Helios Towers PLC · LSE:HTWS
Helios Towers — Non-Deal Roadshow (2023)
51 slides from Helios Towers's roadshow presentation, 2023
Slide 1: Helios Towers H1 2023 NDR & conference deck
Helios Towers H1 2023 NDR & conference deck
Slide 2: Agenda
Agenda • H1 2023 highlights • Helios Towers overview Helios Towers Overview 2023 2
Slide 3: H1 2023 highlights
H1 2023 highlights Strong H1 23 operational and financial performance illustrates investment thesis: ✓ Unparalleled structural growth ✓ Proven operational execution ✓ Robust business model providing effective earnings protection ✓ Strategy driving value for all stakeholders Helios Towers Overview 20
Slide 4: Highlights
Highlights Record tenancy additions, accelerating organic growth and reducing leverage; FY 23 guidance tightened upwards across key KPIs 1 2 3 STRONG RECORD FY 23 GUIDANCE FINANCIAL PERFORMANCE TENANCY GROWTH TIGHTENED UPWARDS • +32% YoY H1 revenue growth • +3,176 (+30%) YoY site growth, • Organic t
Slide 5: Robust growth on key metrics
Robust growth on key metrics Leadership positions in high-growth markets, proven business model and consistent operational execution driving performance Adj. EBITDA Portfolio free cash flow Return on invested capital(5) (US$m) (US$m) (%) Adj. EBITDA Margin Cash conversion(2) 54% 50% 50% 70% 71% 70%(
Slide 6: Group ROIC reflects mix of established vs. new markets
Group ROIC reflects mix of established vs. new markets Established markets yielding c.16% ROIC (and growing) with new markets, entered into across 2021-22, expected to deliver comparable returns as tenancy ratio expands Established markets New markets (Tanzania, DRC, Congo B, Ghana, South Africa) (O
Slide 7: New markets demonstrating lease-up potential to support Adjusted EBITDA and ROIC growth
New markets demonstrating lease-up potential to support Adjusted EBITDA and ROIC growth Market Sites Tenancy ratio Q2 23 Ann. Adj. EBITDA(1) CAGR Senegal 1,386 1.1x $25m +14% (Closed: Q2 2021) (1,207) (1.0x) ($19m) Madagascar 562 1.2x $6m +16% (Closed: Q4 2021) (490) (1.2x) ($5m) Malawi 770 1.7x $12
Slide 8: Q2 2023: Proven resilience to Fx, CPI and power prices
Q2 2023: Proven resilience to Fx, CPI and power prices Q2 23 YoY revenue walkthrough(1,2) Q2 23 YoY Adj. EBITDA walkthrough(1) (US$m) (US$m) +30% +28% 14 9 7 (5) 4 (2) 11 0 9 14 Principally driven by CPI escalations more than Ghanaian Cedi 179 89 offsetting Fx impacts movements vs. US dollar 138 69
Slide 9: Diversified business underpinned by long-term contracts with blue-chip MNOs
Diversified business underpinned by long-term contracts with blue-chip MNOs Diverse, quality customer base Robust hard-currency revenues Geographically diverse revenues H1 23 revenue breakdown by customer H1 23 revenue breakdown by FX H1 23 revenue breakdown by segment Largest customers 2% USD East
Slide 10: Q2 2023: Reduction in net leverage quarter-on-quarter
Q2 2023: Reduction in net leverage quarter-on-quarter Debt KPIs Commentary ($m) Q2 22 Q1 23 Q2 23 • Net leverage decreased by -0.3x QoQ to 4.8x Cash & cash equivalents 389 83 128 • Anticipate net leverage to be in or around the high- Bond (Dec-25) 975 975 975 end of target range (3.5x – 4.5x) by the
Slide 11: FY 2023: Guidance tightened upwards
FY 2023: Guidance tightened upwards FY 22 H1 23 FY 23 YoY Actual Actual Updated guidance FY 23 vs FY 22(3) Organic +1,900 - 2,100 tenancy +1,601 +1,391 of which 40% sites +8% - 9% of which 47% sites of which 23% sites additions (Prior: +1,600 - 2,100) Adj. EBITDA $283m $356m $355m - $365m +26% - 29%
Slide 12: Sustainable Business Strategy
Sustainable Business Strategy Continued progress on key impact areas of digital inclusion, climate action, developing local talent and responsible governance Committed to the highest levels of transparency Solid progress on all Sustainable Business KPIs Mgmt. ‘AAA’ from MSCI reaffirmed Impact KPI co
Slide 13: Leading ESG credentials
Leading ESG credentials Second ‘AAA’ ESG rating from MSCI, Jul 23 FTSE4Good Index inclusion, Jun 23 Scored B, Dec 22 Platinum rating, Nov 22 (the highest possible score from MSCI) (for a second consecutive year) (improvement from 2021 rating of B-) (rated top 1% from telecoms industry) ESG Risk Rati
Slide 14: Key takeaways
Key takeaways ✓ Executing on 2023 goals – acquisition integration, accelerating organic Adj. EBITDA growth and reducing net leverage ✓ Robust business model through high hard-currency earnings, contractual protections and attractive customer and market dynamics ✓ FY 23 guidance tightened upwards Hel
Slide 15: Helios Towers overview
Helios Towers overview A unique platform to capture the substantial mobile growth across Africa and the Middle East, with a robust and resilient business model, that features highly visible earnings Helios Towers Overview 2023 15
Slide 16: Helios Towers investment proposition
