In Greek mythology, Helios is the personification of the sun. And in the tower business, this sun is rising. Fifteen years after launching, Helios Towers (LSE: HTWS) is the third largest tower company in Africa and the Middle East. The nine markets where it operates were handpicked for their sizable telecom infrastructure gaps amidst skyrocketing mobile data consumption. But for the Tom Greenwood-led company, growth comes with major operational challenges – unlike those seen in more developed regions.
Africa and the Middle East have low mobile penetration rates yet demand for data services, 5G networks and AI are rising. What’s your blueprint to capitalize on these trends?
Africa is the fastest growing place on the planet for mobile telephony and that’s expected to continue for many years. Both markets are generally under-penetrated – about 50 percent of people have mobile phones across the continent, compared to the U.S., U.K. and Western Europe, which are about 90 percent. On a subscriber basis, they’re growing by mid-to-high single digits each year. Globally, data consumption is forecast to double over the next five years but quadruple in Africa and the Middle East. To meet that demand, there’s a huge need to deploy more telecom infrastructure in the region. For example, there’s six times more telecom towers per person in Europe than in Africa. The main difference between a tower company where we operate versus the U.S. is we’re also a power company. We operate a micropower station on every site so the networks will work if the power goes down. It’s a critical part of what we offer.
Helios has an average daily electric grid availability of 17 hours across its markets. Yet, you achieved a company record of 99.99 percent uptime in 2024. How do you bridge that power gap?
We have a mixture of alternative power sources. In any given 24-hour period, on average, we’re getting 17 hours [from the grid] and the balance of seven hours currently is supplied roughly half by generators and half from solar and batteries. We’ve got various initiatives afoot to increase the solar and battery components and gradually reduce generators, which are the highest carbon-producing form of energy, the costliest and need the most maintenance. We use a network of maintenance partners – we provide them with training, upskilling, systems and processes – who work with our operational teams in the market to maintain all these sites 24/7. From a process efficiency point of view, we utilize Lean Six Sigma, a working methodology that trains and enables people to focus on data to solve problems and drive improvement processes.
What other operational challenges do you face?
Beyond the often-unreliable grid, the road networks can be quite underdeveloped in some places. For example, DRC [Democratic Republic of the Congo] is one of our largest markets – it’s 10 times the size of the U.K. with only 1 percent of the UK’s tarmacked roads. Getting to sites can be quite challenging at times. We need the right network of people in the right locations to respond to sites in a timely fashion. That’s why we do so much internal training and development and upskilling our people.
Helios has a goal to reach 2.2 tenants per tower and become free cash flow positive by 2026. How’s that going?
“2.2 by 2026” is the main strap line of our current strategic cycle. We’re making really good progress; we’re at about 2.1, trending upwards and confident about getting to our target and moving beyond it. The business has been doing well. We posted our first full year numbers of free cash flow positivity in 2024 with an upward swing of $100 million on free cash flow, versus the previous year, and we’re building on that in 2025. We’ve guided that we’ll be between $40 to $60 million bottom line, free cash flow this year, which would be up from $19 million in 2024. Roughly doubling or tripling the bottom-line free cash flow this year is what we’ve targeted. We’re making good progress on that.
The Helios portfolio numbers 14,417 towers. Yet MNOs in the countries where you operate own about 19,500 towers. What lies ahead for you in terms of M&A?
We had a big expansion three [or] four years ago when we essentially doubled the size of the business, going from 7,000 to almost 14,000 towers and from five markets to nine markets. Since we closed the last deal in 2022, we’ve focused on organic growth. We’re seeing lots of organic demand in our markets for new roll out, whether that’s coverage, capacity, or technology upgrades. We’ve had record years of new tenancy additions in 2023 and 2024, and started this year solidly as well. We see that continuing. We’re very much focused on growing within the markets where we operate, rather than M&A. In our capital allocation framework, No. 1 is organic growth, No. 2 is cash flow and deleveraging, No. 3 is potential investor distributions from next year and beyond, and No. 4 is M&A. But all options are open. Ultimately, it’s all about deploying capital in ways that create the highest return for investors. Towers in the markets where we operate are a more obvious choice than towers in a brand-new market. But there’s more than enough work to do to support our customers in growing their business on new organic rollout, rather than M&A at the moment.
By Paul Heine, Inside Towers Contributing Analyst
Paul Heine has covered radio/audio, media and marketing since 1985. He has held senior editorial management positions at Inside Radio, Radio & Records, Billboard Radio Monitor and the Friday Morning Quarterback (FMQB). Heine has also reported and analyzed media news and trends for Adweek, Mediaweek, Billboard and The Hollywood Reporter; appeared on “Today” and Fox News; and has been quoted in the New York Times, Entertainment Weekly, the Los Angeles Times, USA Today and other publications. He began his career in on-air and programming positions at radio stations in Buffalo and Rochester, NY.
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