IHS Towers Slows Infrastructure Expansion as Rising Costs Pressure Telecom Industry

IHS Towers Slows Infrastructure Expansion as Rising Costs Pressure Telecom Industry
IHS Towers is slowing parts of its infrastructure expansion strategy across African markets as rising operational costs force telecom infrastructure firms to prioritise efficiency over aggressive growth.

The company reported capital expenditure of $41.4 million in the first quarter of 2026, representing a 5.3% decline year-on-year, according to its latest financial results.
IHS said the reduction reflected the “phasing” of discretionary spending, indicating that some non-essential infrastructure projects are being delayed or spread out over a longer period.

Telecom Expansion Faces Cost Pressure
The spending slowdown comes amid rising energy costs, inflation, and foreign exchange pressures across several African markets.

Tower companies such as IHS provide critical infrastructure used by telecom operators including:
MTN Nigeria
Airtel Africa
9mobile

Industry analysts say slower infrastructure investment could affect:
Network quality improvements
4G and 5G expansion
Rural connectivity rollout
Fibre infrastructure deployment
The development comes at a time when demand for mobile internet services continues to accelerate across Nigeria and other African markets.

Data Demand Continues to Rise
According to data from the Nigerian Communications Commission, Nigeria recorded more than 153 million active internet subscriptions as of March 2026.

Growing usage of:
Video streaming
Fintech applications
Social media
Remote work platforms
continues to place increasing pressure on telecom infrastructure.
Analysts warn that slower tower deployment and network upgrades could make it more difficult for operators to maintain service quality as data consumption rises.

Nigeria Remains Key Market Despite Industry Shift
Despite the broader slowdown, IHS increased spending in Nigeria—its largest market—to $16.4 million in Q1 2026, compared to $11.2 million during the same period last year.
However, the company’s wider strategy reflects a growing industry trend toward tighter capital discipline.
Across Africa, telecom infrastructure firms are increasingly focusing on projects capable of generating faster returns as operating costs rise.

Strategic Restructuring Underway
The spending adjustment also comes during a period of significant restructuring for IHS Towers.

The company recently announced plans to:
Sell its Latin American tower operations
Divest its majority stake in I-Systems
Proceed with a proposed $2.2 billion acquisition by MTN Group later in 2026
Industry observers say the restructuring reflects broader consolidation trends within the telecom infrastructure sector.
Financial Performance Remains Strong
Despite lower capital spending, the company recorded stronger financial performance during the quarter.

Revenue from continuing operations rose 6% to $415.4 million
Adjusted EBITDA increased 6.4% to $268.7 million
Cash flow climbed 15.8% to $173.5 million
The company attributed the improved performance to operational efficiency and lower debt servicing costs.

Tower Portfolio Adjustments Continue
IHS Towers’ total portfolio declined by 1,571 towers year-on-year to 37,641 towers, partly due to the disposal of its Rwanda operations.
Tenant numbers also fell following the restructuring of agreements involving Nigerian telecom operator T2, formerly known as 9mobile.

However, excluding asset disposals and tenant exits, the company said underlying infrastructure demand remains stable, with continued growth in lease amendments and tenant additions.

Digitnomics Insight
Africa’s telecom infrastructure sector is entering a more disciplined phase where profitability and operational efficiency are taking priority over rapid expansion. While demand for mobile data continues to rise, tower operators are increasingly balancing network growth against rising energy, currency, and maintenance costs.