Helios Towers investment proposition Uniquely positioned telecoms infrastructure platform Unparalleled structural growth Proven execution capability in complex markets Robust business model delivering high quality earnings and cash flows Sustainability at the heart of our operations Helios Towers Ov
Slide 17: Our unique platform primed for strong growth and returns
Our unique platform primed for strong growth and returns We operate a geographically diverse suite of telecommunication towers, with a highly visible base of contracted revenues, and are uniquely positioned in the world’s fastest growing mobile markets High-quality cash flows Markets (Q2 23) 9 7 #1
Slide 18: Our core product and its operational leverage
Our core product and its operational leverage What we do Highly attractive returns Illustrative incremental site ROIC(1) Minimal incremental opex 35% Minimal incremental capex Additional Build and Incremental tenant margin: c.80% tenants add 1 acquire tower 3 active equipment assets to the tower MNO
Slide 19: Helios Towers playbook
Helios Towers playbook Market entry by acquisition provides a springboard for growth and returns Acquire sites • Gain immediate scale 15 acquisitions across 9 markets, with Enter attractive high-growth markets average day-1 tenancy of 1.2x • • Suboptimised assets primed for lease-up • Sign initial 1
Slide 20: Our story to date and next phase
Our story to date and next phase Business phase: 1 2 3 4 2010–2015 2016–2020 2020–2022 2022–2026 Established initial Driving Business Doubled and diversified Sustainable value platform Excellence our platform creation Markets Adj. EBITDA margin Markets Adj. EBITDA margin(1) 0 4 37% 55% 5 9 50% Sites
Slide 21: Our five-year strategic target – 22 by 26
Our five-year strategic target – “22 by 26” Margin and scale growth driven by significant organic and inorganic pipelines Q2 23 2023 – 2026 2026 Longer-term: 60%–65% Target Adj. EBITDA margin: 50% 1–2ppt p.a. 55%–60% Adj. EBITDA margin We have achieved our five-year strategic goals laid out at IPO:
Slide 22: Our markets are forecast to require 25k more PoS in the next 5 years
Our 9 markets are forecast to require 25k more PoS in the next 5 years – an 8% CAGR from today(1) Positive macro drivers: young, growing and urbanising populations (2021–26) +42m (2) +30m (3) 66% (2) +5.0% (4) increase in population increase in people below 30 years old GDP CAGR living in cities Str
Slide 23: High quality contracts with blue-chip customer base provides highly visible contracted revenue
High quality contracts with blue-chip customer base provides highly visible and significant contracted revenue High quality contracts Diversified customer base(2) (H1 23 revenues) Utilising the US towerco contract structure in our markets: Others 2% Long term: BBB-/Baa3/BBB- • 10 – 15 years initial
Slide 24: Q2 2023: Proven resilience to Fx, CPI and power prices
Q2 2023: Proven resilience to Fx, CPI and power prices Q2 23 YoY revenue walkthrough(1,2) Q2 23 YoY Adj. EBITDA walkthrough(1) (US$m) (US$m) +30% +28% 14 9 7 (5) 4 (2) 11 0 9 14 Principally driven by CPI escalations more than Ghanaian Cedi 179 89 offsetting Fx impacts movements vs. US dollar 138 69
Slide 25: Earnings growth driven by tenancy additions and well protected from macro volatility
Earnings growth driven by tenancy additions and well protected from macro volatility R- Squared(1): R-Squared(1): Tenancy additions FX / Oil 356 0.92 <0.05 339 Our Adjusted EBITDA is driven by tenancy 304 additions, with no (Q1 15 – Q2 23) (Q1 15 – Q2 23) 278 283 274 correlation to local 264 FX or o
Slide 26: Appendix
Appendix ✓ Unparalleled structural growth ✓ Highly visible earnings and cash flows ✓ Our leadership and governance ✓ Our strategy ✓ Our business model ✓ Strong balance sheet and disciplined capital allocation Helios Towers Overview 2023 26
Slide 27: Unparalleled structural growth
Unparalleled structural growth Helios Towers Overview 2023 27
Slide 28: Our markets are some of the fastest growing in the world
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Our markets are some of the fastest growing in the world Dar es Salaam, TZ Fastest growing population(1) Fastest growing mobile market(2) 1.5 4.4bn Total subs (bn) Data
Slide 29: HT will benefit as operators densify their networks from 2G to 5G
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET HT will benefit as operators densify their networks to support evolution from 2G ➔ 3G ➔ 4G ➔ 5G Future Impact Assessment % of connections in our 9 markets(1) Tower Amen
Slide 30: Medium-term opportunity: expand our platform
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Medium-term opportunity: expand our platform MNOs have been selling towers across Africa and the Middle East but outsourcing still significantly lags behind the rest of
Slide 31: Highly visible earnings and cash flows
Highly visible earnings and cash flows Helios Towers Overview 2023 31
Slide 32: Business model underpinned by diversified and highly visible, contracted revenues
