1 00:00:02,600 --> 00:00:08,119 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:08,160 --> 00:00:12,520 Speaker 2: Empty and chief executive Officer Ralph Mupita joining us today. Ralph, 3 00:00:12,560 --> 00:00:15,320 Speaker 2: thanks so much for being with us today. So I 4 00:00:15,360 --> 00:00:17,880 Speaker 2: wanted to start with what you noted in the earnings report, 5 00:00:17,880 --> 00:00:21,640 Speaker 2: which was macro headwinds that the company is dealing with, 6 00:00:21,760 --> 00:00:25,760 Speaker 2: one of which pretty big headwind is currency volatility. I mean, 7 00:00:25,840 --> 00:00:29,840 Speaker 2: how is the company thinking about protecting itself going forward 8 00:00:29,880 --> 00:00:32,080 Speaker 2: from this because it's happening in a few different markets 9 00:00:32,080 --> 00:00:32,919 Speaker 2: that you operate in. 10 00:00:35,000 --> 00:00:38,000 Speaker 1: Yeah, look, I mean our underlying performance from our point 11 00:00:38,000 --> 00:00:40,800 Speaker 1: of view was very strong and resilient. You know, we 12 00:00:40,840 --> 00:00:44,080 Speaker 1: look at, you know, how is the business actually developing 13 00:00:44,240 --> 00:00:47,440 Speaker 1: in terms of subscriber growth, What is the traffic we're 14 00:00:47,440 --> 00:00:50,120 Speaker 1: seeing in our network, What is the transaction values and 15 00:00:50,240 --> 00:00:53,360 Speaker 1: volumes you see on the fintech platforms. Those have been 16 00:00:53,400 --> 00:00:56,320 Speaker 1: strong and very encouraging. And when we look at that 17 00:00:56,400 --> 00:00:59,600 Speaker 1: kind of underlying performance, you know, pretty much across most 18 00:00:59,600 --> 00:01:03,240 Speaker 1: of from it's kind of basically trending in line with expectations. 19 00:01:03,480 --> 00:01:05,959 Speaker 1: The two main challenges that we faced in the period. 20 00:01:06,000 --> 00:01:09,920 Speaker 1: One is the very sharp devaluation of the Naira. The 21 00:01:10,000 --> 00:01:12,560 Speaker 1: Narra ended last year nine h seven versus the US 22 00:01:12,640 --> 00:01:16,360 Speaker 1: dollar in this half is average fifteen hundred, so quite 23 00:01:16,400 --> 00:01:19,920 Speaker 1: a lot of volatility. But between Q two and even 24 00:01:20,040 --> 00:01:23,080 Speaker 1: up to now, the NARRA has been actually fairly stable 25 00:01:24,240 --> 00:01:28,240 Speaker 1: and on a more recent forecast via Standard Bank Group 26 00:01:28,319 --> 00:01:33,200 Speaker 1: Securities forecasts, you know, the pressure on the narrow is 27 00:01:33,200 --> 00:01:38,400 Speaker 1: is projected to abate somewhat as inflation. Expectations are that 28 00:01:39,000 --> 00:01:42,680 Speaker 1: inflation in Nigeria should start to come down and that 29 00:01:42,840 --> 00:01:46,000 Speaker 1: rate tightening cycle in Nigeria will remain and therefore take 30 00:01:46,240 --> 00:01:50,760 Speaker 1: pressure off the NARRAW you know, going forward. So you know, 31 00:01:50,800 --> 00:01:54,640 Speaker 1: if you exclude the narrow impact in particular, actually were 32 00:01:54,680 --> 00:01:57,920 Speaker 1: a very decent top line growth would have had a 33 00:01:58,120 --> 00:02:03,320 Speaker 1: decent set of earnings growth off. So the underlying business 34 00:02:03,320 --> 00:02:07,600 Speaker 1: remains strong, and you know, we see growth as our 35 00:02:07,680 --> 00:02:10,600 Speaker 1: best way to protect kind of the earning stream over 36 00:02:10,639 --> 00:02:15,160 Speaker 1: the next the medium term to kind of restore positive 37 00:02:15,680 --> 00:02:19,440 Speaker 1: earnings growth, you know, for the whole business. But the 38 00:02:19,480 --> 00:02:21,760 Speaker 1: main issue has been the NIROD evaluation. 