Helios Towers’ Build and Buy Growth

Helios Towers (LSE: HTWR), based in London, is the third largest tower company in Africa and the Middle East region behind IHS Towers and American Tower’s ATC Africa operating unit, according to Inside Towers Intelligence. At the end of 2Q23, Helios Towers reported a portfolio of 13,870 towers across seven African countries, predominantly Tanzania and DRC (Congo) along with Senegal, Malawi, Madagascar, Congo Brazzaville and South Africa, and Oman in the Middle East. By comparison, IHS Towers ended the quarter with 31,874 sites followed by ATC Africa with 24,328 towers.

Through the first half of 2023, Helios Towers’ total sites increased by 3,176 year-over-year to 13,870 compared to 10,694 in 1H22, reflecting 657 sites of organic site growth and 2,519 sites acquired in Oman at the end of 2022, Inside Towers reported. Tenancies in 1H23 increased by 5,334 YoY to 25,883, up from 20,549 in 1H22, reflecting a record addition of 2,317 organic tenancies and 3,017 acquired tenancies in Oman. The company ended the quarter with a 1.9x tenancy ratio that was down slightly from a year ago. 

Note that Helios Towers serves an average of three MNOs in each of the nine countries where it operates. The company estimates that MNOs in those countries collectively still own and operate about 26,500 towers offering further acquisition opportunities, particularly in South Africa, Senegal, and Oman.

Revenue for 1H23 increased by 32 percent YoY to $350 million driven by strong organic tenancy growth, acquisitions in Malawi and Oman, and contractual price escalators. Organic revenue was up 18 percent YoY, with nine percent coming from tenancy growth and nine percent due to power pass-through charges and inflation-indexed escalators. 1H23 Adjusted EBITDA increased by 28 percent YoY to $174 million mainly driven by tenancy growth.

Management pointed out that its business is underpinned by long-term contracted revenues totaling $4.9 billion, up from $4.2 billion at the end of 1H22. Of that contracted revenue, 99 percent is with large multinational MNOs, with an average remaining contractual life of 7.1 years compared to 7.2 years in 1H22.

Tom Greenwood, Helios Towers CEO, comments, “The team also continues to make solid progress on our 2023 goals of acquisition integration, tenancy ratio expansion, accelerating Adjusted EBITDA growth and reducing net leverage.”

Helios Towers raised its full-year guidance on all metrics, reflecting strong 1H23 performance and a robust commercial pipeline. It expects new tenant additions of 1,900-2,100, with 40 percent on new sites, Adjusted EBITDA of $355-365 million and portfolio free cash flow of $235-245 million. 

The company anticipates capital expenditure of $180-210 million, mainly for new tower builds and growth on existing towers, including $40 million of non-discretionary capex for maintenance and company operations.

By John Celentano, Inside Towers Business Editor

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