisions in our MLAs in that regard, no new Tenants or new Lease Amendments added, no amendments to our existing MLA terms and no Churn. See “Risk Factors — Our Contracted Tenant Lease Revenue is based on certain estimates and assumptions and actual results may differ materially from such estimated operating results.”

“Dollar”, “USD” or “$” refer to U.S. dollars.

“EMEA” refers to Europe, the Middle East and Africa.

“euro” or “€” refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the treaty establishing the European Community, as amended.

“GSM” refers to Global System for Mobile Communications technologies for our large MNO customers, which comprise the most prevalent type of technology on our towers to date.

“HTN Towers” refers to Helios Towers Nigeria Limited, now known as IHS Towers NG Limited.
 
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“HTN Towers Acquisition” refers to the acquisition by us of 100% of the share capital of HTN Towers in 2016, which included the acquisition of 1,211 towers, of which 925 were towers with at least one Tenant. An additional 368 towers were operated under a Managed Services agreement at the time of acquisition, which was subsequently terminated in April 2017.

“IHS Nigeria” refers to IHS (Nigeria) Limited, one of our operating subsidiaries in Nigeria.

“INT Towers” refers to INT Towers Limited, one of our operating subsidiaries in Nigeria.

“Key Customers” refers to MTN Customers, Orange Cameroun S.A., or Orange Cameroon, Orange Côte d’Ivoire S.A., or Orange Côte d’Ivoire, 9mobile, Airtel Nigeria, Airtel Networks Zambia PLC, or Airtel Zambia, Airtel Rwanda Limited, or Airtel Rwanda, Claro S.A., or Claro Brazil, TIM Cellular S.A., or TIM Brasil, Telefonica Brasil S.A., or Vivo Brazil, Colombia Móvile S.A. E.S.P., or Tigo Colombia, COMSEL S.A., or Claro Colombia and Zain Kuwait.

“Kuwait Acquisition” refers to the acquisition by us of up to 1,620 towers from Zain Kuwait. The acquisition was signed in October 2017, and we completed multiple closings totaling 1,229 towers as of June 30, 2021. The remaining towers are managed and operated under a Managed Services agreement until such time as these towers can legally be transferred to us. These towers are operated in Kuwait through an entity in which we own 70% of the shares and Zain Kuwait owns the remaining 30%.

“Lease Amendments” refers to the installation of additional equipment on a site or the provision of certain ancillary services for an existing Tenant, for which we charge our customers a recurring lease fee.

“LTE” refers to long-term evolution, a standard for high-speed wireless communication for mobile devices and data terminals. We refer to LTE and 4G interchangeably in this prospectus.

“Managed Services” refers to when MNOs outsource the day-to-day operations of their owned towers, including maintenance, security and power supply.

“MLA” refers to the long-term lease agreements we enter into with our customers, including but not limited to master lease agreements, infrastructure sharing agreements, master tower space use/license agreements and MLL agreements.

“MLL” refers to towers we manage with a license to lease for a defined period. Where there is an MLL agreement, we have the right to lease out space on the tower to other MNOs and provide services, generating further revenue for ourselves. The site owner typically reduces its operating costs and eliminates capital expenditures.

“MNOs” refers to mobile network operators.

“MTN Acquisition” refers collectively to the acquisition by us of 8,850 towers from MTN Nigeria Limited, or MTN Nigeria, signed in December 2014, at the financial closing of which in December 2014 we acquired tranche one of the sites comprising 4,154 towers, followed by the acquisition of tranche two of the sites comprising 4,696 towers in July 2015. The business resulting from this acquisition is INT Towers.

“MTN Customers” refers to MTN Nigeria, MTN Côte d’Ivoire S.A., or MTN Côte d’Ivoire, MTN Cameroon Limited, or MTN Cameroon, MTN Zambia Limited, or MTN Zambia, and MTN Rwandacell Limited, or MTN Rwanda.

“MTN Group” refers to MTN Group Limited and its subsidiaries, one of which is one of our shareholders as well as a related party of certain MTN operating entities that are our customers in the countries in which we currently operate. In each African market in which we currently operate, one of the MTN operating entities is a customer of ours.

“NAFEX” refers to the Nigerian Autonomous Foreign Exchange Rate Fixing Methodology.

“Naira” and “” refers to the lawful currency of the Federal Republic of Nigeria.

“New Sites” refers to Towers owned and operated by the Group constructed through build-to-suit arrangements for the initial Tenant.
 
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“sites” refers to towers that are owned or operated by us.

“Skysites” refers to Skysites Holdings S.A.

“Skysites Acquisition” refers to the acquisition by us on January 6, 2021 of Skysites from a group of eighteen persons. At closing, Skysites had 1,005 towers in Brazil.

“SLAs” refer to site-specific documents or agreements entered into in relation to specific sites pursuant to an MLA.

“subscribers” refers to the number of active subscriber identification module, or SIM, cards in service rather than the number of services provided (excluding machine to machine connections). For example, if a subscriber has both a data and voice plan on a smartphone this would equate to one subscriber. Alternatively, a subscriber who has a data and voice plan for a smartphone and a data plan for a tablet would be counted as two subscribers.

“Tenants” refers to the number of distinct customers who have leased space on each Tower across our portfolio. For example, if one customer had leased tower space on five of our Towers, we would have five Tenants.

“TIM Fiber Acquisition” refers to our signing of definitive transaction agreements with TIM Brasil on May 5, 2021 in relation to the acquisition and deployment of TIM Brasil’s secondary fiber network infrastructure. Upon closing, which remains subject to customary conditions and approvals, the existing and future fiber assets will be operated in Brazil through a new entity, which we refer to as FiberCo, in which we will own 51% of the shares upon completion and TIM Brasil will own the remaining 49%.

“TIM Brasil” refers to TIM S.A.

“Towers” refers to ground-based towers, rooftop and wall-mounted towers, cell poles, in-building solutions, small cells, distributed antenna systems and cells-on-wheels, each of which is deployed to support wireless transmission equipment. We measure the number of Towers in our portfolio at a given time by counting the number of Towers that we own or operate with at least one Tenant. The number of Towers in our portfolio excludes any towers for which we provide managed services.

“Zain Kuwait” refers to Mobile Telecommunications Company K.S.C.P.
 
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PROSPECTUS SUMMARY
This summary highlights information contained in more detail elsewhere in this prospectus. This summary may not contain all the information that may be important to you, and we urge you to read this entire prospectus carefully, including the “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections, our historical consolidated audited financial statements, including the notes thereto, and our historical unaudited condensed consolidated interim financial statements, including the notes thereto, included in this prospectus, before deciding whether or not to invest in our ordinary shares.
Overview
Our Business
We are one of the largest independent owners, operators and developers of shared telecommunications infrastructure in the world, providing our customers, most of whom are leading MNOs, with critical infrastructure that facilitates mobile communications coverage and connectivity for 596 million people in emerging markets, across three regions and nine countries. We are the largest independent multinational emerging-market-only tower operator and one of the largest independent multinational tower operators globally, in each case by tower count. As of June 30, 2021, we operated 30,207 Towers across five countries in Africa, three countries in Latin America and one country in the Middle East. We are the largest tower operator in six of the nine markets in which we operate and we are the only independent tower operator of scale in five of these markets.
We have a well-defined organic and inorganic expansion strategy designed to grow in existing markets with our existing and new customers and, given the significant global emerging market opportunities in telecommunications infrastructure, enter carefully selected growth oriented markets with compelling underlying fundamentals. Historically, our business has been predominantly focused on Towers, however we have begun complementing this business with additional telecommunications infrastructure offerings for our customers such as fiber connectivity. Aligned to this inorganic growth strategy, in February 2020 we completed the first closing of 1,022 towers in Kuwait through a controlling investment pursuant to the Kuwait Acquisition for the acquisition of up to 1,620 towers in the aggregate, with a further 207 towers transferred in subsequent closings. Also in February 2020 we completed the acquisition of 2,312 towers through a 100% investment pursuant to the CSS Acquisition with towers primarily in Brazil, as well as Peru and Colombia. More recently in 2021, we acquired 1,005 towers in Brazil pursuant to the Skysites Acquisition, 819 towers in Brazil and Colombia pursuant to the Centennial Acquisition and also signed definitive agreements for the acquisition of certain fiber assets from TIM Brasil pursuant to the TIM Fiber Acquisition, where TIM Brasil will be the anchor tenant on the fiber network. Each of these acquisitions supports our inorganic growth strategy of expanding into additional regions that meet our investment criteria, which opens up new markets that we believe will provide future organic and inorganic growth opportunities.
Largest Independent Multinational Tower Companies Globally
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Source:    Company filings and TowerXchange
 
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Note:    Data as of June 30, 2021 for ATC, Cellnex, SBA, IHS Towers and Helios. Data as of July 2021 for Phoenix Tower International. “ATC” refers to American Tower Corporation, “Cellnex” refers to Cellnex Telecom S.A., “SBA” refers to SBA Communications Corporation, “PTI” refers to Phoenix Towers International and “Helios” refers to Helios Towers plc.
For the years ended December 31, 2020 and 2019, we generated revenue of $1,403 million and $1,231 million, losses for the period of $323 million and $423 million and Adjusted EBITDA of $819 million and $669 million, respectively. For the years ended December 31, 2020 and 2019, we had a loss margin of 23% and 34% and our Adjusted EBITDA Margin was 58% and 54%, respectively. See “Summary Consolidated Financial and Operating Data” for a reconciliation of Adjusted EBITDA to profit/(loss) for the period, the most directly comparable IFRS measure. For the year ended December 31, 2020 compared to the year ended December 31, 2019, we realized year over year growth of 14% for revenue, a decrease of 24% for loss and 22% growth for Adjusted EBITDA.
For the six months ended June 30, 2021, we generated revenue of $764 million, a profit for the period of $77 million and Adjusted EBITDA of $490 million, resulting in a profit margin of 10.0% and an Adjusted EBITDA Margin of 64.2%. For the six months ended June 30, 2021, we achieved a profit of $77 million, compared to a loss of $353 million for the six months ended June 30, 2020, and we achieved year over year growth in our revenue and Adjusted EBITDA of 15.0% and 30.7%, respectively, compared to the six months ended June 30, 2020.
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Our core business is providing shared telecommunications infrastructure services to MNOs and other customers, who in turn provide wireless voice, data and fiber access services to their end users and subscribers. We provide our customers with opportunities to lease space on existing Towers alongside current Tenants, known as Colocation, to install additional equipment on a Tower or request certain ancillary services, known as Lease Amendments, or to commission the construction of new Towers to the customer’s specifications, known as New Sites. Additionally, we lease space to our customers in secure locations within large building complexes, such as shopping malls, stadiums and airports, which we refer to as in-building solutions, or IBS, or distributed antenna systems, or DAS, as well as provide fiber connectivity. In certain strategic instances, we may also provide Managed Services, such as maintenance, security and power supply for Towers owned by third parties. As of June 30, 2021, our owned and operated tower portfolio supported 45,487 Tenants, with a Colocation Rate of 1.51x.
Our primary customers are the leading MNOs in each of our markets. We also provide infrastructure and services to a number of other communications service providers. Our success in establishing deep customer relationships and operational excellence has enabled us to grow both organically and through 19 transactions, building a footprint that currently covers Nigeria, Côte d’Ivoire, Cameroon, Rwanda, Zambia, Brazil, Peru, Colombia and Kuwait. We are the largest tower operator in six of the
 
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nine markets in which we operate and are the only independent tower operator of scale in five of these markets. Our markets in Latin America (which we just entered in 2020) are the only ones in which we do not have a leadership position today.
To support the telecommunications infrastructure needs of our customers, we typically enter into long-term MLAs of 5 to 15 years in duration, which have historically yielded strong renewal rates. As of June 30, 2021, the average remaining length of our MLAs with our Key Customers, who represented 92% of our Tenants, was 6.3 years. Additionally, these Key Customers had aggregate Contracted Tenant Lease Revenue of $9.8 billion and an average remaining tenant lease term of 7.4 years as of June 30, 2021.
Our MLAs typically include annual inflation-linked revenue escalators, limited customer termination rights and, in certain cases, provisions designed to mitigate foreign exchange risk, such as periodic reset mechanisms to adjust for local currency devaluation. For the six months ended June 30, 2021 and the years ended December 31, 2020, 2019 and 2018, 63%, 65%, 65% and 66%, respectively, of our revenues were linked to the U.S. dollar or euro. Foreign currency-linked elements implemented in certain of our contracts aim to help provide protection against potentially adverse movements in local currency. Our U.S. dollar-linked revenues are denominated in U.S. dollars in the relevant MLAs, but paid to us in local currency through contractual mechanisms. In such cases, including the majority of our MLAs in Nigeria, our MLAs may contain a formula for periodically determining the U.S. dollar to local currency exchange rate. In other cases, such as Côte d’Ivoire and Cameroon, the MLAs are in local currencies that have a fixed exchange rate, or are “pegged”, to the euro. Our Middle East and Latin American businesses have MLAs, which typically only contain local currency lease fees. See “Risk Factors — Risks Relating to Our Business — The existence of multiple foreign exchange markets with different exchange rates may impact the rate at which our operating subsidiaries’ financial results are translated into U.S. dollars for group reporting purposes, which may impact our financial condition and/or results of operations.”
We have historically increased the number of our owned and operated Towers through a combination of constructing New Sites, as well as through acquisitions of tower portfolios from MNOs and independent tower companies. Shortly after entering new markets through acquisitions, we typically begin constructing New Sites.
IHS Towers Overview by Country
Market Share (December 31, 2020)
Country
2020
Population
(millions)
# of IHS
Towers
June 30,
2021
# of IHS
Towers
December 31,
2020
Estimated
Outsourced
Towers
December 31,
2020
Estimated
Total
Towers
December 31,
2020
IHS Towers
Market Position
Nigeria
209 16,522 16,537 25,535
37,625
#1
Côte d’Ivoire
27 2,701 2,702 2,702
4,079
#1
Cameroon
27 2,215 2,214 2,214
5,208
#1
Zambia
19 1,751 1,753 1,753
3,491
#1
Rwanda
13 1,160 958 958
1,605
#1
Kuwait
4 1,229 1,162 1,162
5,858
#1
Brazil
213 4,350 2,419 46,842
64,075
#5*
Peru
33 51 51 6,731
17,903
n.m.
Colombia
51 228 11 8,647
17,474
n.m.
*
IHS Towers market position is #4 after taking into consideration the Skysites Acquisition and the Centennial Acquisition, which we completed in January 2021 and April 2021, respectively.
Source:   Euromonitor International Limited (Economies & Consumers data) for Population, Analysys Mason estimates and IHS.
 
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We believe we offer a unique balance between existing infrastructure with visible revenue streams and high potential for revenue growth given the strong growth potential in our countries, the strength of our market positions within each country and our strategically important, unique tower locations. We believe that we are well positioned to improve margins and cash flow, while achieving long-term growth due to:

a large and scalable platform that provides critical infrastructure to help drive telecommunications activity and broader digital and economic progress;

a long-standing and stable operational platform that consistently delivers on our service level agreements to customers with proven network reliability;

a well-defined organic and inorganic expansion strategy designed to grow in existing markets with our existing and new customers and enter carefully selected growth-oriented markets with compelling underlying fundamentals; and

a comprehensive commitment towards contributing to sustainability and the well-being of our communities and environments where we operate.
Our successful performance so far is the result of many years of building, acquiring, operating, managing, and owning telecommunications infrastructure in emerging market environments. As one of the pioneers of the tower infrastructure industry in Africa, we have worked with our customers to develop the experience needed to operate and grow a successful business in our sector. Our experience has provided us with years of insight, deep operational expertise, and strong relationships with various stakeholders that we believe will allow us to enhance our leadership position in existing and new markets. Our track record is highlighted by the following milestones:

2001:   Founded as a builder of telecommunication Towers for MNOs in Nigeria; our founders continue to lead the business today.

2004:   Launched our Managed Services operations for MNO-owned Towers with services including maintenance, security and power supply.

2009:   Began owning Towers and leasing space to MNOs in Nigeria and launched our Colocation operations through which we lease space to other MNOs.

2013:   Acquired MTN Côte d’Ivoire’s tower portfolio of 911 Towers and MTN Cameroon’s 818 Towers. Additionally, completed MLL agreements for Orange Côte d’Ivoire’s tower portfolio of 1,191 Towers and Orange Cameroon’s 819 Towers.

2014:   Successfully completed a $2.0 billion equity raise, which was drawn down in 2014 and 2015.

2014:   Entered Zambia and Rwanda through the acquisitions of MTN’s tower portfolios of 719 Towers in Zambia and 550 Towers in Rwanda. These transactions helped establish us as the largest independent tower company in EMEA by tower count.

2014:   Executed landmark transactions in Nigeria to acquire a total of 10,966 Towers. We acquired 4,154 of these Towers from MTN Nigeria and 2,116 of these Towers from 9mobile in 2014 and the balance of 4,696 Towers from MTN Nigeria the following year.

2015:   Expanded through the acquisitions of Airtel Zambia’s 949 Towers and Airtel Rwanda’s 200 Towers and further expanded in Nigeria through the acquisition of an additional 555 Towers from 9mobile.

2016:   Acquired HTN Towers which owned 1,211 Towers, the first tower company-to-tower company transaction in Africa, which reinforced our leadership in Africa’s largest market.

2016:   Issued our debut $800 million 9.500% senior notes due 2021 (now fully refinanced and redeemed as noted below under 2019), the largest African corporate high yield bond single issue offering at the time.

2019:   Refinanced outstanding debt of our Nigeria operations (approximately $1.8 billion), including issuing $1.3 billion of new senior notes, as well as new senior credit facilities, resulting in a more simplified debt capital structure, extended maturities and lower cost of debt.
 
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2020:   Expanded our footprint by entering the Middle East through the completion of the Kuwait Acquisition, a controlling investment in Zain Kuwait’s 1,620 towers in Kuwait, of which we completed the first closing of 1,022 towers in February 2020 and 140 towers in October 2020.

2020:   Expanded our footprint by entering Latin America through the completion of the CSS Acquisition, for 2,312 towers primarily across Brazil, as well as Peru and Colombia.

2020:    Completed a tack-on transaction for $150 million in aggregate principal amount of senior notes and upsized our IHS Holding Revolving Credit Facility to $225 million in available borrowing capacity.

2021:   Expanded our Latam business through the acquisitions of Skysites in Brazil, Centennial Brazil and Centennial Colombia, acquiring 1,005 towers, 602 towers and 217 towers, respectively.

2021:   Signed definitive agreements with TIM Brasil for the acquisition of existing fiber assets and future deployment of fiber assets in Brazil, pursuant to the TIM Fiber Acquisition.

2021:   Completed third closing of 67 towers in April 2021 in Kuwait pursuant to the Kuwait Acquisition, with the remainder of the towers currently managed and operated under a Managed Services agreement until they can be legally transferred to us. Completed acquisition of 162 towers in April 2021 from Airtel Rwanda.