39 00:02:23,680 --> 00:02:26,800 Speaker 2: Yeah, and in particular with that, Ralph, I mean that 40 00:02:26,919 --> 00:02:30,040 Speaker 2: Nigeria accounts for nearly a third of the company's earning. 41 00:02:30,120 --> 00:02:33,440 Speaker 2: So are there things that you're thinking about doing as 42 00:02:33,440 --> 00:02:36,760 Speaker 2: you sort of a wait for the volatility to debate. 43 00:02:38,960 --> 00:02:41,560 Speaker 1: Look coming on the volatility side, I think it's much 44 00:02:41,600 --> 00:02:45,040 Speaker 1: more near a term, so it's not medium to long term. 45 00:02:45,240 --> 00:02:49,120 Speaker 1: As I mentioned, you know, inflation cycle is anticipated to 46 00:02:49,160 --> 00:02:51,280 Speaker 1: kind of peak in Q three, maybe a little bit 47 00:02:51,280 --> 00:02:54,440 Speaker 1: into Q four and start trending down. If I use 48 00:02:54,800 --> 00:02:58,600 Speaker 1: standard bank forecasts on inflation, Nigeria should be somewhere like 49 00:02:58,960 --> 00:03:02,280 Speaker 1: in the early twenties from the kind of early thirties. 50 00:03:02,320 --> 00:03:06,240 Speaker 1: So that moderation, you know, should also relieve some cost 51 00:03:06,280 --> 00:03:11,160 Speaker 1: pressure in the next couple of quarters. But the underlying 52 00:03:11,200 --> 00:03:13,880 Speaker 1: growth in Nigeria is very healthy. The one big issue 53 00:03:14,320 --> 00:03:18,639 Speaker 1: we remain focused on is really around you know, some 54 00:03:18,919 --> 00:03:23,680 Speaker 1: teriff increase relief that will need expensive been growing you know, 55 00:03:24,160 --> 00:03:28,960 Speaker 1: quite sharply, so we've been engaged with authorities around a 56 00:03:29,040 --> 00:03:32,960 Speaker 1: tarraff increase, which we should then support the restoration and 57 00:03:33,000 --> 00:03:37,960 Speaker 1: growth of earnings. But beyond Nigeria, in South Africa, you know, 58 00:03:38,040 --> 00:03:40,320 Speaker 1: we had a decent set of results. Our service revenue 59 00:03:40,320 --> 00:03:42,600 Speaker 1: was up three point three that's a business that we 60 00:03:42,600 --> 00:03:44,680 Speaker 1: think has the potential to go four to six percent, 61 00:03:45,600 --> 00:03:48,280 Speaker 1: you know, given the capex that we've put into that business. 62 00:03:48,680 --> 00:03:52,040 Speaker 1: So South Africa can step up a bit more in 63 00:03:52,080 --> 00:03:54,520 Speaker 1: the near term in terms of its own top line 64 00:03:54,520 --> 00:03:57,760 Speaker 1: growth and its earnings contribution. The rest of the portfolio, 65 00:03:57,800 --> 00:04:01,120 Speaker 1: Garna has been growing actually very very strongly. Uh in 66 00:04:01,360 --> 00:04:05,680 Speaker 1: Ghana you know, continues to grow you know, both data 67 00:04:05,760 --> 00:04:08,960 Speaker 1: and fintech businesses in a well all above you know, 68 00:04:09,040 --> 00:04:13,240 Speaker 1: forty percents on those bearers. So there's a portfolio effect 69 00:04:13,280 --> 00:04:16,040 Speaker 1: of the other markets that can also grow. And the 70 00:04:16,040 --> 00:04:20,040 Speaker 1: fintech business in the period grew very strongly twenty seven 71 00:04:20,080 --> 00:04:26,080 Speaker 1: percent service revenue growth, the EBIDA margin growth, the EBIDA 72 00:04:26,160 --> 00:04:28,719 Speaker 1: margin delivered by that business has also been very very strong. 