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Business model underpinned by diversified and highly visible, contracted revenues Orange Contracted revenues Hard-currency Adj. EBITDA Customer diversification Geograph
Slide 33: How HT is protected against FX & cost inflation risk
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET How HT is protected against FX & cost inflation risk Illustration: 365 Days Case Study Timeline Day 1 Day 2 ... Day 30 ... Day 90(1) ... Day 365(2) Local Currency Local
Slide 34: Our leadership and governance
Our leadership and governance Helios Towers Overview 2023 34
Slide 35: Executive leadership team experience
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Executive leadership Team has over 350 years of tower, power, telco and EM experience, built with localised leadership and dedicated ExCo, regional and functional exper
Slide 36: Our Board has significant experience in towers, Africa, telecoms, power
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Our Board has significant experience in towers, Africa, telecoms, power, industry and investment Sir Samuel Jonah Tom Greenwood Manjit Dhillon Chair Chief Executive Off
Slide 37: Our global standard values and governance
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Our global standard values and governance Values Key standards and accreditations ✓ Management systems aligned to ✓ Strong procedures and the highest international stan
Slide 38: Our strategy
Our strategy Helios Towers Overview 2023 38
Slide 39: Our five-year Sustainable Business Strategy
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Our five-year Sustainable Business Strategy Our purpose is to drive the growth of mobile communication across Africa and the Middle East Our mission is to deliver excep
Slide 40: Our seven-pillar customer service excellence proposition
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Our seven-pillar customer service Customer Service excellence proposition Excellence 1 Power 2 3 Lower 4 Capital 5 Regulatory Speed Environment 6 Quality 7 uptime cost
Slide 41: Our people and business excellence founded on Lean Six Sigma
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Our people and business excellence is People and Business founded on Lean Six Sigma principles, and Excellence we deliver best-in-class customer service Downtime per to
Slide 42: Our sustainable value creation; real impact and real returns
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Our sustainable value creation; Sustainable Value real impact and real returns Creation Our impact Our future Drives financial today(1) impact performance People under
Slide 43: Our business model
Our business model Helios Towers Overview 2023 43
Slide 44: We select acquisitions in attractive, high-growth markets
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET We select acquisitions in attractive, high-growth markets What we look for: # markets: Africa and the Middle East ✓ 9/9 Population of >10m ✓ 6/9 3+ 3+ Operators ✓ 7/9 P
Slide 45: Proven track record of driving lease-up
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Proven track record of driving lease-up Tenancy ratio by vintage Highly attractive returns Average tenancy ratio expansion per annum: Illustrative incremental site ROIC
Slide 46: We utilise GIS analysis to understand the value of sites and drive lease-up
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET We utilise GIS analysis to understand the value of sites and drive lease-up What is GIS analysis? Geographical Information System (“GIS”) is a platform used for proprie
Slide 47: Building a platform for success: A Tanzania case study
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Building a platform for success A Tanzania case study Leading in Tanzania: INVEST IN ASSETS DRIVE GROWTH & RETURNS • Finding the right people and hiring locally • “One
Slide 48: Strong balance sheet and disciplined capital allocation
Strong balance sheet and disciplined capital allocation Helios Towers Overview 2023 48
Slide 49: Balance sheet well-protected in a rising rate environment
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Balance sheet well-protected in a rising rate environment Strong balance sheet Blended cost of debt • 3.5x – 4.5x targeted (5.1x as of Q1 23; anticipate net leverage to
Slide 50: Highly selective and disciplined capital deployment
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Highly selective and disciplined capital deployment Investment priority Considerations • Drive colocations on portfolio (lease-up) o Newly established platform with str
Slide 51: Expanded platform primed to drive return on invested capital
UNPARALLELED HIGH QUALITY CASH LEADERSHIP & STRONG BALANCE OUR STRATEGY OUR BUSINESS MODEL STRUCTURAL GROWTH FLOWS GOVERNANCE SHEET Expanded platform primed to drive return on invested capital(1) Transformational period, with >$1bn invested; capital intensity decreasing thereafter Discretionary cape