2021:   Expanded the restricted group for our $1,450 million senior notes to encompass IHS Holding Limited and all of IHS Holding Limited’s subsidiaries (other than unrestricted subsidiaries).

2021:    Entered into a $500 million bridge facility in August 2021 that can be used for certain acquisitions. Upsized IHS Holding Revolving Credit Facility by $20 million to $245 million in July 2021. As of August 18, 2021, the IHS Holding Revolving Credit Facility and the IHS Holding Bridge Facility remain undrawn.
We believe that the underlying telecommunications trends in our markets will continue to drive the need for additional infrastructure and enable us to further augment our growth through continued Colocation, Lease Amendments, New Site construction, adjacent telecommunications infrastructure investments such as fiber and acquisition activity. New telecommunication infrastructure services such as small cells will further add to our growth opportunities with the roll-out of 5G in some of our markets. As of June 30, 2021, with an average age of our tower portfolio of 5.9 years, based on the date of integration of the sites, and a Colocation Rate of 1.51x, we believe that we have a young portfolio with ample capacity to continue growing organically, as well as to realize further gains on operating margins from operational efficiencies. We believe this organic growth will help drive enhanced cash flow generation from our existing assets.
Our Industry
Macroeconomic Overview
Several key macroeconomic trends influence the propensity to adopt wireless telecommunication services, and thereby drive the expected long-term demand for telecommunications infrastructure and network capacity. We seek out markets that demonstrate these trends and that we believe will provide long-term growth and appropriate risk-adjusted returns.
Population Growth:    Our markets exhibit high population growth rates. As of 2020 there were approximately 596 million people in our nine markets, and analysts from Euromonitor International Limited, Economies & Consumers, which we refer to as Euromonitor, estimate that number could reach approximately 644 million by 2025. The CAGR of the population in our markets, weighted by our Tower count as of June 30, 2021, has averaged 2.3% from 2015 to 2020 and is forecasted to grow at a 2.1% CAGR from 2020 to 2025, which exceeds the global average of 1.0% according to The World Bank.
Population Age:    In our markets, approximately 18% of the total population is between the ages of 15 and 24 as of the end of 2020, according to Euromonitor. The median age across our nine markets,
 
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is approximately 21 years old, according to country-specific data from Euromonitor weighted by our Tower count as of June 30, 2021, which compares to the global median age of 31 years old, according to the United Nations. In addition, according to Euromonitor approximately 15% of the total population in our markets is between the ages of 25 to 34. With many “high demand” users, our markets continue to see increasing voice usage and strong demand increases for data. This segment represents a key portion of the expanding middle-class, who tend to find wireless telecommunications services to be critical to their day-to-day lives. We expect that this increase in total usage and demand for quality data services will drive demand for more wireless infrastructure.
Increasing Urbanization:    Countries with a higher degree of urbanization typically have higher mobile penetration rates, higher ARPU and more rapid deployment of next generation wireless technology and networks, which we also believe are drivers of demand for additional telecommunications infrastructure. Across our markets we have urban populations that are approaching or exceed 52% of the total population according to Euromonitor, while Rwanda has urbanization levels that are lower, but growing. The majority of our markets are experiencing increasing urbanization levels, which we expect will support demand for additional telecommunications infrastructure.
GDP Growth and Wireless Telecommunications as a Core Driver:   The markets in which we operate typically demonstrate high GDP growth relative to more developed markets. Higher GDP growth generally translates into a larger middle class with higher disposable incomes to consume wireless telecommunications, as compared to when such markets were less developed. Mobile subscribers are expected to continue to use their handsets for increasingly integrated communications, social, entertainment and business applications. In many of our markets, the handset has generally become an increasingly important part of everyday life. More businesses are leveraging the productivity benefits of enhanced telecommunications services and individuals are demanding more and better communications services, which in turn contributes to further GDP growth. The resulting impact on GDP growth has a positive impact on broader economic development and creates steady demand for increased telecommunications infrastructure.
Telecommunications and Towers Industry
Large and Growing Wireless Telecommunications Industry
Wireless is the main form of telecommunications:   In our markets, wireless services and networks are the primary and preferred method of telecommunications due to a lack of fixed line infrastructure.
Large addressable market for mobile telecommunications services:   The wireless markets in which we operate are among the fastest growing in the world. In aggregate, total mobile service revenues in our markets were $30.9 billion as of 2020. The total number of mobile SIMs in these markets is estimated to increase from 604 million in 2020 to 684 million in 2025, while average SIM penetration in these markets, weighted by our Tower count in each market as of June 30, 2021, is expected to increase from 102% to 108% (as a result of certain users having more than one mobile phone or more than one SIM card installed on their mobile phone) from 2020 to 2025. In addition to this absolute growth in subscribers, we also expect the subscriber mix to change from mostly 2G / 3G subscribers to more data-intensive 3G, 4G and also 5G subscribers. We believe these growth trends will continue given the favorable macroeconomic and demographic factors in our markets.
Multiple MNOs competing in the market:   Within each of our markets, there are multiple MNOs, and this dynamic can promote healthy competition in the broader telecommunications market. Telecommunications infrastructure providers typically benefit from this dynamic. Additionally, MNOs are expanding services, especially around data, that could require investment in the latest technologies, and in turn require more space and power on towers. Since a large portion of wireless subscribers in our markets are on prepaid packages and more prone to switching service providers, network quality is critical. To compete, MNOs must continually invest in their networks and service offerings. Whether MNOs deploy advanced wireless networks, increase network densification due to increased data consumption or improve ongoing network coverage to their end users, these variables drive increased demand for telecommunications infrastructure.
 
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Attractive Opportunity for Telecommunications Infrastructure Providers
Well-established contractual framework between MNOs and telecommunications infrastructure providers:   We believe that the outsourced tower management model is mutually beneficial to MNOs, telecommunications infrastructure providers and ultimately subscribers. MNOs benefit from their agreements with telecommunications infrastructure providers in multiple ways, including reduced operating and capital expenditures. Such outsourcing typically enables MNOs to dedicate more time and resources to enhancing service quality and innovation, customer service and marketing. Furthermore, MNOs that sell their existing towers to telecommunications infrastructure providers may also realize capital proceeds, which provide flexibility to invest in these initiatives. Outsourcing allows telecommunications infrastructure providers to use their specialized focus and relationships with MNOs and suppliers across the value chain to better manage towers, enable faster time-to-market for MNOs as well as increased MNO roll-out due to a lower capital expenditure requirement for them.
Consistent track record of telecommunications infrastructure outsourcing:   As a result of outsourcing benefits and increasing MNO competition, MNOs in Africa and Latin America have increasingly outsourced their tower ownership to third-party operators; we believe further outsourcing opportunities remain in these regions. While the tower business model is well established in Africa and Latin America, the shift in tower ownership is in its infancy in the Middle East and could provide growth opportunities for tower companies. We believe that this trend is similar to the ones that have played out across other geographies.
Need for additional telecommunications infrastructure:   Many emerging and some less developed markets are underinvested in telecommunications infrastructure. Strong demand for new technologies and data services is increasing the utilization on existing towers and driving the demand for new towers. For example, some African wireless networks are supporting nearly two times the number of subscribers per tower site as in the United States. The higher utilization significantly impacts network quality and is unsustainable, requiring additional network investment. Without fixed line broadband alternatives, we believe that more tower capacity may be necessary.
Favorable regulatory environment for telecommunications infrastructure:   National telecommunications regulators encourage improved capacity, expanded coverage and improved quality of service. Growing populations and wireless usage, as well as improved quality of service and roll-out obligations, requires MNOs to invest in both existing and new communications equipment and tower companies filling the need to host this equipment. Tower companies play a role in implementing regulators’ policy objectives on improving coverage and mitigating down-time or poor network quality. Favorable regulation contributes to encouraging investment in new infrastructure and sharing among the MNOs. We believe that the operating model of independent passive telecommunications infrastructure providers, such as ourselves, is aligned with these goals.
High barriers to entry:   Significant resources are required to build or buy regional or national tower footprints at our scale in our markets. We have had a first mover advantage in the majority of the markets in which we currently operate as we have completed the first MNO tower purchase deals in such markets. In addition to building our scale, we have also developed significant operating expertise, which includes a local presence, tower management, site selection, development and acquisition capabilities, experience navigating regulatory processes and management of energy supply contracts. We believe that a combination of all of these factors is critical to effectively compete in our markets.
The table below summarizes some of the key telecoms metrics that we estimate in our markets and that demonstrate the expected growth in demand for wireless telecommunications services across our markets as well as broader markets:
 
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Nigeria
Zambia
Rwanda
Côte
d’Ivoire
Cameroon
Kuwait
Brazil
Peru
Colombia
Total/Average
2020 / 2025 Mobile SIMs (millions)
200 / 239
19 / 24
11 / 13
38 /44
25 / 30
7 / 7
206 / 224
36 / 37
62 / 65
604 / 684
Growth (2020-2025 CAGR)
3.6%
5.0%
4.9%
3.2%
3.8%
(0.3)%
1.7%
0.4%
0.8%
3.3%
2020 / 2025 Mobile Penetration
96% / 101%
102% / 113%
81% / 91%
141% / 146%
91% / 98%
161% / 158%
97% / 102%
110% / 107%
122% / 124%
102% / 108%
2020 / 2025 2G SIM Penetration
30% / 14%
41% / 14%
78% / 60%
28% / 11%
61% / 26%
2% / 0%
7% / 4%
15% / 7%
15% / 4%
30% / 14%
2020 / 2025 3G SIM Penetration
62% / 43%
44% / 27%
16% / 9%
58% / 48%
29% / 35%
39% / 9%
11% / 2%
32% / 14%
43% / 19%
48% / 33%
2020 / 2025 4G SIM Penetration
8% / 40%
15% / 60%
6% / 28%
14% / 40%
10% / 38%
58% / 40%
81% / 85%
52% / 72%
42% / 70%
22% / 47%
2020 / 2025 5G SIM Penetration
0% / 3%
0% / 0%
0% / 3%
0% / 1%
0% / 1%
1% / 50%
0% / 10%
0% / 8%
0% / 6%
0% / 5%
2020 / 2025 Smartphone Adoption
41% / 64%
47% / 72%
21% / 32%
41% / 59%
51% / 66%
83% / 88%
86% / 93%
73% / 88%
56% / 62%
50% / 68%
2020 / 2025 Average Data Usage (GB / SIM / month)
0.8 / 3.8
0.7 / 2.4
0.5 / 1.7
1.0 / 3.5
0.7 / 2.5
39.6 / 60.1
2.5 / 13.0
5.1 / 17.8
1.4 / 9.5
2.7 / 7.2
2020 Voice Usage (Min / handset / month)
120
102
199
129
93
100
140
255
211
124
2020 Total towers (thousands)
37.6
3.5
1.6
4.1
5.2
5.9
64.1
17.9
17.5
157.3
2020 SIMs per tower (thousands)
5.3
5.4
6.6
9.3
4.7
1.2
3.2
2.0
3.6
5.2
2020 Market colocation rate(1)
1.17x
1.35x
1.61x
1.51x
1.26x
1.01x
1.51x
1.48x
1.20x
1.28x
Source: Analysys Mason estimates, Euromonitor International Limited (Economies & Consumers data), IHS
(1): Market colocation rate calculated as MNO points of presence, or PoPs, divided by Towers
Note: All metrics excluding mobile SIMs and Total towers are weighted based on our Towers per market as of June 30, 2021, Mobile SIM Penetration is as of the end of each year, based on Analysys Mason mobile SIMs and Euromonitor population estimates adjusted to year-end figures. 2G, 3G, 4G and 5G SIM Penetration refers to the number of SIMs of each technology as a percentage of total SIMs in the market.
Our Competitive Strengths
We believe the following strengths position us to deliver operationally for our customers as well as generate strong financial returns and growth:
We are a clear leader in the majority of our current markets, which we support with a high quality asset base and service.
Large and Growing Telecommunications Markets.   We believe the markets in which we currently operate are structurally favorable, as a result of having large, growing populations and low mobile penetration, particularly relating to 4G and 5G SIM penetration. Our nine markets covered approximately 604 million SIMs as of December 31, 2020. Our African markets are generally characterized by low mobile penetration, and a high number of subscribers per tower compared with the U.S. and Western Europe. These markets are also attractive due to an increasing need for 3G and 4G coverage and capacity, with 55% 3G SIM penetration and only 9% 4G SIM penetration as of December 31, 2020. Over the longer term, we also expect 5G technology to become available in these markets. To meet the anticipated telecommunications growth in our African markets, it is expected that these markets will require over 22,000 new towers and over 30,000 new MNO points of presence over the period December 2020 to December 2025. We have also opened up new growth markets in 2020 with the completion of the Kuwait Acquisition and the CSS Acquisition in Latin America, giving us additional exposure to the growth and technology trends in these markets as well. It is estimated that these markets in Latin America will require over 19,000 new towers and over 42,000 new MNO points of presence over the period December 2020 to December 2025. As telecommunication networks in our markets
 
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evolve, we believe that there may also be increasing demand for other telecommunications infrastructure, such as fiber connectivity and data centers.
Significant Market Scale.   We are the number one tower operator in six of our nine markets. As of December 31, 2020, we had an estimated 65% market share of independently owned or operated sites in Nigeria, which is the largest telecommunications market in Africa by subscribers, and we are the only independent tower operator in five more of our current markets. As of June 30, 2021, we are the largest tower operator in Africa, measured by tower count. In the Middle East, we are the first independent tower company to enter the region with the completion of the Kuwait Acquisition.
As a leader in many of our markets, we benefit from operational efficiencies that help drive financial performance. We have strategically acquired multiple tower portfolios in each of our African markets and have selectively consolidated Towers, where we move Tenants from one Tower to another, to reduce costs. Follow-on transactions in new markets are an important element of our inorganic growth strategy, and we have reinforced our position in our markets, completing follow-on transactions in each of our African markets, as well as Brazil and Colombia. We own or operate approximately 47% of all Towers (73% of independent Towers) in our combined African markets and therefore benefit when MNOs invest in additional coverage and capacity, either on our existing sites or through the share of new sites we deliver in the market. We believe our scale and market position gives us a unique opportunity to increase our revenue per tower through Colocation and Lease Amendments as MNOs upgrade their networks from 2G and 3G to 4G and 5G further in the future.
Substantial and Defensible Market Share.   Given the size and scale of our business and our track record of growth and service to our customers, we believe we are well positioned to maintain or even grow our market share. Our market position is backed by long-term contracts that we have a history of successfully maintaining. We have a presence across all the states of Nigeria, with coverage estimated at 80% of the population. We believe that in Nigeria, we have delivered the majority of estimated demand for new site deployments by independent tower companies in the market over the last two years, and we are the only independent tower operator in five of our other markets. For the period covering 2018, 2019 and 2020 and the first six months of 2021, we have added 11,228 Tenants, 15,716 Lease Amendments and constructed 2,428 New Sites. As of June 30, 2021, we have built over 6,900 New Sites since our inception. We continue to provide quality service and take a partnership approach with our customers in radio frequency planning. We also benefit from high barriers to entry in our industry, including the capital intensive nature of building new tower portfolios and, in certain instances, zoning rules that restrict Towers and masts from being built within a certain radius of each other. We believe these factors underpin the strength of our market leadership and position us to take advantage of opportunities in our markets.
We have a proven business model with high quality revenue visibility that is backed by long-term, inflation-linked contracts.
Proven business model coupled with recurring revenues and long-term contracts.   We offer MNOs reliable services in exchange for monthly lease fees that are underpinned by long-term contracts, creating long-term revenue visibility. For MNOs, there are high costs and potential service interruptions associated with switching tower infrastructure and, historically, we have had a track record of successfully renegotiating and extending our contracts with MNOs. As of June 30, 2021, we had $9.8 billion of Contracted Tenant Lease Revenue from an average remaining tenant lease term of 7.4 years and an average remaining length of our MLAs of 6.3 years . In many cases, our contracts also include limited customer termination rights, inflation-linked revenue escalators and power indexation clauses to mitigate against certain increases in diesel prices. In certain cases, our contracts also include provisions designed to mitigate foreign exchange risk, such as periodic reset mechanisms to adjust for local currency devaluations.
The majority of our revenue comes from MNOs that are subsidiaries of large, publicly listed multi-national MNOs, including MTN Group and MTN Nigeria, Orange Group, Airtel Africa, Zain Group, Telecom Italia and TIM S.A., Telefonica, America Movil and Millicom. Many of our customers enjoy the support of their broader organizations and our multi-country partnerships help facilitate strong relationships throughout our markets.
 