73 00:04:29,120 --> 00:04:31,320 Speaker 1: So when you look at the portfolio, I think you'll 74 00:04:31,320 --> 00:04:35,039 Speaker 1: see different parts of the portfolio, you know, contributing to 75 00:04:35,120 --> 00:04:39,160 Speaker 1: the overall group results. And as I said, in Nigeria, 76 00:04:39,760 --> 00:04:43,320 Speaker 1: they still pent up demand and growth that we see 77 00:04:43,800 --> 00:04:47,120 Speaker 1: for both the core connectivity business and our fintech business. 78 00:04:48,400 --> 00:04:51,599 Speaker 2: Right Ralph, just sticking on the other parts of their portfolio. 79 00:04:51,640 --> 00:04:55,400 Speaker 2: Also in Iran, on on the earnings report, you noted 80 00:04:55,440 --> 00:04:58,760 Speaker 2: the uncertainty around what is happening in Iran, especially with 81 00:04:58,760 --> 00:05:01,920 Speaker 2: with sanctions from other countries. I mean, are there plans 82 00:05:01,960 --> 00:05:05,279 Speaker 2: to adjust or speak with authorities there. How is that 83 00:05:05,320 --> 00:05:07,000 Speaker 2: affecting the rest of the group. 84 00:05:09,240 --> 00:05:11,800 Speaker 1: No Iran, We've continued to manage Iran in the same 85 00:05:11,800 --> 00:05:14,480 Speaker 1: way over the last five years, since the years sanctions 86 00:05:14,520 --> 00:05:17,040 Speaker 1: came in. We haven't been able to get you know, 87 00:05:17,080 --> 00:05:20,680 Speaker 1: any of the dividends in that market out. You know, 88 00:05:20,760 --> 00:05:25,279 Speaker 1: obviously the Swift financial system is not open to Iran 89 00:05:26,640 --> 00:05:32,560 Speaker 1: you know flows, so you know, the accumulated dividends that 90 00:05:32,640 --> 00:05:35,359 Speaker 1: we are on lending the company in Iran is about 91 00:05:35,360 --> 00:05:39,960 Speaker 1: three billion, So we don't anticipate to see any upstreaming, 92 00:05:40,680 --> 00:05:43,279 Speaker 1: you know, coming out of Iran. But what we reported 93 00:05:43,440 --> 00:05:47,120 Speaker 1: was that the earnings grew thereby you know, over eighty percent, 94 00:05:48,080 --> 00:05:53,560 Speaker 1: and that's a very healthy clip for earnings growth in Iran. 95 00:05:55,800 --> 00:06:00,480 Speaker 2: Are there markets, Ralph that you're potentially considering exiting MTN 96 00:06:00,560 --> 00:06:04,120 Speaker 2: is considering exiting. I mean, we talked about around potentially 97 00:06:04,120 --> 00:06:06,320 Speaker 2: the challenges that are there, but there's also been some 98 00:06:06,440 --> 00:06:10,400 Speaker 2: challenges with Sudan as well, and that's another geopolitical story 99 00:06:10,440 --> 00:06:13,919 Speaker 2: that's having an effect on the company. Are you thinking 100 00:06:13,920 --> 00:06:16,919 Speaker 2: about potentially exiting either of those markets? 101 00:06:18,360 --> 00:06:20,960 Speaker 1: So the market we've announced we've done the exit on 102 00:06:21,240 --> 00:06:25,280 Speaker 1: it is Afghanistan. So we've completed the exit of Afghanistan 103 00:06:26,360 --> 00:06:29,960 Speaker 1: in February and now we've done Guinea Bissal So Guinea 104 00:06:29,960 --> 00:06:33,680 Speaker 1: Bissa is done, so what we're working with. We have 105 00:06:33,720 --> 00:06:37,360 Speaker 1: an offer from tellusl to acquire Guinea Conacrey. So those 106 00:06:37,440 --> 00:06:41,000 Speaker 1: are the markets where we have exit plans in execution. 