Helios Tower plc (LSE: HTWS.L) showed financial and operational growth in its established and newly acquired markets in sub-Saharan Africa, reflecting the stepped-up activity among the mobile network operators in the region. The company currently has tower operations in Tanzania, Democratic Republic of Congo (DRC), Congo Brazzaville (Congo B), Ghana, South Africa, and Senegal. Helios Towers is moving into four new markets in Africa – Madagascar, Malawi, Gabon, Chad – and Oman in the Middle East.
The impetus for these moves is that the mobile network operators in these countries are monetizing most or all of their tower assets to help fund network expansion. These MNOs are experiencing year-over-year growth in mobile subscriber additions, particularly on their 4G networks and are projecting double-digit revenue growth. Helios Towers is riding that growth.
Helios Tower counts multinational MNO tenants in Airtel, MTN, Tigo, Orange, Vodafone/Vodacom, Free, Viettel and Africell. Tanzania and DRC are the company’s two biggest markets, and together accounted for 78 percent of 3Q21 revenues with the remainder from Congo B, Senegal, Ghana, and South Africa.
For the nine months ending September 30, the company reported revenues of $327 million, up 6 percent YoY driven by the acquisition of Free’s tower portfolio in Senegal in 2Q21 and continued organic tenancy growth across its existing operations.
Over the same period, Adjusted EBITDA increased by 5 percent YoY to $175 million with the addition of Free Senegal’s towers and continued organic tenancy growth that was partially offset by higher SG&A investment to support its portfolio expansion strategy.
The company highlighted that its business is underpinned by long-term contracted revenues of $3.7 billion of which 99 percent is from multinational MNOs, with leases averaging 7.6 years remaining life.
“We are delighted to deliver our strongest quarter of organic tenancy additions in six years, with 683 incremental organic tenancies and we have a busy quarter ahead, reflecting the significant demand we are seeing from mobile operators across all our markets,” remarks Kash Pandya, Helios Towers CEO. “Our tenancy pipeline remains robust and accordingly, we have reiterated our full-year tenancy outlook and look forward to supporting our [mobile operator] customers’ network expansion in Q4 2021 and beyond.”
Operationally, Helios Towers’ sites increased by 1,543 YoY to 8,765 sites compared to 7,222 sites at the end of 3Q20. This increase was a combination of 336 organic site additions and 1,207 sites acquired from Free in Senegal.
Tenancies increased by 2,691 YoY to 17,773 tenants, comprising 1,427 organic tenancy additions and 1,264 additional tenancies through the Free Senegal passive infrastructure assets acquisition.
Tenancy ratio decreased slightly YoY to 2.03x from 2.09x in 3Q20, reflecting the dilutive impact of the acquired assets from Free Senegal which had a 3Q21 tenancy ratio of 1.06x. Excluding Senegal, Helios Towers’ group tenancy ratio expanded by 0.09x YoY to 2.18x.
With integration of the five announced acquisitions underway, Helios Towers’ site count will expand to nearly 15,000 towers across the 11 markets, once the deals close and include build-to-suit commitments as part of these transactions.
The company anticipates the acquisitions in Madagascar (494 sites) and Malawi (735 sites) from Airtel Africa to close in 4Q21 while the acquisition in Oman (2,890 sites) from Oman Telecommunications (Omantel) expected to close in late 4Q21 or 1Q22.
Helios Towers has agreed to exclusive memorandum of understanding arrangements for the potential acquisition of Airtel Africa’s passive infrastructure assets in Chad and Gabon. These transactions are expected to close in 1Q22, subject to obtaining a passive infrastructure license in each jurisdiction and other customary closing conditions.
For its FY2021 outlook, the company maintained its tenancy guidance for its established five markets at 1,000-1,500 tenancies, already supported by 853 organic tenancy additions year-to-date and a robust tenancy pipeline.
Helios Towers raised its FY2021 capital expenditure guidance to around $1 billion, reflecting roughly two-thirds for tower acquisitions in new markets and the balance for organic growth, upgrades, and non-discretionary capex in existing markets.
Tom Greenwood, Helios Towers COO and CEO-designate comments, “Our new markets team is well progressed with the integration plans for each of the five other announced acquisitions, and we are excited to commence operations in these attractive markets, supporting our customers to efficiently expand mobile communications.”
For further insights on Helios Towers, tune in to our Tower Talks podcast #83 for our in-depth conversation with Kash Pandya, CEO.
By John Celentano, Inside Towers Business Editor
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