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Structurally favorable unit economics.   The absence of competing infrastructure in the vicinity of our Towers helps enable strong demand from existing customers and positions our Towers as the preferred location for potential new demand. Time to market advantages for New Site construction, cost-to-build considerations and in some cases, regulatory restrictions create natural and high barriers to entry into our markets. We are able to achieve favorable unit economics through additional Tenants and Lease Amendments via colocation that allow us to improve our margins and our return on invested capital. When we add additional Tenants via Colocation and Lease Amendments, we generally incur limited incremental costs and typically do not provide additional tenant discounts. We also have the ability to reduce certain of our costs per Tenant, which are mostly fixed, with the exception of power costs in our African and Middle East markets, which are variable. For example, in Nigeria where we invested in hybrid power solutions (which combine diesel generators with solar and/or battery systems) on more than 9,000 sites, we achieved a reduction in diesel consumption on those sites. Our new business in Latin America does not have the same operational requirements as our African or Middle Eastern businesses, given power is generally the responsibility of the customers and land lease costs are typically passed through to them. With a Colocation Rate of 1.51x across our portfolio as of June 30, 2021, our sites have the capacity to add additional Tenants before reaching a similar Colocation Rate as our older tower vintages. For example, as of June 30, 2021, our tower vintages up to 2010 had a Colocation Rate of 2.21x. We believe our success in leasing up and colocating on our older Towers is a strong indicator of our ability to lease-up, grow revenue and expand margins on our newer Towers.
We have contractual protections against macroeconomic volatility.   For the six months ended June 30, 2021, and the years ended December 31, 2020 and 2019, 63%, 65% and 65%, respectively, of our revenues were linked to the U.S. dollar or euro. Most of our operating costs are in local currency, and we have structured our contracts to provide protection against inflation and, in some cases, local currency devaluation.
Our MLAs in the Middle East and Latin America have local currency lease fees with annual inflation linked escalators. In our African markets the local currency components of our lease fees typically adjust with local currency linked inflation provisions and U.S. dollar components of our lease fees typically adjust with U.S.-linked inflation provisions. The majority of our costs do not have mechanical indexation, enabling us to both grow our revenue and manage our cost base. With the exception of the cost of diesel, which is typically paid in local currency, but linked to the U.S. dollar through the international price of oil, substantially all of our direct and indirect operating expenses are denominated in and incurred in local currency. Capital expenditures may be linked to U.S. dollars in some instances, but are also incurred in local currency, providing further resilience to macroeconomic volatility.
We have a track record of both organic and inorganic growth.
We have a number of organic growth opportunities.   There are a number of avenues that have driven our historical organic growth and that we believe will continue to drive future organic growth, including Colocation, Lease Amendments and New Sites. These opportunities are typically the result of our customers looking to densify their networks, improve their network coverage and capacity and upgrade their networks with new technologies, in response to growing populations and data demand from end users in our markets. Our MLAs also typically include annual inflation-linked escalations, ensuring contractual increases to revenue.
In response to these growing needs, we benefit from customers choosing Colocation in order to get to market quickly on an existing site of ours. Colocations are a highly attractive opportunity as they enable us to lease-up our existing assets with minimal incremental capital expenditure and operating expenses required. As of June 30, 2021, and December 31, 2020, 2019 and 2018, we achieved a Colocation Rate of 1.51x, 1.54x, 1.56x and 1.52x, respectively. When we acquire towers from mobile operators, these typically have a low Colocation Rate that reduces our overall Colocation Rate, but at the same time these towers result in a further colocation opportunity for our other customers.
Lease Amendments represent an opportunity for existing Tenants to enhance their existing position or upgrade technology at a Tower by installing additional equipment on that Tower or requesting certain ancillary services. For the six months ended June 30, 2021, and the years ended December
 
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31, 2020, 2019 and 2018, we added 3,495, 4,379, 3,621 and 4,221 Lease Amendments, respectively. Colocation and Lease Amendments both support our growth by increasing our operating leverage.
We typically construct New Sites after obtaining a commitment for a long-term lease with an initial tenant and, in general, if we are aware of, or believe there is, commercial potential for Colocation. Since our inception, we have built over 6,900 New Sites. For the six months ended June 30, 2021, and the years ended December 31, 2020, 2019 and 2018, we built 589, 362, 305 and 1,172 New Sites, respectively.
We also benefit from the opportunity to generate revenue from adjacent services, including fiber, DAS and small cells. These opportunities do not constitute a material contribution to our revenues today, although we will look to continue to expand these opportunities as an area of growth in the future, particularly in our new markets in Brazil and Kuwait where 5G roll-out is close to commencing and has already commenced, respectively.
We have a track record of inorganic growth through acquiring, consolidating and integrating tower portfolios.   Since our inception, we have completed 19 transactions for more than 24,500 Towers across nine countries. These transactions have enabled us to achieve our strong in-market positioning, which is key to both our ability to provide high quality services and to ensure the sustainability of the fundamentals of our business. Our recently completed acquisitions demonstrate our desire to expand into structurally favorable emerging and less developed markets around the world.
Our inorganic growth strategy focuses on entering carefully selected growth-oriented markets with compelling underlying fundamentals. A key component of this inorganic growth lies in our strategy to then develop each of the markets that we enter. We aim to execute follow-on, in-market transactions upon entering a new market, in order to solidify our presence as well as extract cost synergies from our operational platform across our large asset base. In addition to building our market presence, this strategy has allowed us to better service our customers through our extensive platform.
We have an established history of delivering high quality service to our customers.
We have long-term relationships with leading MNOs.   Our sites are, for most of our customers, the primary tower infrastructure that supports their operations, making us a key long-term partner of our customers. Through these partnerships, we have developed deep ties with our customers’ key decision makers.
We have a long track record of delivering quality service to MNOs through deeply integrated relationships. Our customers entrust us with this critical infrastructure in part due to our proven record. For example, in our African businesses, we had average power uptimes of 99.8% and average time to repair below two hours for the six months ended June 30, 2021. In our African businesses, our innovative power availability solutions are a critical component of our quality service offering in our current markets, which lack a robust power grid.
We have a modern and efficient global operational management platform.   We have differentiated ourselves from our competitors over time through our advanced network operating centers, or NOCs, in our six African and Middle Eastern businesses, bespoke remote monitoring at 88% of sites covered by our NOCs as of June 30, 2021 (with monitoring of almost all remaining sites through MNO network operating centers), site acquisition and maintenance teams, and a network of partners in the fields of security, power management equipment, site deployment / construction and diesel supply. Our NOCs operate 24 hours a day, seven days a week and monitor a variety of data sent from our Towers. Such data include access and gate status, diesel supply, usage and quality, cabinet temperature and overall power uptime, consumption and supply. We have demonstrated significant uptime improvement in the sites that we have purchased and enabled improved quality of service levels across our portfolio. Given the current operating environment in Latin America with limited service level agreement obligations (such as power uptime or average time to repair) to customers, our businesses in Brazil, Peru and Colombia generally do not require NOCs or remote monitoring services.
 
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We have a track record of resilience to volatility.
We have a track record of growth during periods of macro-economic volatility, including in relation to foreign exchange rates.   Despite the significant shortage of U.S. dollar liquidity in Nigeria in 2015 and 2016, Naira devaluations and the economic slowdown in Nigeria in 2017, 2018, 2019 and 2020, when real GDP growth was 0.8%, 1.9%, 2.3% and (1.9)%, respectively, our revenue and Segment Adjusted EBITDA for our Nigeria segment continued to grow during that same period. Revenue for our Nigeria segment increased 12.1%, 8.6% and 3.8% for the years ended December 31, 2020, 2019 and 2018, compared to the years ended December 31, 2019, 2018 and 2017, respectively, and Segment Adjusted EBITDA for our Nigeria segment increased by 25.5%, 14.2% and 6.1% over the same periods, despite the Naira depreciating from an average rate of 305.3 to $1.00 for the year ended December 31, 2017 to an average rate of 385.7 to $1.00 for the year ended December 31, 2020.
We have a disciplined capital allocation policy.   We employ a prudent approach to discretionary capital allocation. We have a strong focus on maintaining a healthy capital structure through a mix of debt and equity financing. As of June 30, 2021 we had $2.6 billion of debt and IFRS 16 lease liabilities and $542 million of cash on our balance sheet. We continue to maintain a prudent approach to leverage, which we believe provides us with strong flexibility to evaluate future investment opportunities and other potential capital allocation alternatives.
We have a founder-led, experienced management team with a differentiated operational skillset and track record, supported by committed, seasoned investors.
Our executive team is led by our founders and other seasoned senior executives with strong relevant experience.   Our founders remain in lead executive positions and are deeply involved in day-to-day operations, strategy and leadership. We have a highly experienced management team with a track record of delivering operational performance and strategic growth for our business. With a background in site construction, site management as well as site operation, our management team has experience across the full telecommunications infrastructure value chain. We have added to our leadership team over the years, and together, our management team has deep experience in both developed and emerging markets, towers, telecommunications, finance, governance and mergers and acquisitions. In addition to a strong executive management team, we have developed a seasoned team of in-country managers that help run the day-to-day operations, manage local relationships and expand effectively into new markets.
We have benefited from the consistent commitment of experienced, long-term investors that actively support our management.   Since our inception in 2001, we have established a rigorous framework, which includes a focus on corporate governance, ethics, environment and sustainability and risk management policies and a platform that combines the strong fundamentals of the towers business with attractive long-term growth potential. Our global shareholder base includes strategic and financial investors, such as African Infrastructure Investment Managers, Emerging Capital Partners, Nederlandse Financierings-Maatschappij Voor Ontwikkelingslanden N.V., or FMO, Singapore’s sovereign wealth fund, or GIC, Goldman Sachs, International Finance Corporation, or IFC, Investec, Korea Investment Corporation, MTN Group and Wendel, among others.
Our governance and control frameworks underpin our dedication to operational best practices.   We have implemented governance practices at the board of directors and executive levels, including committees focused on ethics and risk management. Upon consummation of this offering, we will have           directors,           of whom will be independent directors, on our board of directors. Since 2011, we have been subject to compliance with the IFC’s Performance Standards. We have also developed an ethical compliance framework aligned with converging best practice methodologies.
Our Strategy
Since our inception in 2001, we have established a reputation as a leader in the high growth, emerging market telecommunications infrastructure sector, servicing MNOs and ultimately the growing end-consumer market with critical telecommunications infrastructure, which also benefits the broader
 
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communities in our markets through enabling accelerated access to communications. Through the growth of 2G, 3G and 4G, we have helped the MNOs in our markets provide services to subscribers by owning, operating, sharing and constructing telecommunications infrastructure. We are pursuing the following key strategies to grow our cash flow and continue to take advantage of our competitive strengths:
Increase revenue, improve margins and grow cash flows by maximizing the use of our existing network infrastructure and driving organic growth through Colocation, Lease Amendments and New Sites
Our primary strategy is to expand our revenue-generating asset base and improve utilization on new and existing Towers. We aim to drive organic revenue growth and cash flow generation through Colocation, Lease Amendments, contractual lease fee escalations and New Site construction. In addition, we believe strong operating leverage and initiatives, such as selective decommissioning, will help us drive margins and increase cash flows. As our customers ready themselves for 5G roll-out, we believe existing services such as DAS, small cells and fiber services will likely increase in prevalence, and will become a core component to our growth thesis.
Seek attractive rates of return through disciplined organic and inorganic investment
We intend to continue investing capital at attractive rates of return. We pursue carefully selected strategies, including New Site construction and selective decommissioning, and have a strong track record of delivering value-enhancing incremental investments that have helped grow our asset base, secure our market leading positions and provide the scale and market share necessary to sustain our growth. We assess acquisition and investment opportunities in both existing and new markets using our (i) country attractiveness framework, (ii) strategic importance analysis and (iii) investment appraisal methodologies.
Within existing markets, we focus on growing our scale advantages by acquiring portfolios and other existing tower companies, which offer opportunity for operational improvements, potential synergy realization and potentially decommissioning opportunities, leading to potentially higher returns than comparable standalone investments. Additionally, we assess adjacent components of the telecommunications infrastructure value chain, such as fiber, to be able to offer more infrastructure services to our customers, generate incremental operating synergies across our assets and deliver potentially higher returns.
In new markets, we seek attractive telecommunications infrastructure opportunities with contractual agreements that aim to maximize returns on our investments. We also seek balanced telecommunications market dynamics with service and technology growth opportunities and demand for telecommunications infrastructure services. We consider markets attractive if we believe we can achieve significant scale, and even more so, if we can leverage relationships with multi-national MNOs with whom we may have existing relationships in other markets. If we deem a market attractive, we aim to apply our disciplined approach to acquisitions, establish a path to scale, gain market leadership within that country or more broadly within that region and diversify our overall portfolio by market and by customer. In contrast, we avoid markets which do not offer near-term chances for meaningful scale or ones that we do not believe have the right fundamental drivers to support our growth strategy.
In addition to acquiring tower portfolios or seeking to consolidate existing tower companies, we also see the potential for new and related services that will help enhance our value proposition to our customers, reduce their capital expenditure, stabilize their operating costs, help improve their quality of service and enable faster deployment of their networks. We expect to continue to generate cash flows from newly developed service propositions, such as fiber infrastructure services, where we see significant potential in our markets. We will continually consider opportunities to expand our offering beyond the current infrastructure services, which support MNOs in their intention to build 4G and 5G enabled networks of the future, notably with small cells in urban areas and DAS. We believe that there are opportunities to expand the types of infrastructure partnerships that we could form with our customers, such as investments in fiber networks, Internet-of-Things or edge computing, which could fall within our investment criteria, our infrastructure focus and our business model. We are committed to anticipating and responding to new technology trends and evolving customer needs.
 
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Our investment appraisal of inorganic opportunities includes targeting long term revenue and Adjusted EBITDA growth rates, strong Adjusted EBITDA margins and Consolidated AFFO expressed as a percentage of Adjusted EBITDA over the long term. While these metrics, together with return metrics, form the basis of our investment appraisal, we also assess inorganic opportunities for individual strategic merit.
Continued focus on operational excellence, service delivery for customers and adopting an innovative approach to new technology
We plan to continue delivering high levels of performance to our customers in terms of site power availability, site access, equipment monitoring and servicing. We have done this consistently for years and we are increasingly leveraging new technology to expand the scope of how we monitor and improve the sites while reducing our dependence on diesel-powered generators. Our extensive use of alternative power solutions in our African markets helps reduce our operating costs and is more environmentally friendly given the reduction in diesel consumption that these solutions deliver. We will also look to leverage this expertise in other markets in which we operate where services such as power or site monitoring may be requested from customers in the future.
Continue improving our impact on our communities and on the environment
Our business model is inherently sustainable given we promote infrastructure sharing, drive connectivity across our markets and have invested in hybrid power solutions that reduce our CO2 emissions. Additionally, we continuously aim to improve and develop our Sustainability strategy, which focuses on four pillars: (i) environment and climate change; (ii) education and economic growth; (iii) our people and communities; and (iv) ethics and governance. By supporting local schools, education initiatives, health clinics and wider programs, such as improving rural telephony, we seek to make a positive impact in the communities in which we operate and further contribute to the growth and development of our markets.
Having become a Signatory of the UN Global Compact in 2020, we are expected to produce an annual ‘Communication on Progress (CoP)’ covering how we are supporting the Compact’s ten principles in areas such as human rights, labor standards, the environment and anti-corruption, and our 2020 Sustainability Report serves as our first CoP. We believe that our sustainability programs contribute to nine of the 17 United Nations Sustainable Development Goals, or UN SDGs. Each of these goals feeds into our sustainability strategy, which guides our everyday performance and underpins our business. We have been very active in our communities during the COVID-19 pandemic, working in conjunction with organizations such as UNICEF, the Nigerian Red Cross and the Nigeria Center for Disease Control, delivering hundreds of thousands of items of personal protective equipment and testing kits, as well as by donating funds.
The success of our Sustainability strategy has also been recognized externally. In 2020, IHS Nigeria was recognized for the second year running at the Sustainability, Enterprise and Responsibility Awards (SERAs), receiving awards for the Most Impactful Intervention, and Best Company in Partnership for Development. IHS Nigeria was also ranked as a top five performer in the ICT, Media & Telecommunication Sector for Sustainability Performance in the 2020 Corporate Sustainable Investor Report. Our COVID-19 relief efforts were also recognized at the 2020 Cameroon Corporate Awards in the category of Best Departmental and Employee Initiative, and at the CSR Network Zambia Awards, alongside IHS Zambia’s country-wide borehole drilling program.
We are committed to supporting the professional development of all our employees. Our aim is to enable them to build the skills and knowledge required to enhance their careers at IHS. In support of this, in 2017, we launched the IHS Academy, an online training portal with more than 5,700 different training items across a variety of areas including professional skills, personal development skills, management, leadership and teamworking skills, as well as a selection of health, safety, environment and compliance courses. In 2020, we had more than 119,000 IHS Academy courses completions, almost triple the 2019 total.
 
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The Migration
We have historically conducted our business through IHS Holding Limited, a private company limited by shares incorporated in the Republic of Mauritius, and its subsidiaries. Prior to the consummation of this offering, IHS Holding Limited, a company incorporated in the Republic of Mauritius under the Mauritian Companies Act 2001 as a private limited liability company, will be registered by way of continuation as an exempted company limited by shares under the Companies Act of the Cayman Islands. On the date of this prospectus, the Company’s share capital will be reorganized, all of the outstanding Class A and Class B shares of IHS Holding Limited will be exchanged on a        basis for ordinary shares, the outstanding options granted pursuant to IHS Holding Limited’s existing long-term incentive plan will be converted into ordinary shares, the Articles will be adopted and the Company will cease to be incorporated in Mauritius.
The Migration has been undertaken to enable us to move to a business structure more aligned to that commonly seen for companies listed in the United States and which we believe would be more familiar for potential investors.
Corporate Information
IHS Holding Limited was incorporated in the Republic of Mauritius as a private company limited by shares on July 26, 2012 under the Mauritian Companies Act 2001. On completion of the Migration, IHS Holding Limited will cease to be incorporated in the Republic of Mauritius and will be incorporated and registered by way of continuation as an exempted company with limited liability under the Companies Act (as amended) of the Cayman Islands.
Our principal executive offices will be located at 1 Cathedral Piazza, 123 Victoria Street, London SW1E 5BP, United Kingdom. Our telephone number at this address will be +44 20 8106 1600. Our website address is www.ihstowers.com. The information contained on, or that can be accessed through, our website is not a part of, and shall not be incorporated by reference into, this prospectus. We have included our website address as an inactive textual reference only.
Risks Associated With Our Business
Our business is subject to a number of risks of which you should be aware before making an investment decision. You should carefully consider all of the information set forth in this prospectus and, in particular, should evaluate the specific factors set forth under the “Risk Factors” section of this prospectus in deciding whether to invest in our securities. These important risks include, but are not limited to, the following:

a significant portion of our revenue is derived from a small number of MNOs;

we may experience volatility in terms of timing for settlement of invoices or may be unable to collect amounts due under invoices;

our current and future markets involve additional risks compared to more developed markets;

a significant portion of our revenues are currently derived from our Nigerian operations;

we and our customers face foreign exchange risks, which may be material;

the existence of multiple foreign exchange markets with different exchange rates may impact the rate at which our operating subsidiaries’ financial results are translated into U.S. dollars;

regional or global health pandemics, including the outbreak of the novel coronavirus, or COVID-19, could severely affect our business;

we may not successfully execute our business strategy or manage our growth;

we rely on third-party contractors for various services, and any disruption in or non-performance of those services would hinder our ability to deploy or maintain our infrastructure effectively;

our Contracted Tenant Lease Revenue is based on certain estimates and assumptions and actual results may differ materially from such estimated operating results;
 
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any increase in operating expenses, particularly increased costs for diesel or ground lease costs, or an inability to pass through or mitigate against such costs, could erode our operating margins;

inability to renew and/or extend our ground leases, or protect our rights to access and operate our Towers or other telecommunications infrastructure assets;

we have incurred and may continue to incur losses;

our ability to construct New Sites;

risks relating to our indebtedness and the terms of our indebtedness;

risks relating to the markets in which we operate; and

risks related to our status as a foreign private issuer.
Implications of Being a Foreign Private Issuer
Upon consummation of this offering, we will report under the Exchange Act as a non-U.S. company with foreign private issuer status. As long as we qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including:

the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act;

the sections of the Exchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial and other specific information, or current reports on Form 8-K, upon the occurrence of specified significant events.
Foreign private issuers are also exempt from certain more stringent executive compensation disclosure rules.
 
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THE OFFERING
Ordinary shares offered by us
     ordinary shares
Ordinary shares offered by the Selling Shareholders
     ordinary shares
Ordinary shares to be outstanding after this offering
    ordinary shares (          ordinary shares if the underwriters exercise their option to purchase additional ordinary shares from us and the Selling Shareholders in full)
Option to purchase additional shares
We and the Selling Shareholders have granted the underwriters an option to purchase up to          additional ordinary shares from us and an additional               ordinary shares from the Selling Shareholders within 30 days of the date of this prospectus.
Use of proceeds
We estimate that the net proceeds to us from this offering will be approximately $      million, assuming an initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.
We intend to use the net proceeds from this offering to fund growth and for other general corporate purposes. We have not quantified or allocated any specific portion or range of the net proceeds to us for any particular purpose. See “Use of Proceeds.”
We will not receive any proceeds from the sale of ordinary shares by the Selling Shareholders.
Dividend policy
We do not anticipate paying any cash dividends on our ordinary shares in the foreseeable future. However, if we do pay a cash dividend on our ordinary shares in the future, we will pay such dividend out of our profits or share premium (subject to solvency requirements) as permitted under Cayman Islands law. See “Dividend Policy.”
Listing
We have applied to list our ordinary shares on the New York Stock Exchange, or the NYSE, under the symbol “IHS.”
Risk factors
See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our ordinary shares.
The number of our ordinary shares to be outstanding after this offering is based on ordinary shares outstanding as of                 , 2021 and excludes           ordinary shares reserved for future issuance under our employee share option programs as described in “Management — Share Incentive Plans.”
Unless otherwise indicated, all information contained in this prospectus assumes or gives effect to:

no exercise by the underwriters of their option to purchase additional ordinary shares in this offering; and

an initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus.
 