107 00:06:41,720 --> 00:06:45,200 Speaker 1: So that is challenging for sure. The ongoing conflict makes 108 00:06:45,240 --> 00:06:48,200 Speaker 1: it very difficult for us to be able to provide 109 00:06:48,720 --> 00:06:53,000 Speaker 1: consistent connectivity. Some sites do come down as a consequence 110 00:06:53,520 --> 00:06:58,479 Speaker 1: of the conflict there. You know, we continue to best 111 00:06:58,520 --> 00:07:01,120 Speaker 1: we can to keep that network up, so we are 112 00:07:01,160 --> 00:07:04,640 Speaker 1: putting you know, more sites back on air to enable connectivity. 113 00:07:05,600 --> 00:07:11,280 Speaker 1: There's been a massive dispersion of the population of Sudan 114 00:07:11,360 --> 00:07:14,960 Speaker 1: and it is really you know, tragic what's actually happening there. 115 00:07:15,160 --> 00:07:17,960 Speaker 1: You know, kids nineteen million children not going to school 116 00:07:18,720 --> 00:07:21,360 Speaker 1: since April of last year. So, I mean, these effects 117 00:07:21,400 --> 00:07:25,600 Speaker 1: are very profound. So in Sudan we're continuing to manage 118 00:07:25,640 --> 00:07:27,640 Speaker 1: best we can. We've have had the impacts, you know, 119 00:07:27,720 --> 00:07:30,960 Speaker 1: the impayment we took and also the impact we've seen 120 00:07:31,000 --> 00:07:35,680 Speaker 1: on growth. But you know, the exit plans as formally communicated, 121 00:07:36,000 --> 00:07:38,480 Speaker 1: the only other market we're looking at right now is getting. 122 00:07:38,240 --> 00:07:42,720 Speaker 2: Conacree okay, okay, So no plans in the near term 123 00:07:42,800 --> 00:07:50,400 Speaker 2: for Sudan at this point, no plans, Okay, no plans, Ralph. 124 00:07:50,440 --> 00:07:52,920 Speaker 2: Before we let you go, I wanted to know what 125 00:07:53,040 --> 00:07:56,360 Speaker 2: you envision the business looking like in the next few years. 126 00:07:56,720 --> 00:07:58,960 Speaker 2: Obviously there's a lot of macro headwinds that you can't 127 00:07:59,560 --> 00:08:01,680 Speaker 2: anticip paid how it's going to affect the business. But 128 00:08:02,240 --> 00:08:04,600 Speaker 2: how are you how are you thinking about it and 129 00:08:04,640 --> 00:08:07,480 Speaker 2: your growth strategy over the next few years. 130 00:08:08,680 --> 00:08:10,920 Speaker 1: Yeah, we believe that in the market that empty and 131 00:08:11,000 --> 00:08:16,520 Speaker 1: operates in, we've got two main engines of growth that 132 00:08:16,640 --> 00:08:20,400 Speaker 1: are structural because of pent up demand. The one is data. 133 00:08:21,600 --> 00:08:26,360 Speaker 1: I mean now we have about sixty percent odd of 134 00:08:26,400 --> 00:08:29,960 Speaker 1: our customers are using smartphones, means the balance is still 135 00:08:30,040 --> 00:08:33,960 Speaker 1: using two G capable phones, so the growth rate in 136 00:08:34,200 --> 00:08:37,360 Speaker 1: a data adoption remains very strong. So we see that 137 00:08:37,400 --> 00:08:41,640 Speaker 1: as fueling growth. On the fintech side, many Africans are 138 00:08:41,679 --> 00:08:45,679 Speaker 1: excluded from you know, financial services as we know it, 139 00:08:46,160 --> 00:08:50,120 Speaker 1: and we've been building a platform there of you know, 140 00:08:50,520 --> 00:08:55,840 Speaker 1: more modern services including remittance, bank tech payments, and e commerce, 141 00:08:56,200 --> 00:08:59,079 Speaker 1: and that's actually fueling growth as I said, the growth 142 00:08:59,160 --> 00:09:01,520 Speaker 1: rates that we see there on these advanced services has 143 00:09:01,600 --> 00:09:04,240 Speaker 1: been about fifty eight percent growth in the period. So 144 00:09:04,320 --> 00:09:07,800 Speaker 1: those two in particular going to fuel growth, and we 145 00:09:07,840 --> 00:09:12,160 Speaker 1: anticipate that in going forward you'll still see growth driven 146 00:09:12,200 --> 00:09:14,800 Speaker 1: by data and fintech. I think what you're going to 147 00:09:14,880 --> 00:09:18,240 Speaker 1: see more and more is you know, you know, carving 148 00:09:18,280 --> 00:09:22,800 Speaker 1: out the infrastructure, particularly around fiber, and you know, creating 149 00:09:22,840 --> 00:09:26,480 Speaker 1: an opportunity of co investment with third parties to accelerate 150 00:09:26,960 --> 00:09:29,960 Speaker 1: you know, investment in infrastructure. We're not using our own 151 00:09:29,960 --> 00:09:33,080 Speaker 1: balance sheet. We're going to focus on partner capital there 152 00:09:33,520 --> 00:09:37,000 Speaker 1: as well. But I think the three drivers of growth 153 00:09:37,000 --> 00:09:40,960 Speaker 1: will be the connectivity business driven by data, the fintech business. 154 00:09:41,000 --> 00:09:44,120 Speaker 1: As we move into more advanced services, and infrastructure in 155 00:09:44,160 --> 00:09:47,800 Speaker 1: particular fiber and data centers and there you're going to 156 00:09:47,880 --> 00:09:51,920 Speaker 1: need partnerships, you know, to be able to create these 157 00:09:52,880 --> 00:09:58,000 Speaker 1: also open access platforms and also leverage our partner capital. 158 00:09:59,160 --> 00:10:02,240 Speaker 1: There's no space now balance sheet to fund all that growth, 159 00:10:02,480 --> 00:10:05,960 Speaker 1: but we can see the opportunity with a much more 160 00:10:06,000 --> 00:10:08,920 Speaker 1: partnership model. That's how we see the business going forward. 161 00:10:10,840 --> 00:10:13,200 Speaker 2: Does that sort of speak to as well to the 162 00:10:13,360 --> 00:10:18,560 Speaker 2: IHS partnership with with MTN. I mean, is that sort 163 00:10:18,600 --> 00:10:22,200 Speaker 2: of getting past the previous issues that the two companies had. 164 00:10:22,400 --> 00:10:24,800 Speaker 2: Is that part of the future growth strategy that you're 165 00:10:24,840 --> 00:10:25,200 Speaker 2: thinking of. 166 00:10:27,080 --> 00:10:29,520 Speaker 1: No, the way we think about infrastructure, you know, you know, 167 00:10:29,559 --> 00:10:33,360 Speaker 1: many companies look at a telco infrastructure and they you know, 168 00:10:33,480 --> 00:10:38,360 Speaker 1: have the tower co, the fiber and the data centers 169 00:10:38,400 --> 00:10:42,559 Speaker 1: as you know, different verticals. We've sold most of our 170 00:10:42,600 --> 00:10:45,880 Speaker 1: towers already and they're all sitting in our investment in 171 00:10:45,960 --> 00:10:50,200 Speaker 1: HHS with a twenty six percent shareholding. So in the 172 00:10:50,240 --> 00:10:53,439 Speaker 1: way we think about infrastructure, you know, there's no tower 173 00:10:54,040 --> 00:10:57,120 Speaker 1: companies there. It's mostly on the fiber and the data 174 00:10:57,160 --> 00:11:00,600 Speaker 1: center side. I mean, so what we are focused on is, 175 00:11:00,920 --> 00:11:04,160 Speaker 1: you know, how do we get you know, to see 176 00:11:04,880 --> 00:11:08,200 Speaker 1: value being truly reflected in the IHS share price. We 177 00:11:08,240 --> 00:11:12,920 Speaker 1: think the market undervalues that business, but I mean it's 178 00:11:12,960 --> 00:11:16,319 