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SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA
We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. The summary historical consolidated financial information presented for the years ended December 31, 2018, 2019 and 2020 has been derived from the audited consolidated financial statements of IHS Holding Limited included elsewhere in this prospectus. The historical unaudited condensed consolidated interim financial information presented as of June 30, 2021 and for the six months ended June 30, 2020 and 2021 has been derived from our unaudited condensed consolidated interim financial statements appearing elsewhere in this prospectus. The unaudited condensed consolidated interim financial statements were prepared on a basis consistent with our audited consolidated financial statements and include, in our opinion, all adjustments, consisting only of normal recurring adjustments that we consider necessary for a fair statement of the financial information set forth in those statements.
The unaudited pro forma financial information set forth below is derived from the audited consolidated financial statements of IHS Holding Limited included elsewhere in this prospectus and is based on assumptions as explained in the notes to the tables below. The results for any prior period are not necessarily indicative of the results of operations that you should expect for any future period.
All operations are continuing operations and we have not proposed or paid dividends in any of the periods presented.
The financial data set forth below should be read in conjunction with, and are qualified by reference to, “Prospectus Summary — The Migration,” “Presentation of Financial and Other Information,” “Selected Consolidated Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements of IHS Holding Limited, including the notes thereto, included elsewhere in this prospectus.
Year ended December 31,
Six months ended
June 30,
2018
2019(1)
2020(1)
2020
2021
($ in thousands, except share and per share data)
IHS Holding Limited Statements
of Income and
Comprehensive Income Data:
Revenue
1,168,087 1,231,056 1,403,149 664,097 763,569
Cost of sales
(766,732) (810,967) (838,423) (435,849) (400,040)
Administrative expenses
(148,773) (556,285) (236,112) (122,385) (153,247)
(Loss allowance)/reversal of loss allowance on trade
receivables
(50,611) (27,944) (13,081) (1,341) 36,620
Other income
3,961 7,036 16,412 3,358 7,056
Operating profit/(loss)
205,932 (157,104) 331,945 107,880 253,958
Finance income
23,988 36,045 148,968 13,143 17,282
Finance costs
(315,942) (288,915) (633,766) (377,217) (154,621)
(Loss)/profit before income tax
(86,022) (409,974) (152,853) (256,194) 116,619
Income tax expense
(46,748) (13,518) (169,829) (96,696) (40,013)
(Loss)/profit (132,770) (423,492) (322,682) (352,890) 76,606
(Loss)/profit attributable to Owners of the Group
(132,770) (423,492) (321,994) (352,497) 77,323
Non-controlling interests(2)
(688) (393) (717)
(Loss)/profit per share – basic
(0.00) (0.00) (0.00) (0.00) 0.00
(Loss)/profit per share – diluted
(0.00) (0.00) (0.00) (0.00) 0.00
Weighted average number of shares outstanding – basic (thousands)
146,706,094 146,784,812 147,051,494 147,051,494 147,051,494
 
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Year ended December 31,
Six months ended
June 30,
2018
2019(1)
2020(1)
2020
2021
($ in thousands, except share and per share data)
Weighted average number of shares outstanding – diluted (thousands)
149,150,687 158,240,303 158,674,348 158,660,580 158,770,567
Pro forma as adjusted (loss)/profit
per share
 – basic(3)
 – diluted(3)
Pro forma as adjusted weighted average number of shares outstanding
 – basic (thousands)(3)
 – diluted (thousands)(3)
Pro forma as adjusted (loss)/profit
per share as further adjusted for
this offering
 – basic(4)
 – diluted(4)
Pro forma as adjusted weighted average number of shares outstanding as further adjusted for this offering
 – basic (thousands)(4)
 – diluted (thousands)(4)
As of June 30, 2021
IHS Holding
Limited Actual
Pro Forma
As Adjusted
And As Further
Adjusted For
This Offering(4)
($ in thousands)
IHS Holding Limited Consolidated Statement of Financial Position Data:
Cash and cash equivalents
541,644
Total assets
4,683,611
Non-current borrowings
1,976,840
Total borrowings
2,221,003
Stated capital
4,530,870
Total equity
1,322,041
Year ended
December 31,
Six months ended
June 30,
2018
2019(1)
2020(1)
2020
2021
($ in thousands)
IHS Holding Limited Consolidated Statement of
Cash Flows:
Net cash generated from operating activities
462,307 641,940 635,256 301,391 369,395
Net cash used in investing activities
(264,596) (235,806) (758,512) (626,628) (331,634)
Net cash used in financing activities
(202,780) (138,319) (128,136) (191,262) (46,268)
 
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Year ended
December 31,
Six months ended
June 30,
2018
2019(1)
2020(1)
2020
2021
($ in thousands, except ratio and operating data)
IHS Holding Limited Other Financial and Operating Data:
(Loss)/profit (132,770) (423,492) (322,682) (352,890) 76,606
(Loss)/profit margin
(11.4%) (34.4%) (23.0%) (53.1%) 10.0%
Adjusted EBITDA(5)
550,722 668,614 819,014 374,925 490,029
Adjusted EBITDA Margin(7)
47.1% 54.3% 58.4% 56.5% 64.2%
Consolidated AFFO(6)
188,162 220,762 374,842 145,163 244,683
AFFO(6)
188,162 220,762 374,154 144,770 243,771
Towers (at period end)
23,863 24,076 27,807 27,473 30,207
Tenants (at period end)
36,301 37,652 42,864 42,253 45,487
Colocation Rate (at period end)
1.52x 1.56x 1.54x 1.54x 1.51x
Lease Amendments (at period end)
9,983 13,604 17,983 15,861 21,478
(1)
On January 1, 2019, we applied IFRS 16 using the modified retrospective approach which requires the recognition of the cumulative effect of initially applying IFRS 16, as of January 1, 2019, to the retained earnings and does not require us to recast prior years. For the year ended December 31, 2019, the impact of IFRS 16 decreased our profit before tax by $8.0 million. Underlying the net impact was an increase in depreciation expense and a decrease in rent expense recognized in cost of sales and administrative expenses of $38.1 million and $46.1 million, respectively, and an increase in finance cost of $16.0 million for the year ended December 31, 2019. For additional information, see Note 2.1.1 to the audited consolidated financial statements included elsewhere in this prospectus.
(2)
For the year ended December 31, 2020, non-controlling interests related to our subsidiary in Kuwait in which we hold a 70% stake.
(3)
Pro forma as adjusted gives effect to the Migration. Such pro forma as adjusted data will become the historical (loss)/profit per share upon consummation of the Migration.
(4)
Pro forma as adjusted, as further adjusted for this offering, gives effect to the following transactions as if they were consummated at the beginning of the referenced period: (a) the Migration; (b) the issuance and sale of ordinary shares by us in this offering at a price equal to $     per share, the midpoint of the price range set forth on the cover of this prospectus; and (c) the use of proceeds from this offering as described under “Use of Proceeds.”
(5)
We define Adjusted EBITDA as profit/(loss) for the period, before income tax expense/(benefit), finance costs and income, depreciation and amortization, impairment of withholding tax receivables, business combination transaction costs, impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites, net (profit)/loss on sale of assets, share-based payment (credit)/expense, insurance claims, costs relating to this offering and certain other items that management believes are not indicative of the core performance of our business. See “Presentation of Financial and Other Information” for a description of this non-IFRS measure.
 
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The following is a reconciliation of Adjusted EBITDA to the most directly comparable IFRS measure, which is loss for the periods presented:
Year ended December 31,
Six months ended
June 30,
2016
2017
2018
2019
2020
2020
2021
($ in thousands)
(Loss)/profit
(940,749) (421,538) (132,770) (423,492) (322,682) (352,890) 76,606
Adjustments:
Income tax (benefit)/expense
(176,278) 25,130 46,748 13,518 169,829 96,696 40,013
Finance costs(a)
1,202,718 645,652 315,942 288,915 633,766 377,217 154,621
Finance income(a)
(78,048) (135,527) (23,988) (36,045) (148,968) (13,143) (17,282)
Depreciation and amortization
271,570 326,701 317,304 384,507 408,662 221,024 183,925
Impairment of withholding tax
receivables(b)
21,760 52,292 12,063 44,586 31,533 14,657 32,684
Business combination transaction costs
20,909 1,509 3,448 3,745 13,727 11,010 5,948
Impairment of property, plant and equipment and related prepaid land rent(c)
28,343 6,119 21,604 27,594 13,207 2,813
Decommissioning cost
3,475
Net loss/(gain) on sale of assets
4,518 3,043 2,557 5,819 (764) (538) (1,538)
Share-based payment expense/(credit)(d)
88,364 (27,436) (5,065) 351,054 8,342 6,791 4,682
Insurance claims(e)
(2,055) (1,537) (1,847) (3,607) (14,987) (2,584) (5,402)
Listing costs
3,357 8,295 5,221 1,078 12,652 3,171 4,035
Customer contract exit fee income(f)
(50,958)
Other costs(g)
14,377 22,092 4,990 16,932 310 307 10,193
Other income(h)
(1,269)
Adjusted EBITDA
382,960 527,019 550,722 668,614 819,014 374,925 490,029
(a)
Finance costs consist of interest expense and loan facility fees on borrowings, the unwinding of the discount on our decommissioning liability and lease liability, realized and unrealized net foreign exchange losses arising from financing arrangements and net realized and unrealized losses from valuations of financial instruments. Finance income consists of interest income from bank deposits, realized and unrealized net foreign exchange gains arising from financing arrangements and net realized and unrealized gains from valuations of financial instruments.
(b)
Revenue withholding tax primarily represents amounts withheld by customers in Nigeria and paid to the local tax authority. The amounts withheld may be recoverable through an offset against future corporate income tax liabilities in the relevant operating company. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors affecting our financial condition and results of operations — Pioneer Status and Revenue Withholding Tax in Nigeria.” Revenue withholding tax receivables are reviewed for recoverability at each reporting period end and impaired if not forecast to be recoverable.
(c)
Represents non-cash charges related to the impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites.
(d)
Represents credits and expense related to share-based compensation, which vary from period to period depending on timing of awards and changes to valuation inputs assumptions.
(e)
Represents insurance claims included as non-operating income.
(f)
Represents Visafone contract exit fee receivable on termination of contract.
(g)
Other costs for the six months ended June 30, 2021 included non-recurring professional costs related to financing of $9.2 million and aborted transaction costs of $1.0 million. Other costs for the
 
21

 
six months ended June 30, 2020 related to aborted transaction costs. Other costs for the year ended December 31, 2020 included aborted transaction costs of $0.3 million. Other costs for the year ended December 31, 2019 included redundancy costs of $3.2 million, aborted transaction costs of $0.6 million, $9.6 million of consultancy, facility set up, and other related expenses for the Group’s finance transformation program (to improve the consistency and efficiency of our finance function and its processes) and $3.4 million related to Middle East start-up costs. Other costs for the year ended December 31, 2018 included redundancy costs of $3.0 million, escrow amounts received relating to the IHS Towers NG Limited acquisition of $4.3 million, $2.8 million related to Middle East start-up costs, costs of $1.9 million related to consultancy services for the implementation of IFRS 16 and costs of $0.7 million related to consultancy review services related to the restrictions placed on bank accounts. Other costs for the year ended December 31, 2017 included $15.2 million in relation to site safety, structural integrity and compliance review, $1.8 million for consultancy costs and $1.3 million for Middle East start up costs. Other costs for the year ended December 31, 2016 included consultancy on bond issuance of $4.8 million, a success bonus in relation to the bond issued of $4.1 million, $1.8 million of costs incurred in relation to the restructuring of ITNG and tax consultancy in relation to Pioneer status in Nigeria of $1.0 million.
(h)
Other income for the six months ended June 30, 2021 relates to the remeasurement of the liability for contingent consideration on the Skysites Acquisition for a portion thereof not paid to the sellers, as the conditions were not met post acquisition.
(6)
We define Consolidated AFFO as profit/(loss) for the period, before income tax expense/(benefit), finance costs and income, depreciation and amortization, impairment of withholding tax receivables, business combination transaction costs, impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites, net (profit)/loss on sale of assets, share-based payment (credit)/expense, insurance claims, costs relating to this offering and certain other items that management believes are not indicative of the core performance of our business, adjusted to take into account interest paid, interest income received, revenue withholding tax, income taxes paid, lease payments made, amortization of prepaid site rent, maintenance capital expenditures and routine corporate capital expenditures.
We define AFFO as Consolidated AFFO, excluding the impact of the portion of Consolidated AFFO attributable to non-controlling interests.
See “Presentation of Financial and Other Information” for a description of these non-IFRS measures.
 
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The following is a reconciliation of Consolidated AFFO and AFFO to the most directly comparable IFRS measure, which is profit/(loss) for the periods presented:
For the year ended
December 31,
For the
six months ended
June 30,
2018
2019
2020
2020
2021
($ in thousands)
(Loss)/profit (132,770) (423,492) (322,682) (352,890) 76,606
Adjustments:
Income tax expense
46,748 13,518 169,829 96,696 40,013
Finance costs(a)
315,942 288,915 633,766 377,217 154,621
Finance income(a)
(23,988) (36,045) (148,968) (13,143) (17,282)
Depreciation and amortization
317,304 384,507 408,662 221,024 183,925
Impairment of withholding tax receivables(b)
12,063 44,586 31,533 14,657 32,684
Business combination transaction costs
3,448 3,745 13,727 11,010 5,948
Impairment of property, plant and equipment
and related prepaid land rent(c)
6,119 21,604 27,594 13,207 2,813
Net loss/(profit) on sale of assets
2,557 5,819 (764) (538) (1,538)
Share-based payment (credit)/expense(d)
(5,065) 351,054 8,342 6,791 4,682
Insurance claims(e)
(1,847) (3,607) (14,987) (2,584) (5,402)
Listing costs
5,221 1,078 12,652 3,171 4,035
Other costs(f)
4,990 16,932 310 307 10,193
Other income(g)
(1,269)
Interest paid
(176,876) (171,883) (167,938) (88,305) (73,348)
Interest income received
18,701 14,732 5,101 3,174 2,352
Amortization of prepaid site rent
33,435 3,355 4,459 238 4,346
Maintenance capital expenditures(h)
(100,632) (167,401) (113,987) (64,472) (55,736)
Corporate capital expenditures(i)
(8,590) (5,286) (2,464) (1,404) (557)
Lease payments made
(76,565) (74,541) (65,230) (28,287) (45,175)
Revenue withholding tax(b)
(36,310) (33,432) (89,573) (46,830) (57,842)
Income taxes paid
(15,723) (13,396) (14,540) (3,876) (19,386)
Consolidated AFFO
188,162 220,762 374,842 145,163 244,683
Adjustment for non-controlling interests(j)
(688) (393) (912)
AFFO 188,162 220,762 374,154 144,770 243,771
(a)
Finance costs consist of interest expense and loan facility fees on borrowings, the unwinding of the discount on our decommissioning liability and lease liability, realized and unrealized net foreign exchange losses arising from financing arrangements and net realized and unrealized losses from valuations of financial instruments. Finance income consists of interest income from bank deposits, realized and unrealized net foreign exchange gains arising from financing arrangements and net realized and unrealized gains from valuations of financial instruments.
(b)
Revenue withholding tax primarily represents amounts withheld by customers in Nigeria and paid to the local tax authority. The amounts withheld may be recoverable through an offset against future corporate income tax liabilities in the relevant operating company. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Factors affecting our financial condition and results of operations — Pioneer Status and Revenue Withholding Tax in Nigeria.” Revenue withholding tax receivables are reviewed for recoverability at each reporting period end and impaired if not forecast to be recoverable.
(c)
Represents non-cash charges related to the impairment of property, plant and equipment and related prepaid land rent on the decommissioning of sites.
 
23

 
(d)
Represents credits and expense related to share-based compensation, which vary from period to period depending on timing of awards and changes to valuation inputs assumptions.
(e)
Represents insurance claims included as non-operating income.
(f)
Other costs for the six months ended June 30, 2021 included non-recurring professional costs related to financing of $9.2 million and aborted transaction costs of $1.0 million. Other costs for the six months ended June 30, 2020 related to aborted transaction costs. Other costs for the year ended December 31, 2020 included aborted transaction costs of $0.3 million. Other costs for the year ended December 31, 2019 included redundancy costs of $3.2 million, aborted transaction costs of $0.6 million, $9.6 million of consultancy, facility set up, and other related expenses for the Group’s finance transformation program (to improve the consistency and efficiency of our finance function and its processes) and $3.4 million related to Middle East start-up costs. Other costs for the year ended December 31, 2018 included redundancy costs of $3.0 million, escrow amounts received relating to the IHS Towers NG Limited acquisition of $4.3 million, $2.8 million related to Middle East start-up costs, costs of $1.9 million related to consultancy services for the implementation of IFRS 16 and costs of $0.7 million related to consultancy review services related to the restrictions placed on bank accounts.
(g)
Other income for the six months ended June 30, 2021 relates to the remeasurement of the liability for contingent consideration on the Skysites acquisition for a portion thereof not paid to the sellers, as the conditions were not met post acquisition.
(h)
We incur capital expenditures in relation to the maintenance of our Towers, which is non-discretionary in nature and required in order for us to optimally run our portfolio and to perform in line with our service level agreements with customers. Maintenance capital expenditures includes the periodic repair, refurbishment and replacement of tower and power equipment at existing sites to keep such assets in service.
(i)
Corporate capital expenditures, which are non-discretionary in nature, consist primarily of routine spending on information technology infrastructure.
(j)
For the year ended December 31, 2020, and for the six months ended Jun e 30, 2021 and June 30, 2020, non-controlling interests related to our subsidiary in Kuwait in which we hold a 70% stake.
(7)
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue for the applicable period, expressed as a percentage. See “Presentation of Financial and Other Information” for a description of this non-IFRS measure.
 
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RISK FACTORS
You should carefully consider the risks described below before making an investment decision. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, financial condition or results of operations could be adversely affected by any of these risks. The trading price and value of our ordinary shares could decline due to any of these risks, and you may lose all or part of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks faced by us described below and elsewhere in this prospectus.
Risks Relating to Our Business
A significant portion of our revenue is derived from a small number of MNOs. Non-performance under or termination, non-renewal or material modification of tower lease agreements with these customers could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
A significant portion of our revenue in each of our markets of operation is derived from a small number of customers, who usually constitute some of the largest MNOs in those markets. In particular, for the years ended December 31, 2018, 2019 and 2020, and the six months ended June 30, 2021, revenue from our top three MNO customers, considered in each of our individual markets of operation, collectively accounted for 97%, 97%, 98% and 97%, respectively, of our consolidated revenue, with MTN Nigeria and Airtel Nigeria accounting for 55% and 10% respectively, of our consolidated revenue for the six months ended June 30, 2021. Should there be any negative impact on the businesses of our major customers, including these key MNOs, this in turn could adversely affect their demand for tower space and/or ability to perform their obligations under their lease agreements with us.
Due to the long-term nature of our MLAs (usually 5 to 15 years with subsequent renewal provisions), we are also dependent on the continued financial strength of our customers.
Some customers may operate with substantial leverage and/or rely on capital-raising to fund their operations and such customers may not have sufficient credit support or the ability to raise capital. If, for example, our customers or potential customers are unable to raise adequate capital to fund their business plans as a result of health pandemics or epidemics, including the current outbreak of COVID-19 and future coronavirus or other outbreaks or events with a wide-ranging regional or global impact, or do not have adequate parental support, they may reduce their capital spending, which could materially and adversely affect demand for space on our Tower sites or other infrastructure, which in turn could have a material adverse effect on our financial condition and/or results of operations.
Furthermore, some of our customers may become subject to regulatory or other action, which may result in unanticipated levies or fines. For example, in 2018, the CBN alleged improper repatriation by MTN Nigeria Communication PLC, or MTN Nigeria, of $8.1 billion between 2007 and 2015. The CBN, upon review of additional documentation, concluded that MTN Nigeria was no longer required to reverse the historical dividend payments made to MTN Nigeria shareholders. The CBN instructed MTN Nigeria to implement a notional reversal of the 2008 private placement of shares in MTN Nigeria at a net cost of circa 19.2 billion—equivalent to $52.6 million (the notional reversal amount). This is on the basis that certain certificates of capital importation or CCIs, utilized in the private placement were not properly issued. MTN Nigeria and the CBN agreed that they will resolve the matter on the basis that MTN Nigeria will pay the notional reversal amount without admission of liability, and that the CBN will regularize all the CCIs issued on the investment by shareholders of MTN Nigeria, thereby bringing to a final resolution all incidental disputes arising from this matter.
In addition, MTN Nigeria was, until January 2020, involved in a $2 billion dispute with Nigeria's Attorney General regarding a demand for allegedly unpaid tax. In January 2020, the Attorney General withdrew its claims against MTN Nigeria and instead referred the matter to the Nigeria Federal Inland Revenue Service and the Nigeria Customs Service. On August 27, 2021, it was reported that Nigeria’s Minister of Finance, Budget and National Planning stated, in relation to MTN Nigeria, that a payment plan
 
25

 
has been undertaken with the Federal Inland Revenue Service on the matter. Any fines levied against our customers, their inability to fund their operations or other financial difficulties experienced by our customers could negatively affect their demand for tower space or their ability to perform their obligations under their lease agreements with us, and in turn could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
In addition, in 2017 Emerging Markets Telecommunication Services Limited, or 9mobile, previously known as Etisalat Nigeria, one of our Key Customers in Nigeria, experienced certain payment issues with lenders, which ultimately resulted in the lenders enforcing their security rights pursuant to the credit agreement over the shares previously held by Etisalat Group (Emirates Telecommunications Group Company PJSC). 9mobile was reportedly sold in a distressed M&A process in November 2018, however, it has since been publicly reported that the international element of the consortium pulled out of the acquisition in early 2019 and the current ownership status remains unclear. 9mobile continues to trade in Nigeria and had a 7% market share as of June 30, 2021, down from 15% in 2015. In 2017 and 2018, we incurred a bad and doubtful debt charge of $38.3 million and $30.0 million respectively, relating to 9mobile’s outstanding trade receivables balance as a result of its financial distress during the period it was being restructured. While we continue to engage with 9mobile as a regular customer and currently continue to receive payments from 9mobile, 9mobile has failed to make full monthly payments to us in the past and any continued or future failure to make payments (including pursuant to any new arrangements entered into to try and resolve the situation) may result in us not receiving payment of amounts owed to us and further potential renegotiation of contract terms. See “— We may experience volatility in terms of timing for settlement of invoices or may be unable to collect amounts due under invoices.” These circumstances may, in turn, have a material adverse effect on our business, prospects, financial condition and/or results of operations. For the years ended December 31, 2018, 2019 and 2020, and the six months ended June 30, 2021, 9mobile accounted for 13%, 13%, 7% and 6% of our revenue generated, respectively.
In addition, if any of our customers are unwilling or unable to perform their obligations under the relevant tower lease agreements, including as a result of health pandemics or epidemics, such as the current outbreak of COVID-19 and future coronavirus or other outbreaks or events with a wide-ranging regional or global impact, or related events (such as regulatory interventions on pricing to make MNO services more accessible during periods of lockdown or restricted movement or operations), our revenues, financial condition and/or results of operations could be adversely affected. In the ordinary course of our business, we do occasionally experience disputes with our customers, generally regarding the interpretation of terms in our lease agreements. From time to time, we also undertake routine revenue assurance exercises to determine that all customer equipment on site and services being provided to the customers are being accurately invoiced according to our contracts, and occasionally, we locate equipment that we have not previously invoiced to customers that we believe we are contractually able to invoice. Historically, we have sought to resolve these disputes in an amicable manner, and such disputes have not had a material adverse effect on our customer relationships or our business. However, it is possible that such disputes could lead to a termination of our lease agreements with customers, a material modification of the terms of those lease agreements or a failure to obtain new business from existing customers, any of which could have a material adverse effect on our business, prospects, financial condition and/or results of operations. Furthermore, if we are forced to resolve any of these disputes through litigation or arbitration, our relationship with the applicable customer could be terminated or damaged, which could lead to decreased revenue or increased costs, which may in turn result in a material adverse effect on our business, prospects, financial condition and/or results of operations.
Our customers may fail to meet their payment obligations on a timely basis or at all. Such failures to pay, payment delays or other non-performance may be due to a customer’s insolvency or bankruptcy, a downturn in the economic cycle or factors specific to the relevant customer. The failure of our customers to meet their payment obligations and/or our inability to find new customers in a timely manner could have a material adverse effect on our financial condition and/or results of operations.
No assurance can be given that our customers will renew their tower lease agreements upon expiration of those agreements or that customers will not request unfavorable amendments to existing agreements. Also, no assurance can be given that we will be successful in negotiating favorable terms
 
26

 
with these customers. Any failure to obtain renewals of existing tower lease agreements or failure to successfully negotiate favorable terms for such renewals of or amendments to existing agreements (if sought) could result in a reduction in revenues and, accordingly, have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We may experience volatility in terms of timing for settlement of invoices or may be unable to collect amounts due under invoices.
Our contractual invoicing cycle is typically monthly in arrears or monthly or quarterly in advance, with the contractual payment cycle on average 30 to 60 days post invoice. As of December 31, 2020, we had gross receivables more than 90 days overdue of $190 million and held an impairment provision allowance of $134 million. While we may continue to pursue our contractual rights in collecting outstanding amounts, should the relevant counterparties be unable to meet their obligations to pay us any such sums in a timely manner, including as a result of health pandemics or epidemics, such as the current outbreak of COVID-19 and future coronavirus or other outbreaks or events with a wide-ranging regional or global impact, or related consequences, this could have a material adverse effect on our business, prospects, financial condition and/or results of operations, including planned working capital requirements. In addition, if our customers experience financial difficulties, as a result of regulatory actions, the COVID-19 pandemic or related effects, prolonged economic downturn, inability to raise funds or capital, or for any other reason, we may be unable to collect amounts due under invoices from those customers, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Our current and future markets involve additional risks compared to more developed markets, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We and our customers operate in various international markets, particularly in emerging markets such as in Africa, the Middle East and Latin America. As a result, we may, directly or indirectly, be exposed to economic, political and other uncertainties, including risks of:

general political and/or economic conditions, including any deterioration thereof, including inflation, impacting our existing or anticipated markets of operation, such as the effects of health pandemics or epidemics, including the current outbreak of COVID-19 and future coronavirus or other outbreaks or events with a wide-ranging regional or global impact, or following the recent fall in copper prices that adversely affected Zambia’s economy or the recent volatility of oil price markets that have adversely affected economies such as Nigeria’s;

civil strikes, acts of war, terrorism, insurrection and incidents of general lawlessness;

acts of piracy or vandalism;

significant governmental influence over many aspects of local economies;

telecommunications regulatory systems and/or competition regimes regulating our or our customers’ services, or our ability to invest further in particular markets as a result of antitrust regimes that may, for example, impact us due to our ultimate shareholders also investing in other, ancillary businesses in the same market;

laws or regulations that tax or otherwise restrict repatriation of earnings or other funds or otherwise limit distributions of capital;

laws or regulations that restrict foreign investment;

changes to existing or new tax laws or fees directed specifically at the ownership and operation of towers or our international acquisitions, which may also be applied or enforced retroactively;

changes to zoning regulations or construction laws, which could also be applied retroactively to our existing sites;

expropriation or governmental regulation restricting foreign ownership or requiring divestiture;
 
27

 

actions restricting or revoking spectrum or other licenses or suspending business under prior licenses;

material site security issues;

significant license or permit surcharges;

increases in the cost of labor (as a result of unionization or otherwise);

seizure, nationalization or expropriation of property or equipment;

repudiation, nullification, modification or renegotiation of contracts;

limitations on insurance coverage, such as political risk or war risk coverage, in certain areas;

political or social unrest, such as tensions between the “Anglophone” and “Francophone” regions of Cameroon;

local, foreign and/or U.S. monetary policy and foreign currency fluctuations and devaluations;

changes in foreign currency exchange rates;

price setting or other similar laws for the sharing of passive telecommunications infrastructure, or requirements to construct new sites in remote or rural areas that are less commercially viable for us;

complications associated with repairing and replacing equipment in remote locations, or supply chain issues arising out of global or geopolitical issues, such as operational and transport restrictions as a result of the COVID-19 pandemic;

import-export quotas, wage and price controls, imposition of trade barriers;

U.S. and foreign sanctions, trade embargoes or export control restrictions;

restrictions on the transfer of funds into or out of countries in which we operate, or lack of availability of foreign currency;

failure to comply with U.S. Treasury and other internationally recognized sanctions regulations restricting doing business with certain nations or specially designated nationals;

failure to comply with anti-bribery, anti-corruption laws or money laundering and regulations such as the Foreign Corrupt Practices Act, the UK Bribery Act or similar international or local anti-bribery, anti-corruption laws or money laundering, or Office of Foreign Assets Control requirements;

uncertain rulings or results from legal or judicial systems, including inconsistencies between and within laws, regulations and decrees, and judicial application thereof, which may be enforced retroactively, and delays in the judicial process;

actions, proceedings, claims, disputes and threats brought by governments, regulators, entities or individuals for fees, taxes or other payments, even if meritless or frivolous under applicable law;

regulatory or financial requirements to comply with bureaucratic actions;

changes to existing laws or new laws, and/or changing labor and taxation laws or policies, including confiscatory taxation;

other forms of government regulation and economic conditions that are beyond our control; and

governmental corruption.
Any of these or other risks could adversely impact our customers’ and/or our operations, which, in turn, could have a material adverse effect on our business, prospects, financial condition and/or results of operations, as well as our growth opportunities. In particular, a significant portion of our revenues are currently derived from our Nigerian operations (73% of our revenues for the six months ended June 30, 2021), and any such risks materializing within Nigeria in particular may have a significant impact on our business as a whole, including our business, prospects, financial condition and/or results of operations.
 
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Operations in international markets, including emerging and less developed markets (including Africa, the Middle East and Latin America), also subject us to numerous additional and different laws and regulations affecting our business, such as those related to labor, employment, unions, health and safety, antitrust and competition, environmental protection, consumer protection, import/export and anti-bribery, corruption and money laundering. Our employees, subcontractors and agents could take actions that violate any of these requirements. Violations, or alleged violations, of any such laws or regulations could subject us to criminal or civil enforcement actions and adversely affect our reputation, any of which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Our expansion into new geographic markets, such as Kuwait, Latin America and other markets we may enter in the future, may present competitive, distribution, regulatory and other challenges that differ from the challenges we face in markets that we have historically operated in. In addition, we may be less familiar with the customers, competitive dynamics (including antitrust concepts or regimes that may be based on our ultimate group shareholding and that may limit our ability to make future investments, due to, for example, our ultimate shareholders also investing in other ancillary businesses in the same market, which regulatory authorities in some markets may view as impacting their antitrust considerations) and regulatory environment in these markets and may ultimately face different or additional risks, as well as increased or unexpected costs, compared to those we experience in our existing markets. Expansion into new geographic markets may also expose us to direct competition with companies with whom we have limited or no past experience as competitors. To the extent we rely upon expanding into new geographic markets and do not meet, or are unprepared for, any new challenges posed by such expansion, our future sales growth could be negatively impacted, our operating costs could increase, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations. See “Risks Relating to the Markets in which We Operate.”
We and our customers face foreign exchange risks, which may be material.
For the six months ended June 30, 2021 and the year ended December 31, 2020, 63% and 65%, respectively, of our revenue was linked to the U.S. dollar or in euro-pegged currencies. The manner in which these revenues are linked to the U.S. dollar or the euro differs across our MLAs and jurisdictions of operation.
Our U.S. dollar-linked revenues are denominated in U.S. dollars in the relevant MLAs, but paid to us in local currency through contractual mechanisms. In such cases, including the majority of our MLAs in Nigeria, our MLAs may contain a formula for periodically determining the U.S. dollar to local currency exchange rate. Such MLAs typically have U.S. dollar-denominated components and local currency components of pricing, and the U.S. dollar components are converted to the local currency for settlement at a fixed conversion rate for a stated period of time, which conversion rates are reset quarterly, semi-annually or annually. As a result, in the event of devaluation, such as the ones that occurred in June 2016 and March 2020 in Nigeria, there is a risk of a delay between the timing of the devaluation and the next contractual reset, which may be significant. During the period between the date of the devaluation and the date of the reset, all of our revenues (i.e., both those revenues that are contractually linked to the U.S. dollar and those that are contractually linked to local currency) would reflect the new, devalued foreign exchange rate. When the reset is effected, the amount relating to the portion of the lease fees linked to the U.S. dollar, which is invoiced in local currency, is adjusted, upward, including in the cases of the June 2016 and March 2020 devaluations in Nigeria. Furthermore, our ability to maintain or enter into such contractually linked foreign exchange protection mechanisms in the future is not assured, which may in turn reduce our protection against fluctuations in foreign exchange rates and therefore could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
In addition, the conversion rates included in our MLAs may also be different than the rates at which our financial results are translated into U.S. dollars for reporting purposes. If we are required to use a higher rate for accounting purposes than that of our contracts, notwithstanding any underlying performance, it is likely that our financial results for the relevant periods in the future will show a related decline in performance. For example, as described below under “— The existence of multiple foreign
 
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exchange markets with different exchange rates may impact the rate at which our operating subsidiaries’ financial results are translated into U.S. dollars for group reporting purposes, which may impact our financial condition and/or results of operations,” in April 2017 the CBN introduced a new foreign exchange window for investors and exporters, and while the majority of our contracts in Nigeria contain contractually linked foreign exchange protection mechanisms that protect against foreign exchange fluctuations, such contracts historically only protected against changes in the official CBN exchange rate. While we have reached an agreement with our Key Customers in Nigeria to update the reference exchange rate in our contracts to the prevailing market rate available on Bloomberg (which has typically been aligned to the NAFEX rate), should these and similar circumstances arise again or continue to exist (where there is a divergence between the applicable market rate or translation rates for our financial results, and the exchange rate reflected in our contracts with customers), there is no guarantee that we will be able to renegotiate these contracts or enter into new contracts to fully protect against such foreign exchange risks, which could materially impact our results of operations. In addition, some of our contracts, particularly in Latin America and Kuwait, are based on local currency pricing with no direct foreign exchange link or conversion mechanism, and therefore any depreciation in local currency rates against the U.S. dollar would similarly impact our financial results when they are translated into U.S. dollars for reporting purposes, notwithstanding any underlying performance.
Certain of our other MLAs have revenue components linked to hard currencies, such as the U.S. dollar or the euro, because the MLAs are in local currencies that maintain a fixed exchange rate, or are “pegged,” to such currencies, such as those in Côte d’Ivoire and Cameroon. In addition, it was announced in December 2019 that the CFA Franc used in the West African Economic and Monetary Union (UEMOA), which includes Côte d’Ivoire, and which has a fixed exchange rate to the euro, would be replaced by a new currency called the Eco, and in June 2021, the heads of state of fifteen West African countries, including Côte d’Ivoire, comprising the Economic Community of West African States adopted a roadmap for the launch of the Eco in 2027. If such fixed or linked exchange rates are not maintained or “de-pegged,” it could result in fluctuations and/or devaluations of these currencies, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
In addition, even though our MLAs may have foreign currency-linked revenue components, or have use fees expressed in foreign currencies, the actual currency of settlement of a significant portion of our revenue is in local currencies, and we therefore remain exposed to foreign exchange risks. There may also be regulatory actions or pressure based on, among other things, socioeconomic or political reasons or events, to enforce local currency-based pricing, which would dilute any protection we may seek to include in our contracts to protect against local currency devaluations.
Most of our expenses are in the local currencies of the relevant jurisdiction of operation, except for certain of our borrowings, which are predominantly in U.S. dollars. For example, our $510 million 7.125% Senior Notes due 2025, or the 2025 Notes, and our $940 million 8.0% Senior Notes due 2027, or the 2027 Notes and, together with the 2025 Notes, the Notes, were issued in U.S. dollars. Certain other components of our capital expenditures may also be linked to foreign currency-based pricing elements. Diesel, which is one of our most significant expenses, may be considered as linked to U.S. dollars given the international pricing of oil, but is typically paid for in local currency. See “— Any increase in operating expenses, particularly increased costs for diesel or an inability to pass through or mitigate against increased diesel costs, could erode our operating margins and could have a material adverse effect on our business, prospects, financial condition and/or results of operations.” Should the relevant local currencies depreciate against the U.S. dollar, as was the case in mid-2016 and March 2020 in Nigeria, the local currency cost of buying diesel may increase. However, when translated back into U.S. dollars at the higher foreign exchange rate, the impact on our results is less notable. There may, however, be instances where our suppliers face foreign exchange pressure in the importation of certain materials, or as a result of the exchange rate at which they are able to source (or which applies to items for which charges are based on) foreign currency and import certain materials. This could in turn result in pressure from our suppliers to increase amounts payable by us.
We hold U.S. dollar cash balances in some of our jurisdictions of operation and/or convert local currencies to the relevant foreign currencies for payment obligations. Accordingly, we are subject to fluctuations in the rates of currency exchange between the local currencies and the relevant foreign
 