Speaker 1: for the management team there to demonstrate by execution the 179 00:11:16,360 --> 00:11:20,840 Speaker 1: business remains fundamentally undervalued. So at these current share prices, 180 00:11:20,880 --> 00:11:22,960 Speaker 1: you know, for us, you know, we're not looking to 181 00:11:23,000 --> 00:11:25,960 Speaker 1: sell out of IHS. You know, at the current share price, 182 00:11:25,960 --> 00:11:28,520 Speaker 1: we think the business is more valuable than this, and 183 00:11:29,640 --> 00:11:32,439 Speaker 1: you know, the governance issues that we've had in the past. 184 00:11:32,440 --> 00:11:36,480 Speaker 1: As we communicated last week, we're looking to amicably resolve them, 185 00:11:37,120 --> 00:11:42,079 Speaker 1: particularly now that the major contract renegotiations in Nigeria and 186 00:11:42,120 --> 00:11:45,480 Speaker 1: particularly have now been closed. That's been a successful set 187 00:11:45,559 --> 00:11:49,560 Speaker 1: of discussions, and so we'll move into discussing the governance 188 00:11:49,559 --> 00:11:53,800 Speaker 1: issues over the next while ahead. You know, myself and 189 00:11:53,960 --> 00:11:56,600 Speaker 1: Sam Darwish we'll be talking around those and you know, 190 00:11:56,720 --> 00:11:59,680 Speaker 1: will take proposals to our respective boards in due course. 191 00:12:01,440 --> 00:12:04,439 Speaker 2: Are you expecting the market then to value the company 192 00:12:04,480 --> 00:12:07,560 Speaker 2: at sort of somewhat closer to what you're expecting or 193 00:12:08,200 --> 00:12:09,920 Speaker 2: do you think this might continue a little bit longer. 194 00:12:11,600 --> 00:12:13,920 Speaker 1: Look, it's difficult to say. I mean, there are you know, 195 00:12:14,920 --> 00:12:17,960 Speaker 1: I think part of the impact on the ch share 196 00:12:18,000 --> 00:12:20,840 Speaker 1: price is also the uncertainty or what the market may 197 00:12:20,840 --> 00:12:24,920 Speaker 1: see as uncertainty around Nigeria. Can you get currency, can 198 00:12:24,960 --> 00:12:27,520 Speaker 1: you get hard currency? Whereas the narrare going to find 199 00:12:27,559 --> 00:12:29,840 Speaker 1: its level. So I think there are some uncertainties that 200 00:12:29,880 --> 00:12:32,240 Speaker 1: you will see into the CH share price, which you 201 00:12:32,280 --> 00:12:38,520 Speaker 1: see similarly into the MT and group. I think also 202 00:12:38,679 --> 00:12:41,880 Speaker 1: you know, is you know has got you know, has 203 00:12:41,880 --> 00:12:46,080 Speaker 1: got a particular debt profile and maturity profile. I guess 204 00:12:46,120 --> 00:12:49,080 Speaker 1: the market is looking at that. But I think the 205 00:12:49,160 --> 00:12:53,480 Speaker 1: governance concerns, if they are addressed amicably, I think will take, 206 00:12:53,800 --> 00:12:57,679 Speaker 1: you know, quite a bit of uncertainty about the long 207 00:12:57,760 --> 00:13:00,480 Speaker 1: term prospects of the company. So I think the market, 208 00:13:00,640 --> 00:13:04,160 Speaker 1: you know, we'll see a conclusion on governance issues very favorably, 209 00:13:04,880 --> 00:13:08,320 Speaker 1: you know, uh, you know particularly uh you know that 210 00:13:08,400 --> 00:13:11,560 Speaker 1: these are it will be agreed between ih s UH 211 00:13:11,600 --> 00:13:12,600 Speaker 1: and the mt and Group. 212 00:13:15,120 --> 00:13:18,320 Speaker 2: Ralph Mapita, mt N Chief executive Officer, I really appreciate 213 00:13:18,320 --> 00:13:19,440 Speaker 2: your time today, Ralph