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currency as well as availability to source the relevant foreign currency in the jurisdictions in which we operate, and such fluctuations and/or availability could have a material adverse effect on our business, prospects, financial condition and/or results of operations. There may also be limited availability of U.S. dollars in the market at the time when we convert the relevant local currency to U.S. dollars, in which case we may need to convert the relevant local currency into U.S. dollars at a less favorable currency exchange rate. See also “Risks Relating to the Markets in which We Operate — Shortage of U.S. dollar, euro or other hard currency liquidity in the markets in which we operate could have a material adverse effect on our ability to service our foreign currency liabilities.”
In addition, our major customers may also face foreign exchange risks where their revenues are denominated in local currency, but their costs are denominated in, or linked to, a foreign currency such as the U.S. dollar, including the fees they pay to us. When the local currency depreciates against the relevant foreign currency (such as the significant depreciation of the Naira against the U.S. dollar, from approximately 196.5 to $1.00 as of January 1, 2016 to 304.5 to $1.00 as of December 31, 2016, based on the official rate published by the CBN), it may impact the ability of our customers to make payments to us on a timely basis or at all, and our customers may either raise prices for their customers or cut back on capital and operational expenditures, both of which could reduce future demand for our services, or result in requests to renegotiate contract terms with us prior to the relevant MLA end date.
Fluctuations in exchange rates, including volatility related to the COVID-19 pandemic and its effects on the global economy, depreciation of local currencies and/or a lack of sufficient availability of hard/international currencies, as required, could have a material adverse effect on our business, prospects, financial condition and/or results of operations. See “— Financial authorities in the markets in which we operate may intervene in the currency markets by drawing on external reserves, and their currencies are subject to volatility” and “— The existence of multiple foreign exchange markets with different exchange rates may impact the rate at which our operating subsidiaries’ financial results are translated into U.S. dollars for group reporting purposes, which may impact our financial condition and/or results of operations.”
The existence of multiple foreign exchange markets with different exchange rates may impact the rate used in our customer contracts and the rate at which our operating subsidiaries’ financial results are translated into U.S. dollars for group reporting purposes, which may impact our financial condition and/or results of operations.
As described below under “— Risks Relating to the Markets in which We Operate — Financial authorities in the markets in which we operate may intervene in the currency markets by drawing on external reserves, and their currencies are subject to volatility,” central banking authorities in the countries in which we operate may intervene in the currency markets or adopt policies that may impact the applicable exchange rates and/or amounts of foreign currency that may be obtained. In markets where there are multiple exchange rates available and/or referenced by the applicable banking authorities, there may be differences among the exchange rates companies use pursuant to accounting standards, contracted rates, rates quoted for other foreign exchange transactions, and ‘official’ central bank rates. If such differences exist, we may encounter issues relating to the interpretation or enforcement of our contracts with our customers. We may also be required to change the exchange rate applied to the translation of the local currency books of our operating subsidiaries to U.S. dollars for our consolidated group reporting purposes.
This has been particularly relevant to our operations in Nigeria, where a significant portion of our operations are based. Following the significant depreciation of the Naira against the U.S. dollar in 2016, as described in “Risks Relating to Our Business — We and our customers face foreign exchange risks, which may be material,” in a continuing effort to improve U.S. dollar liquidity in Nigeria and to assist investors and exporters in accommodating foreign exchange transactions, the CBN introduced a new foreign exchange window for investors and exporters in April 2017. This foreign exchange window, which includes the NAFEX, rate currently allows willing counterparties to exchange foreign currency through authorized dealers at a rate that is essentially market driven. This resulted in a situation where there were differing exchange rates in the market and we have been required to regularly monitor and evaluate which exchange rate is most appropriate to apply in the translation of the Naira books of our Nigerian operations to U.S. dollars for our consolidated group reporting purposes.
 
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During 2018 and 2019 the CBN official rate was approximately 306 to the U.S. dollar while the NAFEX rate was approximately 361 to the U.S. dollar. During 2020, the divergence between the two rates reduced as they both depreciated against the U.S. dollar, with the CBN rate and NAFEX rates as of December 31, 2020 being 381 and 410 to the U.S. dollar, respectively. As of May 31, 2021, the CBN ceased publishing what was the CBN Rate, although with limited impact on us given that the NAFEX rate was the most widely used rate at this time. The CBN now publishes the NAFEX rate on its website.
The determination of which is the most appropriate rate to use at the relevant time we produce financial information will depend on a number of factors, including, but not limited to, availability and liquidity in the market generally. The foreign exchange rate that we determine to be the most appropriate for the translation of our results for group reporting purposes may differ from the conversion rates contained within our contracts For example, from January 1, 2018, the results of our subsidiaries in Nigeria have been translated into our presentation currency, U.S. dollars, at the NAFEX monthly average exchange rate for income and expenses and from December 31, 2017, the assets and liabilities at the NAFEX closing rate at the balance sheet date. Prior to the agreements that we reached with our Key Customers in Nigeria to update the reference exchange rate in our contracts to the prevailing market rate available on Bloomberg, because the NAFEX rate used for accounting purposes had historically been higher than the CBN official rate used in our contracts, notwithstanding any underlying performance, our financial results for the relevant periods would have shown a related decline in performance in case of devaluation of NAFEX where the CBN official rate remained at the same level. While our contracts with certain of our Key Customers in Nigeria have been amended to resolve this anomaly, there can be no assurance that such a divergence between the applicable market rate or translation rate for our financial results, and the exchange rate reflected in our contracts with customers, will not occur again, or that the prevailing market rate on Bloomberg will not diverge from other exchange rates in the market (including NAFEX), which could, in turn, have a material adverse effect on our business, prospects, financial condition and/or results of operations, notwithstanding any underlying performance.
In addition, other measures taken by the relevant authorities and/or the CBN, including the manner in which various exchange rates are published, may further impact the rates available in the market, and we may need to consider such measures for the purposes of our accounts.
Potential investors should, therefore, bear this in mind when considering an investment in our ordinary shares, and the potential impact on the future trading and/or market price of our ordinary shares based on a decline in reported financial and/or operational performance based on such factors.
A regional or global health pandemic, including the current outbreak of COVID-19, could severely affect our business.
A regional or global health pandemic, depending upon its duration and severity, could have a material adverse effect on our business. For example, in March 2020, the World Health Organization characterized COVID-19 as a global pandemic, which has had numerous effects on the global economy. Governmental authorities around the world implemented measures to reduce the spread of COVID-19, including “shelter-in-place” orders suggested or mandated by governmental authorities or otherwise elected as a preventive measure, and such measures adversely affected workforces, supply chains, economies and financial markets and led to an economic downturn in many of our markets.
As a result of the COVID-19 pandemic, we transitioned most of our employees to remote working arrangements and temporarily closed offices in some of our markets.
If our employees are not able to effectively work from home, or if our employees contract COVID-19 or another contagious disease, we may experience a decrease in productivity and operational efficiency, which could negatively impact our business, financial condition and results of operations. In addition, in most of our markets we were required to obtain permits designating certain employees as “key personnel” in order to facilitate the access to many of our Tower sites for construction, service and maintenance activities. While we have so far been able to obtain all required permits, there can be no assurance that we will be able to obtain all approvals or permits that may be required in the future.
In addition, as a result of the COVID-19 pandemic and its effects on the global economy, depreciation of local currencies and/or a lack of sufficient availability of hard/international currencies,
 
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we may experience fluctuations in foreign currency exchange rates in many of the markets in which we operate, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations. Continued global deterioration in economic conditions in light of the COVID-19 pandemic could adversely and materially affect us and/or our customers through disruptions of, among other things, the ability to procure telecommunications equipment or other supplies through the usual supply chains. For instance, shortages of capacity in shipping may occur and could affect the smooth flow of our and/or our customers' supply chains, increase transportation costs and/or decrease reliability. Continued global deterioration in economic conditions in light of the COVID-19 pandemic or similar events could also adversely and materially affect the ability of us and/or our customers to maintain liquidity and deploy network capital, with potential decreases in consumer spending contributing to liquidity risks, or even through regulatory interventions or pressure on pricing and services offered that may reduce revenues for periods of time. Any resulting financial difficulties could result in uncollectible accounts receivable or reduced revenues, despite having provided increased services. Resulting supply chain or operational difficulties (including site access) may also result in us being unable to meet the service level agreement targets under our MLAs. See “— We rely on third-party contractors for various services, and any disruption in or non-performance of those services would hinder our ability to effectively maintain our tower infrastructure.” The loss of significant Tenants, or the loss of all or a portion of our anticipated Contracted Tenant Lease Revenue from certain Tenants, could have a material adverse effect on our business, financial condition and/or results of operations.
In the past, governments have taken unprecedented actions in an attempt to address and rectify these extreme market and economic conditions by providing liquidity and stability to financial markets. If these actions are not successful, the return of adverse economic conditions may cause a significant impact on our ability and the ability of our customers to raise capital, if needed, on a timely basis and on acceptable terms or at all.
Although our results have not been materially affected by COVID-19 to date, we are unable to accurately predict the impact that COVID-19 will have on our or our customers’ operations going forward due to uncertainties that will be dictated by the length of time that any disruptions or consequential effects continue, which will, in turn, depend on the currently unknown duration of the COVID-19 pandemic, the impact of governmental regulations that might be imposed in response to the pandemic, the efficacy and availability of vaccines around the world, and the overall economic impact of the pandemic. The response measures imposed also differ in scope across our various markets and are subject to continuous updating. The severity and impact of the pandemic may vary across our markets, and the pandemic may have greater adverse effects in the emerging and less developed markets in which we operate. Due to the uncertainty of COVID-19, we will continue to assess the situation, including abiding by any government-imposed restrictions, market by market. While we have developed and expect to continue to develop plans to help mitigate the potential negative impact of COVID-19, these efforts may not be effective, and any protracted economic downturn will likely limit the effectiveness of our efforts. Accordingly, it is not possible for us to predict the duration and extent to which this will affect our business, future results of operations and financial condition at this time.
To the extent the COVID-19 pandemic, or any similar future pandemic or related events could have a material adverse effect on our or our customers’ business, financial condition, results of operations and/or liquidity, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.
We may not successfully execute our business strategy and operating plans or manage our growth, all of which depend on various factors, many of which are outside our control.
The existing and future execution of our strategic and operating plans will, to some extent, be dependent on external factors that we cannot control, such as changes in the tower infrastructure industry or the wider telecommunications industry, particularly in the various jurisdictions in which we operate and may seek to operate in the future, changes in budgets of or demand from our current or potential customers for tower and other telecommunications infrastructure services, international legislative and regulatory changes, changes in regional security or the economy of the countries in which we operate, changes in fiscal and monetary policies, the availability of additional tower and other
 
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telecommunications infrastructure portfolios for acquisition and restrictions or other limitations relating to foreign direct investment or foreign ownership in particular markets (including, among other things, events such as health pandemics or epidemics, including the current outbreak of COVID-19 and future coronavirus or other outbreaks or events with a wide-ranging regional or global impact, accelerating the implementation of any such measures or giving rise to such factors). For example, high tariffs charged to users in the countries in which we operate compared to certain other countries in which we do not operate, may impede or slow the growth of the telecommunications industries in the countries in which we operate and, in turn, our business.
We may be unable to implement our strategy relating to the construction of New Sites and deployment of other telecommunications infrastructure. See “— Our ability to construct New Sites or to deploy other telecommunications infrastructure depends on a number of factors, many of which are outside of our control.”
Our ability to increase the number of Colocations and Lease Amendments on each Tower that we own across our portfolio is a key factor contributing to our growth and a key part of our strategy in the markets in which we operate. If we are unable to increase the number of Colocations and Lease Amendments on our Towers, either due to a lack of available space or from reduced customer demand, if we are unable to accurately assess and invoice customer equipment on our sites, or if we are unable to implement or achieve our other strategic plans or targets and key performance indicators, we may not achieve the revenues, margins or earnings that we need to grow or to offset the impact of any adverse economic conditions that may develop in the future.
Our ability to increase the usage of our infrastructure by our customers may depend on the performance of these customers and their success in acquiring and retaining end users for the purposes of their services. A decline in the number of end users for our customers, or lower than expected growth in end users for our customers, could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
In addition, our strategic and operational plans need to be continually reassessed to meet the challenges and needs of our businesses in order for us to remain competitive. The failure to implement and execute our strategic and operating plans in a cost-effective and timely manner, or at all, realize the cost savings or other benefits or improvements associated with such plans, or have financial resources to fund the costs associated with such plans or to incur costs in excess of anticipated amounts, or sufficiently assess and reassess the plans (including, in each case, as a result of challenges that may be posed or arise as a result of operating companies in which we may not have a majority of the economic or share ownership, whether in terms of operational or further commensurate funding challenges or otherwise), could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Further, successful execution of our business plan will require effective management of growth, which may include acquisitions. The management team, operational systems and internal controls currently in place or to be implemented may not be adequate for such growth, and the steps taken to hire personnel and to improve such systems and controls may not be sufficient. If we are unable to grow as anticipated, manage our growth effectively or successfully integrate any acquisitions (including their information technology or finance systems), it could have a material adverse effect on our business, prospects, financial condition and/or results of operations. See “Business — Our Strategy” for further information on our key strategies.
We rely on third-party contractors for various services, and any disruption in or non-performance of those services would hinder our ability to effectively deploy or maintain our infrastructure.
We engage third-party contractors to provide various services in connection with the site acquisition, construction, supply of equipment and spare parts, access management, security and preventative and corrective maintenance of tower sites, as well as power management, including the supply of diesel to certain of our sites, sometimes with a small number of contractors in the relevant jurisdiction. For example, we have outsourced power management, refurbishment, operations and maintenance and security
 
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functions for certain of our sites in Nigeria to certain key vendors. Their power management functions include the supply of diesel to and deployment of alternative power technologies, such as hybrid and solar power technologies, on certain sites, to help reduce diesel consumption to a contracted volume. Across our nine markets, as of June 30, 2021, we outsourced certain operations and maintenance activities at 72% of our Towers. We are exposed to the risk that the services rendered by our third-party contractors will not always be available, satisfactory or match our and/or our customers’ targeted quality levels, as well as the risk that they may otherwise be unable to perform their obligations to some extent or at all, including to the extent they are subject to labor disputes, become insolvent or as a result of operational, access or transport restrictions or other COVID-19 related limitations, or due to geopolitical events resulting in export control or similar restrictions. As a result, our customers may be unsatisfied with our services, and we may be required to pay certain financial penalties under our contracts, or our customers may terminate their contracts in the event of a material breach, either of which could have a material adverse effect on our reputation and brand, as well as our business, prospects, financial condition and/or results of operations.
For instance, recent economic and trade sanctions threatened and/or imposed by the U.S. government on a number of China-based technology companies, including Huawei Technologies Co., Ltd., or Huawei, and certain of their respective affiliates and other China-based technology companies, with whom we conduct business, as well as actions brought against Huawei and related persons by the U.S. and the Canadian governments and recent restrictions imposed by the UK government, have raised further concerns as to whether, in the future, there may be additional regulatory challenges or enhanced restrictions involving other China-based technology companies. Such potential restrictions or sanctions, as well as any associated inquiries or investigations or any other government actions, may be difficult or costly to comply with and may, among other things, delay or impede the development of the technology, products and solutions of China-based third-party contractors with whom we are currently engaged or may become engaged with and hinder the stability of the supply chains of such contractors, any of which may have a material adverse effect on our business, financial condition and/or results of operations.
In addition, if third-party contractors do not meet execution targets for both financial and operational performance, including not meeting our standards of service or complying with health, safety, employment or other laws and regulations, or are unable to perform to some extent or at all, we may have to step in and complete the process. If we are required to undertake this work ourselves, it could require extensive time and attention from our management and lead to increased future operating costs while the work is carried out, which could in turn could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We also rely on third parties for our supply of diesel, which is critical, as many of the markets in which we currently or may, in future, operate (including, in particular, those in Africa and certain markets in the Middle East) have limited or unreliable power grid connectivity (including due to the impact of seasonal extreme weather conditions), thereby resulting in a heavy reliance on alternatives such as diesel-powered generators. Given the importance of diesel for our operations, we may purchase diesel in large quantities which is then stored at our facilities. This supply could be disrupted by events that are beyond our control, including, for example, in light of the COVID-19 pandemic and related effects (or any future coronavirus or other outbreaks or events with a wide-ranging regional or global impact). While we maintain planning, monitoring and logistics systems including bulk storage facilities aimed at providing a consistent supply of diesel to sites, scarcity of diesel, lack of available trucks, labor disputes, queues and other issues at fuel depots and security concerns at certain sites, and fire, among other things, including the impact of climate change or related initiatives, have in the past and may in the future, cause this supply to be disrupted. Disruption in the supply of diesel or diesel quality not meeting our requirements would impede our ability to continue to power our sites and adversely affect power uptimes. Widespread or long-term disruption in the supply of diesel may result in us being unable to meet the service level agreement targets under our MLAs, and in some cases we would be required to shoulder resultant financial penalties, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
 
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Our Contracted Tenant Lease Revenue is based on certain estimates and assumptions and actual results may differ materially from such estimated operating results.
Our Contracted Tenant Lease Revenue disclosed in this prospectus represents our estimate of the lease fees to be received from existing Tenants of Key Customers for the remainder of each Tenant’s current contractual site lease term, including lease fees to be received from the existing Lease Amendments of Key Customers for the remainder of each Lease Amendment’s contractual term, as of June 30, 2021. Our Contracted Tenant Lease Revenue is based on certain estimates and assumptions, such as constant foreign exchange rates, no escalation of lease fees despite contractual provisions in our MLAs in that regard, no new tenants or new Lease Amendments added, no amendments to our existing MLA terms and no Churn. Unanticipated events may occur that could adversely affect the actual results achieved by us during the periods to which these estimates relate, causing some or all of the actual results to deviate from our estimates and assumptions, which in turn could have a material adverse effect on our business, financial condition and/or results of operation.
Any increase in operating expenses or costs, particularly increased costs for diesel or ground lease costs, or an inability to pass through or mitigate against such costs, could erode our operating margins and could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Our primary operating expenses include diesel fuel, site maintenance and security, salaries of engineers and security personnel, fees for licenses and permits and insurance. In addition, we incur ground lease costs and the continued development, expansion and maintenance of our tower site infrastructure requires ongoing capital expenditure. There is no assurance that our operating expenses, including those noted above, will not increase in the future or that we will be able to successfully pass any such increases in operating expenses to the customers. For example, we require a substantial amount of diesel to power our tower site operations. For the six months ended June 30, 2021, the cost of power generation, which includes diesel, haulage and minimal electricity, accounted for 29% of our cost of sales.
Diesel prices have fluctuated significantly over time, often in parallel to changes in oil prices, and may fluctuate in the future as a result of many factors, including the impact of the COVID-19 pandemic, geopolitical tensions and/or climate change or related initiatives, and we are only able to pass through a component of the fuel costs at our sites to our customers under the terms of certain of our contracts. We therefore remain exposed to diesel price volatility, which may result in substantial increases in our operating costs and reduced profits if prices rise significantly. Further, our attempts to reduce power costs through the deployment of DC generators, hybrid battery and solar technologies, while presently successful, may not be successful in the future.
Our ground lease costs are for a fixed duration, typically a 10 to 15 year term, paid for either on a monthly or quarterly basis or in advance for a multi-year portion of the overall term of the lease. Approximately 19% of our ground leases are due for renewal within the next 18 months. The renewal of a large proportion of our tower portfolio ground leases within a particular year requires a significant upfront rent payment made upon such renewal, which in turn could increase our cash outflows for that particular year. Any increases in operating expenses or lease costs referred to above would reduce our operating margins and may have a material adverse effect on our business, prospects, financial condition and/or results of operations.
If we are unable to renew and/or extend our ground leases, or protect our rights to access and operate our Towers or other telecommunications infrastructure assets, it could have a material adverse effect on our business and operating results.
Our site portfolio consists primarily of ground-based towers constructed on land that is leased under long-term ground lease agreements. As of June 30, 2021, approximately 92% of the sites in our portfolio were operated under ground leases on land that we do not own. For sites on leased land, approximately 37% of the ground leases have an expiration date before the end of 2025 and, as of June 30, 2021, the average remaining life of our ground leases was 7.9 years.
 
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For various reasons, landowners or lessors may not want to renew their ground leases, may seek substantially increased rents, or they may lose their rights to the land (including, for example, if such land is subject to concession agreements) or transfer their land interests to third parties, which could affect our ability to renew ground leases on commercially viable terms or at all. In addition, we may not have the required available capital to extend these ground leases at the end of the applicable period. In the event that we cannot extend these ground leases, we will be required to dismantle and/or relocate these Towers and may lose the cash flows derived from such Towers, which may have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Real property interests relating to towers consist primarily of leasehold interests, which in some cases relate to sites for which special access arrangements may be required, such as Towers located on or near airports, government facilities or rooftops. For various reasons, we may not always have the ability to access, analyze and verify all information regarding titles and other issues prior to entering into a ground lease, or we may be unable to contractually agree to amendments in relation to sensitive site access issues, all of which could affect the rights to access and operate the site. From time to time, we may also experience disputes with lessors regarding the terms of ground leases, which could affect our ability to access and operate a tower site. The termination of a ground lease may interfere with our ability to operate and generate revenues from the Tower. If this were to happen at a material number of sites, it would have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Our ability to access and operate our Towers or other telecommunications infrastructure may also rely on right of use or other similar agreements with third parties. In the event that we cannot renew or continue to exercise our rights under these agreements, we will be required to dismantle and/or relocate these Towers or other telecommunications infrastructure assets, and may lose the cash flows derived from such assets, which may have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We may experience the loss of tenancies and/or customers, and are exposed to the loss of revenue from the failure or acquisition of any customer or customer consolidation.
If we were to experience a loss of tenancies when services provided by us are terminated, a Tenant does not renew its contract or we have ceased recognizing revenue for a customer on a site in any particular period, we would face what is known as Churn. For example, Tenants may determine that demand has changed in a particular area and they no longer need tower infrastructure at certain sites. A Tenant may Churn if the MLA or SLA is not renewed at the end of its term, the customer ceases operations or switches to a competing tower company. Similarly, certain customers may be acquired, experience financial difficulties or cease operations as a result of technological changes or other factors, including the COVID-19 pandemic and resulting effects (or any future coronavirus or other outbreaks or events with a wide-ranging regional or global impact), which could result in renewal on less favorable terms, cancellation or non-renewal of our tenancy agreements. We experienced Churn of 493, 305, 381 and 774 Tenants for the years ended December 31, 2018, 2019 and 2020, and the six months ended June 30, 2021, respectively. Other than a customer churning at the end of its term, limited termination clauses may apply pursuant to the relevant MLA. Certain of our customer agreements also contain a contractual right to Churn a limited number of sites each year without penalty, and customers with no such right could use their negotiating power in the future to request the ability to Churn certain tenancies. If customers terminate or fail to renew tower lease agreements with us (either on commercially acceptable terms, or at all), are acquired or, become insolvent, or otherwise become unable to pay lease fees, the loss of such customers could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Also, as is customary in tower infrastructure acquisitions, purchase agreements sometimes allow the purchaser of a site, such as us, to unwind sites when legal title has not been transferred by a date falling a number of months after completion of the acquisition, or the long-stop date, unless extended by the mutual consent of the parties. In the event that such unwinding takes place, which is typically at the option of the purchaser, the seller would reimburse the purchaser for the price paid for the sites that are subject to unwinding and the seller, such as the relevant MNO, would stop paying the lease fee for
 
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those sites. Failure to transfer the legal title of acquired sites, including in respect of prior acquisitions where the long-stop date has been extended, or future acquisitions, could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Further, consolidation among or with our customers could result in a reduction in their or the market demand for base transmission sites and/or Colocation, as certain base transmission sites may become redundant or additional tower spaces could be acquired through consolidation, and our customers may therefore choose not to renew their contracts and lease agreements, and we may also not be able to pursue our strategies to obtain or engage with new customers, or we may face reduced or less than anticipated demand from new or existing customers, in any particular market. Such consolidation may also result in a reduction in our customers’ (or potential new customers’) future capital expenditures, including as a result of their expansion plans being similar or if their requirements for additional sites decreases on a consolidated basis. We believe consolidation may occur in certain of our markets in order to achieve both the scale and economic models necessary for long-term growth. Customer or industry consolidation may also result in increased customer concentration. See “— A significant portion of our revenue is derived from a small number of MNOs. Non-performance under or termination, non-renewal or material modification of tower lease agreements with these customers could have a material adverse effect on our business, prospects, financial condition and/or results of operations.” Our contracts and lease agreements may be unable to protect us adequately from a reduction in tenancies due to consolidations and we may be unable to renew contracts or lease agreements on favorable terms, or at all. If a significant number of contract or lease terminations occur due to industry consolidation, our revenue and cash flow could be adversely affected, which in turn could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
A slowdown in the growth of, or reduction in demand for, wireless communications services could adversely affect the demand for tower space and could have a material adverse effect on our financial condition and/or results of operations.
Demand for tower space is dependent principally on demand from wireless communications carriers, which, in turn, is dependent on subscriber demand for wireless services. Most types of wireless services currently require ground-based network facilities, including communications sites for transmission and reception. The extent to which wireless communications carriers lease such communications sites depends on a number of factors beyond our control, including the level of demand for such wireless services, the availability of spectrum frequencies, the financial condition and access to capital of such carriers (including as a result of the COVID-19 pandemic and resulting effects, or any future coronavirus or other outbreaks or events with a wide-ranging regional or global impact), changes in telecommunications regulations and general economic conditions, as well as factors such as geography and population density. In addition, if our customers or potential customers do not have sufficient funds from operations or are unable to raise adequate capital to fund their business plans or face other financial issues, they may reduce their capital spending, which could adversely affect demand for space on our towers, which in turn could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
In addition, tower sharing must continue to be seen by wireless telecommunications providers as a cost-effective way to satisfy their passive infrastructure needs. Any slowdown in the growth of, or reduction in demand for, wireless telecommunications services, or any failure of tower sharing to continue to develop as a way to meet the requirements of wireless telecommunications providers in the countries in which we operate, may adversely affect the demand for tower sites and could have a material adverse effect on our business, prospects, financial condition and/or results of operations, as well as our cash flows.
Further, there can be no assurances that 3G, 4G (including LTE), 5G, advanced wireless services in any other spectrum bands or other new wireless technologies will be deployed or adopted as rapidly as estimated or that these new technologies will be implemented in the manner anticipated or at all. Additionally, the demand by consumers and the adoption rate of consumers for these new technologies once deployed may be lower or slower than anticipated, particularly in emerging and less developed markets such as those in which we operate or may operate in the future. We may also need to adapt our
 
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business model to new technologies such as 5G and the resulting change to products and services we offer, as well as to changing customer or local or regulatory requirements, such as increasing construction of new sites and infrastructure expansion in remote or rural areas, which may be less commercially viable or more technologically or operationally challenging for us (including potentially as a result of needing to contemplate elements of active communications equipment or revenue share models within our business or operating model). These factors could adversely affect our growth rate since growth opportunities and demand for our tower space as a result of such new technologies may not be realized at the times or to the extent anticipated, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
New technologies designed to enhance the efficiency of wireless networks and potential active sharing of the wireless spectrum could reduce the need for tower-based wireless services and could make our tower infrastructure business less desirable to or necessary for Tenants and result in decreasing revenues.
The development and implementation of new technologies designed to enhance the efficiency of wireless networks or the implementation by MNOs of potential active sharing technologies could reduce the use of and need for tower-based wireless services transmission and reception and could decrease demand for tower-based antenna space and ancillary services we provide. For example, new technologies that may promote network sharing, joint development, or resale agreements by our wireless service provider customers, such as signal combining technologies or network functions virtualization, may reduce the need for our wireless infrastructure, or may result in the decommissioning of equipment on certain sites because portions of the customers’ networks may become redundant. In addition, other technologies and architectures, such as WiFi, DAS, femtocells, other small cells, or satellite (such as low earth orbiting) and mesh transmission systems may, in the future, serve as substitutes for, or alternatives to, the traditional macro site communications architecture that is the basis of substantially all of our site leasing business. Additional examples of such new technologies might include spectrally efficient technologies which could potentially relieve some network capacity problems, or complementary voice over internet protocol access technologies that could be used to offload a portion of subscriber traffic away from the traditional tower-based networks, which would reduce the need for telecommunications operators to add more tower-based antenna equipment at certain tower sites. MNOs in European markets have implemented active sharing technologies in which MNOs share the wireless spectrum and, therefore, need fewer of their own antennas and less tower space for such equipment. Moreover, the emergence of alternative technologies could reduce the need for tower-based wireless services transmission and reception. For example, the growth in delivery of wireless communication, radio and video services by direct broadcast satellites could materially and adversely affect demand for our antenna space, or certain alternative technologies could cause radio interference with older generation tower-based wireless services transmission and reception. As a result, the development and implementation of alternative technologies to any significant degree could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Increased competition in the tower infrastructure industry could have a material and adverse effect on our business.
Although we are a leading independent provider of telecommunications tower infrastructure in most of our markets, competition in the tower infrastructure industry exists and customers have alternatives for leasing tower space, including:

telecommunications operators which own and lease their own tower portfolios;

in certain circumstances, owners of alternative site structures such as building rooftops, outdoor and indoor DAS networks, billboards and electric transmission towers; and

other independent tower companies operating in the market, such as American Tower Corporation, or ATC, SBA Communications Corporation, or SBA, or other tower companies that may enter the market.
We believe that competition in the tower infrastructure industry in emerging and less developed markets (including markets such as the Middle East and Latin America) is based on, among other
 
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things, power management expertise, tower location, relationships with telecommunications operators, tower quality and height, pricing and ability to offer additional services to tenants and operational performance, as well as the size of a company’s site portfolio and its ability to access efficient capital. For example, in 2014, certain MNOs, including MTN Nigeria, Airtel Nigeria and Etisalat Nigeria (now known as 9mobile) concluded sale and lease back transactions of their previously owned site portfolios in Nigeria. These transactions led to the emergence of ATC as the other major independent tower company in Nigeria, with a site portfolio of approximately 6,500 towers as of June 30, 2021. ATC is our primary competitor in Nigeria and Africa. We are the market leader in Africa by tower count with 24,349 towers compared to ATC with 20,988 towers, Helios Towers Plc with 8,603 towers and SBA Communications with approximately 1,000 towers as of June 30, 2021. In Brazil, the competitive landscape is wider with ATC and SBA owning approximately 23,000 and 10,000 towers, respectively, and numerous smaller tower companies of similar size to or smaller than our business. The Brazilian competitive landscape presents opportunities for consolidation. We also compete to a lesser extent with telecommunications operators who have retained their own towers and continue to manage them and make them available for Colocation. In certain circumstances, we also compete with owners of alternative site structures such as building rooftops, outdoor and indoor DAS networks, billboards and electric transmission towers. In addition, there may be increased competition in the future from other independent tower companies operating in, or that may enter, our markets. In particular, we may face competition in Latin America from other independent tower companies who may have a substantially larger site portfolio or have operated in the region for a longer period of time than we have.
Competitive pressures could increase and could have a material adverse effect on lease rates paid by our customers, which could result in existing customers not renewing their leases, or new customers leasing towers from our competitors rather than from us. In addition, we may not be able to renew existing customer leases or enter into new customer leases, either on commercially acceptable terms or at all, which could have a material adverse effect on our results of operations and growth rate. Increasing competition could also make the acquisition of attractive tower portfolios or other tower companies more costly, or limit acquisition opportunities altogether, particularly in cases where our competitors have a lower cost of capital. Any of the foregoing factors could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We may not successfully identify or integrate acquired assets or businesses into our operations or be able to fully recognize the anticipated benefits of assets or businesses that we acquire or establish in either existing or new markets.
A key element of our growth strategy has been to increase our tower portfolio through acquisitions, and we expect to continue to make acquisitions in the future, including in new geographic markets and/or adjacent telecommunication infrastructure verticals. During 2020, we completed the Kuwait Acquisition through a controlling investment (for a portfolio of up to 1,620 towers) and also the CSS Acquisition that included 2,312 towers (2,251 in Brazil, 51 in Peru and 10 in Colombia). In early 2021 we completed the Skysites Acquisition that included 1,005 towers in Brazil and the Centennial Acquisition that included 819 towers (602 in Brazil and 217 in Colombia). We also signed definitive transaction agreements with TIM Brasil on May 5, 2021 for the acquisition and deployment of TIM Brasil’s secondary fiber network infrastructure. See “Prospectus Summary — Recent Acquisitions.” There can be no assurance that we will be able to identify suitable acquisition candidates in the future or acquire them on acceptable terms, including due to increased competition for attractive acquisition opportunities in the relevant markets, or that any particular acquisition or investment will perform as anticipated in our investment appraisals or related targets. Additionally, we rely on our due diligence of the acquired assets or business and the representations and financial records of the sellers and other third parties to establish the anticipated revenues and expenses and whether the acquired assets or business will meet our internal guidelines for current and future potential returns. Given the nature of the individual assets which are numerous and geographically diverse, it can be difficult to conduct effective physical diligence on these, which is typically conducted by way of a sample audit. In addition, we may not always have the ability to analyze and verify all information regarding title, access and other issues regarding the land underlying acquired towers. The condition of the assets can also deteriorate significantly during the period prior to closing (and after physical site audits) because sellers may reduce operating and capital expenditure on such towers.
 
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Moreover, we may incur significant costs during the evaluation and consideration of new investment opportunities or the pursuit of such acquisitions, which are often conducted through competitive auction processes. Tower portfolio or other asset acquisitions typically take a considerable period of time to sign and close and usually close in stages, but can involve up-front investments that cannot be recovered regardless of whether the transaction is successfully completed. Tower portfolio or other asset acquisitions are subject to certain customary conditions precedent and closing these transactions will generally depend on whether certain conditions precedent are satisfied, such as regulatory approvals. In the event that conditions precedent are not satisfied or are not satisfied in a timely manner, we may be unable to acquire certain tower portfolios or other assets, or closings (and therefore operations and revenues) may be delayed, while, in each case, incurring associated or continuing transaction costs. For example, on March 27, 2019, we announced that we had entered into an agreement with Mobile Telecommunications Company Saudi Arabia to acquire approximately 8,100 towers in the Kingdom of Saudi Arabia, although on December 30, 2019, it was announced that this agreement had been terminated following expiry of the initial longstop date. We may also at any time be participating in one or multiple sale or acquisition processes across various markets and continents (which may include processes in Africa, Middle East, Latin America and Southeast Asia with different counterparties). Given the confidential nature of such processes the details of these would only be available once we have been selected as the preferred candidate and reached agreement on terms with the counterparty. We may also be unable to succeed in the processes (or any of them) in which we participate or reach an agreement on terms with the counterparty should we be selected as the preferred candidate. Given the often-varying transaction structures of these telecommunication infrastructure sales or acquisitions, we often have little or no control on the timing of such processes.
We may be required to rely on the financial and operational representations, warranties and undertakings (including any indemnity) of sellers. If: (i) records with respect to the acquired assets are not complete or accurate, (ii) we do not have complete access to, or use of, the land underlying the acquired towers, (iii) we discover that the towers or other telecommunications infrastructure have structural issues (such as overloading) (iv) the towers or other assets do not achieve the financial results anticipated, or (v) there are historic liabilities attaching to the acquired assets that we are unable to successfully recover under an indemnity, it could have a material adverse effect on our business, prospects, financial condition and/or results of operations. Furthermore, some sellers may or may not have the financial capacity to support a subsequent claim against them. While we acquire representation and warranty insurance in some of our transactions, such policies typically contain certain exclusions that would limit our ability to recover certain losses.
In addition, the process of integrating acquired assets or businesses into our operations, including the Kuwait Acquisition, CSS Acquisition, Skysites Acquisition, Centennial Acquisition and the TIM Fiber Acquisition, may result in unforeseen operating difficulties and large expenditures and may absorb significant management attention that would otherwise be available for the ongoing development of our business. We may also be unable to retain or replace key personnel of an acquired business, or recruit key personnel in the case of acquired assets, which could reduce the value of the acquisition and prevent us from realizing our strategic goals. These risks may be exacerbated in material acquisitions. Further, such material acquisitions may exacerbate the risks inherent with our growth strategy, such as (i) an adverse impact on our overall profitability if the acquired towers or business does not achieve the financial results estimated in our valuation models, (ii) unanticipated costs associated with the acquisitions that may impact our results of operations for a period, (iii) increased demands on our cash resources that may, among other things, impact our ability to explore other opportunities, (iv) undisclosed and assumed liabilities that we may be unable to recover, (v) increased vulnerability to general economic conditions, (vi) an adverse impact on our existing customer relationships, (vii) additional expenses and exposure to new regulatory, political and economic risks if such acquisitions were in new jurisdictions and (viii) diversion of managerial attention. Furthermore, our international expansion initiatives are subject to additional risks such as complex laws, regulations and business practices that may require additional resources and personnel. There can be no assurance that we will be successful in integrating acquisitions, including the Kuwait Acquisition, CSS Acquisition, Skysites Acquisition, Centennial Acquisition and TIM Fiber Acquisition, into our existing business or be able to fully recognize the anticipated benefits of towers or businesses that we acquire, and failure to do so could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
 
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Our ability to construct New Sites or to deploy other telecommunications infrastructure depends on a number of factors, many of which are outside of our control.
Our ability to construct New Sites or to deploy other telecommunications infrastructure in new or existing markets affected by a number of factors beyond our control, including the availability of and access to suitable land that meets our requirements, including those of the initial customer, and the availability of construction equipment and skilled construction personnel. Delays brought on by a number of factors could also adversely affect our ability to deliver New Sites or to deploy other telecommunications infrastructure in a timely and cost effective manner, particularly in connection with timelines contractually agreed with customers. There can be no assurance that:

we will be able to enter into identified new markets in which we intend to deploy New Sites or other telecommunications infrastructure;

every individual New Site or other telecommunications infrastructure asset will be commercially viable or meet our investment criteria;

we will be able to overcome setbacks to new construction, including local opposition;

we will be able to maintain relationships with the regulatory authorities and to obtain any required governmental approvals for new construction, including any access permits required as a result of restrictions imposed in response to the COVID-19 pandemic;

the number of towers or other infrastructure planned for construction will be completed in accordance with the requirements of customers;

there will be a significant need for the construction of new towers or other telecommunications infrastructure;

we will be able to finance the capital expenditures associated with construction or deployment of New Sites or other telecommunications infrastructure;

we will be able to import the equipment necessary for the construction or deployment of New Sites or other telecommunications infrastructure;

we will be able to purchase and/or import components necessary for the construction or deployment of New Sites or other telecommunications infrastructure, including steel and fiber, or purchase such components at expected prices; or

we will be able to secure rights or access to the land necessary to execute customer orders for New Sites or other telecommunications infrastructure.
Although we are continuously examining the merits, risks and feasibility of and searching for strategic new site opportunities, such efforts may or may not result in profitable New Sites, including as a result of these uncertainties, which could, in turn, have a material adverse effect on our business, prospects, financial condition and/or results of operations. See “— We do not always operate with the required approvals and licenses for some of our sites, particularly where it is unclear whether a certain license or permit is required or where there is a significant lead time required for processing the application, and therefore may be subject to reprimands, warnings and fines for non-compliance with the relevant licensing and approval requirements” for more information.
We rely on key management personnel and any inability to recruit, train, retain and motivate key employees could have a material adverse effect on our business.
We believe that the current management team contributes significant experience and expertise to the management and growth of the business. The continued success of the business and our ability to execute our business strategies in the future will depend in large part on the efforts of key personnel particularly Mr. Darwish, our Chairman, Group Chief Executive Officer and Director, and our other senior officers, each of whose services are critical to the success of our business strategies. There is also a shortage of skilled personnel in the telecommunications infrastructure industry in the markets in which we operate, which we believe is likely to continue. As a result, we may face increased competition for skilled employees in many job categories from tower companies, telecommunications operators
 
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and new entrants into the telecommunications infrastructure industry and this competition is expected to intensify. Although we believe our employee salary and benefit packages are generally competitive with those of our competitors, if our competitors are able to offer more generous salary and benefit packages in the future, we may face difficulties in retaining skilled employees. An inability to successfully integrate, recruit, train, retain and motivate key skilled employees could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We have incurred and may continue to incur losses.
We incurred losses of $133 million, $423 million and $323 million for the years ended December 31, 2018, 2019 and 2020, respectively. Our losses were principally due to depreciation and amortization and finance costs, which includes realized and unrealized losses from foreign exchange movements, in such periods, as well as non-cash share-based payment expenses during the year ended December 31, 2019. As a result of our acquisitions and exposure to foreign exchange movements, we expect our depreciation and amortization and finance costs to continue to be significant and may increase as a result of our planned growth strategy or foreign exchange volatility. If we incur losses in the future, it could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We do not always operate with the required approvals and licenses for some of our sites, particularly where it is unclear whether a certain license or permit is required or where there is a significant lead time required for processing the application, and therefore may be subject to reprimands, warnings and fines for non-compliance with the relevant licensing and approval requirements.
Although we generally seek and obtain the requisite federal, national, state and local approvals prior to the commencement of tower construction, it is often unclear whether certain, particularly local, permits are required and in some circumstances local authorities have imposed permit requirements retrospectively. There is sometimes a long lead-time required for processing applications for approvals and licenses from the local authorities, including construction and building permits required from certain state authorities to construct or build any structure and environmental approvals. See “Business  — Permits and Regulation — License to operate.” Although we make payments in relation to the relevant permits when required, the delay encountered in receiving the permits, licenses or certificates means that we may, therefore, in limited instances, proceed with and complete tower construction and base transmission sites installation for Tenants before all required approvals and licenses have been formally issued by local authorities. As we look to expand our offering to include services like fiber connectivity, rural offerings and other verticals, we may be subject to increased regulatory, license and permit obligations (including in respect of active telecommunications elements that may comprise part of the arrangements with customers, such as for rural offerings, which may be based on an “open RAN” architecture). We may or may not be able to meet any and all such obligations.
Although we believe these practices are customary in the telecommunications industry in the countries in which we operate, there can be no assurance that the relevant authorities will issue the licenses or approvals, if required, or that they will be issued in a timely manner or as expected. If such approvals and licenses are required and not obtained, the local or state authorities may impose penalties, such as reprimands, warnings and fines, for non-compliance with the relevant licensing and approval requirements. In addition, in some jurisdictions, federal, national, state and local authorities charge taxes and levies in relation to similar services, for example tenement rates and environmental permits for our sites. This leads to confusion over which authority should be paid the relevant levy and in many cases we must wait for a demand to be made before we can make the payment.
Additionally, certain authorities have recently become more aggressive in setting of permit fees, the enforcement of permits and collection of payments, or may become more so in the event the profile of a business is perceived to have increased. In an extreme case, local authorities may prevent us from entering our sites or demand that we dismantle the unlicensed towers, which has occurred in certain limited cases. For example, in Nigeria, it was publicly reported in 2019 that the NCAA threatened to decommission and dismantle a number of Glo towers for safety violations including failure to obtain the
 
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statutory aviation height clearance certificate. It is reported that while no towers were ultimately decommissioned or dismantled by the NCAA, this was due to the affected operators complying with demands. In addition, in 2020 the Federal Capital Development Authority, or FCDA, stopped the issuance of permits to telecommunications infrastructure companies in the Federal Capital Territory while it sought to review and increase fees. The FCDA has since begun to issue permits but for the period while new permit issuance were on hold, the development and expansion of our business operations in Abuja (where we had 892 Towers as of June 30, 2021) was impacted, which also consequentially impacted the quality of service of remaining towers in operation in the area.
If we are required to pay additional levies, penalties or fees, or relocate a material number of our Towers and cannot locate replacement sites that are acceptable to our customers, this could adversely affect revenue and cash flow, which in turn could have a material adverse effect on our reputation, business, prospects, financial condition and/or results of operations.
Our business is subject to regulations, including those governing telecommunications, as well as the construction and operation of Towers, and any changes in current or future laws or regulations could restrict our ability to operate our business.
Our business, and that of our customers, is subject to national, state and local regulations governing telecommunications as well as the construction and operation of Towers. These regulations and opposition from local zoning authorities and community organizations against construction in their communities could delay, prevent or increase the cost of new tower construction, modifications, additions of new antennas to a site, or site upgrades, thereby limiting our ability to respond to customer demands and requirements. For instance, there are currently approximately 250 municipal laws in Brazil that limit the installation of new antennas for mobile service, and seeking compliance with the multitude of overlapping regulations has been a continuous barrier to the expansion of mobile networks in that country. Those laws are meant to regulate issues related to zoning and the alleged effects of the radiation and radiofrequencies of the antennas. In addition, certain licenses and permits for the operation of Towers may be subjected to additional terms, conditions or fees/levies (which may be new and unexpected, as a consequence, for example, of a perceived increase in a business’s profile or growth) or new permits imposed on existing sites, with which we cannot comply. As public concern over tower proliferation has grown in recent years, including as a result of concerns about alleged health risks, some communities now also try to restrict tower construction, delay granting permits or require certain towers to be dismantled and relocated. On the other hand, governments and regulators may impose additional requirements on businesses such as ours or our customers based on wider socio-economic considerations, including, potentially, requirements to construct new sites in more remote or rural areas (or regulatory actions or pressure on pricing or packages on our customers or us, including potentially imposition of local currency pricing, as may have been seen in some markets) to increase geographical and network coverage to larger parts of a population (which may be less commercially viable for us) or make services available at lower or fixed tariffs. Existing regulatory policies and changes in such policies may materially and adversely affect the associated timing or cost of such projects and/or the costs attributable to our usual business operations, and additional regulations may be adopted which increase delays, or result in additional costs, or that prevent completion of projects in certain locations. As we look to expand our offering to include services like fiber connectivity, rural offerings and other verticals, we may be subject to increased regulatory, license and permit obligations (including in respect of active telecommunications elements that may comprise part of the arrangements with customers, such as for rural offerings which may be based on an “open RAN” architecture). We may or may not be able to meet any and all such obligations. Any imposition of new regulations, fees or levies, or failure to complete new tower construction, modifications, additions of new antennas to a site, or site upgrades could harm our ability to add additional site space and grow our business, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Our operations are also subject to various other laws and regulations that affect our business, such as those related to labor, employment (including new minimum wage regulations), unions, health and safety, antitrust and competition, environmental protection, consumer protection, import/export and anti-bribery, corruption and money laundering. We or our employees, subcontractors or agents could
 
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take actions that might violate any of these requirements. Violations, or alleged violations, of any such laws or regulations could subject us to criminal or civil enforcement actions and adversely affect our reputation, any of which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We may seek to raise financing to fund future growth opportunities or operating expense reduction strategies and the inability to do so may adversely affect our ability to implement our business strategy.
We may seek to raise financing to fund future growth opportunities, or operating expense reduction strategies, including debt and equity financing. Our ability to secure future debt or equity financing in amounts sufficient for strategic growth or cost reduction opportunities could be adversely affected by many factors. If our revenues decline, we may not be able to raise additional funds through debt or equity financing (or any debt or equity financing may not be on acceptable terms). Moreover, restrictive debt covenants under current and future indebtedness may limit our ability to raise any such further financing (or refinance existing financing) and also our ability to support our growth strategy, including making strategic acquisitions. Additionally, political instability, a downturn in the economy and/or disruption in the financial and credit markets, foreign currency fluctuations, social unrest or changes in the regulatory environment (including as a result of the COVID-19 pandemic or resulting effects, or any other future coronavirus or other outbreaks or events with a wide-ranging regional or global impact) could increase the cost of borrowing or restrict our ability to obtain financing for future acquisitions and other growth or cost reduction opportunities.
There can be no assurance that we will be successful in obtaining financing from banks and other financial institutions and/or capital markets or that the cost of such financing or the other applicable terms of such financing will not make such financing more onerous than under the facilities available to us at present. If we are unable to raise the necessary financing, we may have to revise our business strategy or forgo certain strategic growth opportunities or operating expense reduction strategies, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Towers with MLL agreements are subject to termination risk.
As of June 30, 2021, we operated 1,913 towers under license to lease agreements in Cameroon and Côte d’Ivoire. We do not own these towers or the underlying land leases, but have a contractual right to operate the towers, including leasing out additional space on the towers. The MLL agreements may be terminated upon agreement of the parties, if we fail to comply with specified obligations in the agreements or, in some cases, at the customer’s option. If we are unable to protect our rights under, or extend, the MLL agreements or they are terminated, we will lose the cash flows derived from such towers, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Our inability to successfully execute a group-wide enterprise resource planning, or ERP, global template transformation program could have a material adverse effect on our business and/or operating results.
We are currently in the process of implementing a group wide ERP global template which would standardize and streamline our internal operations in a consistent manner across all group companies. It comprises an integrated and optimized set of business processes and associated system build covering the automation, standardization and streamlining of the major operational areas and business processes of IHS, including Record to Insight, Procure to Pay, Enterprise Asset Management and Order to Cash.
In the event that the global template is not implemented successfully, on time, within budget and/or in line with business requirements, or if the system does not perform in a satisfactory manner, it could be disruptive and could have a material adverse effect on our operations, including our potential ability to report accurate, timely and consistent financial results or otherwise maintain adequate internal control over financial reporting; our ability to purchase supplies from and pay our contractors; and our ability to
 
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bill and collect receivables from our customers, and we may also lose an opportunity to significantly improve business efficiency, process standardization, and inbuilt Sarbanes-Oxley controls across our operations. In addition, we have put together a team of employees who are taking the lead on the implementation of the ERP system. To the extent that this team or key individuals are not retained through the implementation period, the success of our implementation could be compromised and the expected benefits would not be realized. If the ERP system is not successfully implemented (or if its implementation or ongoing operation is impacted, for example, as a result of failure to integrate (or challenges in integrating) the information technology, finance or other ERP systems of new businesses that we acquire), it could have a material adverse effect on our business, prospects, financial condition and/or results of operations. This could also adversely affect our ability to quickly absorb new acquisitions into our present system application architecture, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Our sites contain sensitive and fragile equipment and indemnities obtained from suppliers and contractors may be inadequate to cover any losses or damages to our customers’ property.
Our sites host sensitive and fragile telecommunications equipment, which could be damaged by actions of our maintenance subcontractors, suppliers or the original equipment manufacturer who may be present on our sites during the course of their duties. While we strive to obtain contractual indemnities and insurance protections from our maintenance subcontractors and suppliers with respect to damage to our property and those of our customers, such contractual rights to indemnity may not adequately cover all losses and/or we may not be able to recover such losses due to protracted litigation, defenses successfully raised by the counterparty and/or insolvency of the subcontractor or supplier, which may lead to increased costs and in turn could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We rely on key information technology systems, which may be vulnerable to physical or digital/electronic damage, security breaches or cyber-attacks that could have a material adverse effect on our reputation as well as our business, prospects, financial condition and/or results of operations.
We rely on information technology to conduct our daily business, procure products, pay vendors, communicate internally and externally, share files, and efficiently and accurately provide services to our customers and monitor our operations, including via the operation of our network operations centers, which is key to our site maintenance and performance management. While we seek to apply best practice policies and devote significant resources to network security and other security measures to protect our information technology and communications systems and data, these security measures cannot provide absolute security. In addition, the tools used by cyber criminals continue to evolve in order to circumvent such security measures and maximize the potential damage of a successful attack. Some of our networks are also managed by third-party service providers and are not under our direct control. Third (and beyond) parties have been a popular attack vector for cyber criminals, and depending on the nature of the relationship with some of these partners, we sometimes use their code, software, human-power, networks, or give them access to our servers and data, among many other scenarios. A security vulnerability at any of these third party partners could potentially provide an opportunity for a cyber criminal to reach or damage our networks or data. Despite existing security measures, certain parts of our infrastructure may be vulnerable to damage, disruptions, or shutdowns due to unauthorized access, software bugs, phishing attacks, employee errors, computer viruses, cyber-attacks, and other security breaches, particularly in times of increased usage and reliance such as during and following the COVID-19 pandemic. In addition, many types of cyberattacks are designed to be difficult to detect in order to harvest as much data or cause as much systemic damage as possible before detection. As a result in the event of a cyberattack our systems could be compromised without our knowledge for a period of time before the attack is detected and addressed. The performance of our information technology systems may also be impacted by certain operating conditions in our jurisdictions of operation, including lack of reliable power supply, shortages in replacement parts, as well as general security conditions. In addition, with the majority of our employees working from home as a result of the COVID-19 pandemic, our information technologies and systems may be particularly strained or increasingly vulnerable. An attack attempt or security breach, such as a distributed denial of service attack, or damage caused by
 
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other means could potentially result in the interruption or cessation of certain or all of our services to our customers, our inability to meet expected levels of service or data transmitted over our customers’ networks being compromised, as well as other unforeseen damages. In the event of a potential breach, while we would endeavor to comply with any applicable requirements to inform impacted parties within a reasonable time, priority may be given to containing and eliminating the cyberattack in order to limit the damage; which as a result could potentially delay our communication of the identified attack to customers, vendors, concerned agencies or authorities or other relevant parties.
In addition, we may collect, store and process certain sensitive data (either in respect of our personnel, or from our customers or vendors), which makes us a potentially vulnerable target to cyber-attacks, computer viruses, physical or electronic break-ins or similar disruptions or data theft. While we have taken steps to protect the confidential information that we have access to, our security measures could be breached. Because the techniques used to sabotage or obtain unauthorized access to systems change frequently and generally are not recognized until they are launched against a target, we may not be able to anticipate these techniques or implement adequate preventative measures. Any accidental or willful security breaches or other unauthorized access to our system could cause any such confidential information to be stolen and used for criminal purposes. Security breaches or unauthorized access to confidential information could also expose us to liability related to the loss of the information, time-consuming and expensive litigation and negative publicity. If our security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, our relationships (in particular, those with our customers) could be severely damaged, we could incur significant liability and it could have a material adverse effect on our business and operations. Any failure or perceived failure by us to prevent information security breaches or to comply with privacy policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us and could expose us to legal claims.
We cannot guarantee that our security and power back-up measures will not be circumvented or fail, resulting in customer network failures or interruptions that could impact our customers’ network availability, potentially resulting in penalties for failure to meet targeted quality levels, as well as otherwise having a material adverse effect on our business, reputation, financial condition and/or operational results. We may be required to spend significant resources to protect against or recover from such threats and attacks. In addition, as we implement new information technology systems, we cannot guarantee that our new security measures will be sufficient. If an actual or perceived breach of our security occurs, the market perception of the effectiveness of our security measures could be harmed, and we could lose customers. Further, the perpetrators of cyber-attacks are not restricted to particular groups or persons. Our employees or external actors operating in any geography may commit these attacks. Any such events could result in legal claims or penalties, disruption in operations, misappropriation of sensitive data, damage to our reputation, negative market perception, or costly response measures, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We could have liability under health, safety and environmental laws.
Our operations are subject to the requirements of various environmental and occupational safety and health laws and regulations, including those relating to the management, use, storage, disposal, emission and remediation of, and exposure to, hazardous and non-hazardous substances, materials, waste, as well as items related to our day-to-day operations such as transport and construction. As an operator of telecommunications infrastructure that has a heavy reliance on diesel, we may purchase diesel in large quantities that is then stored at our facilities. As the owner of these facilities, we may be liable for substantial costs or remediation under health, safety and environment laws in the event that there is leakage or spillage from these storage facilities. As the owner, lessee or operator of telecommunications sites, we may be liable for the substantial costs of remediating soil and groundwater contaminated by hazardous materials, without regard to whether we, as the owner, lessee or operator, knew of or were responsible for the contamination. Many of these laws and regulations contain information reporting and record-keeping requirements, which may be burdensome for us or have high costs
 
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associated with compliance, which could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
We cannot assure potential investors that we are or will be in full compliance with all environmental requirements at all times. For example many of our sites rely on the use of carbon-emitting power systems, and at the time of acquisition, certain towers acquired from other companies may not be compliant with environmental regulations or may lack certain environmental permits. We may be subject to potentially significant fines, penalties or criminal sanctions if we fail to comply with any of these requirements. The requirements of these laws and regulations are complex, change frequently, and could become more stringent in the future. It is possible that liabilities will arise in the future in a manner that could have a material adverse effect on our business, prospects, financial condition and/or results of operations.
Failure to provide a safe and healthy working environment in accordance with the relevant applicable legislation, especially in light of the COVID-19 pandemic and related measures imposed in many of the markets in which we operate, may result in government authorities forcing closure of sit