Helios Towers Plc · LSE:HTWS
Helios Towers — FY2023 Earnings Presentation
39 slides from Helios Towers's earnings presentation, Mar 14, 2024
Slide 1: FY 2023 Results
FY 2023 Results 14 March 2024
Slide 2: Helios Towers Team
HELIOS TOWERS TEAM Manjit Dhillon Tom Greenwood Chris Baker-Sams Chief Financial Officer Chief Executive Officer Head of Strategic Finance and Investor Relations 2 Helios Towers FY 2023 Results
Slide 3: Agenda
Agenda 1. Highlights 2. Strategy update 3. Financial results 4. Q&A Dar es Salaam, Tanzania
Slide 4: Highlights
Highlights Odzala National Park, Congo Brazzaville
Slide 5: Highlights
HIGHLIGHTS 1 2 3 4 FY 23: Record FY 23: Financial FY 23: FY 24: Organic organic tenancy performance ahead Strengthened growth, continued growth of expectations financial position deleveraging and FCF focus • +2,433 YoY organic tenancy • +29% YoY revenue growth • -0.7x YoY decrease in net • 1,600 - 2
Slide 6: FY 2023 Key Metrics Exceeded Expectations
FY 2023 KEY METRICS EXCEEDED EXPECTATIONS Organic tenancy additions (#) Adj. EBITDA (US$m) Return on invested capital (%) Organic tenancy ratio expansion Adj. EBITDA growth +0.02x +0.01x +0.10x Reported: +6% +18% +31% Organic: +2% +9% +17% Outperformance through colocation 2,433 370 12% 12% addition
Slide 7: Delivering on Our Sustainable Business Strategy Through Development of Strong Localised Teams
DELIVERING ON OUR SUSTAINABLE BUSINESS STRATEGY THROUGH DEVELOPMENT OF STRONG LOCALISED TEAMS Mgmt. Impact KPI FY 22 FY 23 FY 26 comp(3) Commentary Developing talent % staff trained in Lean Six Sigma Enabler 42% ✓ 53% 70% Local teams % local employees Enabler 96% ✓ 96% 95-100% • Lean Six Sigma train
Slide 8: Strategy update
Strategy update Antananarivo, Madagascar
Slide 9: FY 2026 Strategic Vision Updated to Reflect Focus on Organic Growth
FY 2026 STRATEGIC VISION UPDATED TO REFLECT FOCUS ON ORGANIC GROWTH TO DRIVE CASH FLOW, ROIC AND DELEVERAGING New Target: Prior Target: • 22k towers by 2026 • 2.2x tenancy ratio by 2026 • Platform expansion through M&A • Faster tenancy ratio expansion vs prior guidance(1) • Organic and inorganic gro
Slide 10: Capital Allocation Priorities
CAPITAL ALLOCATION PRIORITIES Capital allocation policy focused on growing portfolio free cash flow while consistently delivering ROIC above our cost of capital Current priorities: Optimised organic Capital efficient investments accretive to ROIC – colocations, 1 investments operational efficiencies
Slide 11: Tenancy Ratio Expansion on Enlarged Platform Driving ROIC Expansion and Free Cash Flow Growth
TENANCY RATIO EXPANSION ON ENLARGED PLATFORM DRIVING ROIC EXPANSION AND FREE CASH FLOW GROWTH Tenancy 2.13x 2.2x ratio 1.96x 1.91x ROIC 14.5% 1.81x 11.8% 12.0% Inflection 10.3% in FCF and ROIC expansion New market Senegal Malawi targeted acquisitions Madagascar Oman 14k 14k Sites 10k 7k FY 20 FY 21
Slide 12: Well-Positioned to Continue Capturing the Structural Growth and Drive Lease-Up
WELL-POSITIONED TO CONTINUE CAPTURING THE STRUCTURAL GROWTH AND DRIVE LEASE-UP Unparalleled organic growth opportunity (2023–28) Uniquely positioned platform +44m (1) 66% (1) +5% (3) Leading or sole independent increase in GDP population (+13%) below 30 CAGR towerco in 7/9 markets: 7/9 Macro years o
Slide 13: Proven Track Record of Tenancy Ratio Expansion and Driving ROIC
PROVEN TRACK RECORD OF TENANCY RATIO EXPANSION AND DRIVING ROIC Tenancy ratio by vintage Highly attractive returns Average tenancy ratio expansion per annum: Illustrative incremental site ROIC for BTS(1): BTS 0.2x 0.3x 0.5x ✓ Minimal incremental opex ✓ Minimal incremental capex Acquired 0.1x 0.1x 0.
Slide 14: Group ROIC Reflects Mix of Established vs. New Markets
GROUP ROIC REFLECTS MIX OF ESTABLISHED VS. NEW MARKETS Established markets yielding 18% 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) (Oma
Slide 15: Financial results
Financial results Ituri, DRC
Slide 16: Financial Highlights
FINANCIAL HIGHLIGHTS YoY QoQ In US$m, unless otherwise stated FY 2023 FY 2022 % change Q4 2023 Q3 2023 % change Sites (#) 14,097 13,553 +4% 14,097 14,024 +1% Tenancies (#) 26,925 24,492 +10% 26,925 26,624 +1% Tenancy ratio (x) 1.91x 1.81x +0.10x 1.91x 1.90x +0.01x Revenue 721 561 +29% 187 184 +2% Ad
Slide 17: Record Organic Tenancy Additions Through Strong Colocation Growth
RECORD ORGANIC TENANCY ADDITIONS THROUGH STRONG COLOCATION GROWTH IN NEW AND EXISTING MARKETS Sites Tenancies Tenancy ratio +4% +10% +0.10x 14,097 26,925 1.91x 13,553 24,492 3,375 1.81x 2,519 2,535 3,017 5,166 9,382 10,942 4,734 6,300 6,396 12,093 12,608 FY 22 FY 23 FY 22 FY 23 FY 22 FY 23 • Site ad
Slide 18: FY 2023 Financial Performance Exceeded Expectations
FY 2023 FINANCIAL PERFORMANCE EXCEEDED EXPECTATIONS Revenue (US$m) Adj. EBITDA (US$m) Adj. EBITDA margin (%) +17% +29% +17% +31% +1ppt 721 370 57 38 283 561 4 2 168 351 295 149 51% 50% 313 163 200 262 -32 -36 FY 22 FY 23 FY 22 FY 23 FY 22 FY 23 • Organic revenue growth driven by tenancy • Adj. EBITD
Slide 19: Adj. EBITDA Growth Highly Correlated to Tenancy Additions and Resilient to FX
ADJ. EBITDA GROWTH IS HIGHLY CORRELATED TO TENANCY ADDITIONS AND RESILIENT TO FX, CPI AND POWER PRICE MOVEMENTS FY 23 YoY revenue walkthrough(1,2) FY 23 YoY Adj. EBITDA walkthrough(1) (US$m) (US$m) +29% +31% 67 41 24 (14) 12 (8) 31 38 3 52 Principally driven by Power efficiency CPI escalations more
Slide 20: Adj. EBITDA Growth and ROIC Expansion Supporting Cash Flow Generation
ADJ. EBITDA GROWTH AND ROIC EXPANSION SUPPORTING CASH FLOW GENERATION ($USm) ($USm) Commentary (36) (45) (81) • Record portfolio free cash flow of (21) (385) $268m, driven by Adj. EBITDA growth (128) (721) and higher cash conversion FY 21 FY 22 FY 23 FY 24 FY 21 FY 22 FY 23 FY 24 • c.$5m ahead of FY
Slide 21: Capex Is Tightly Controlled and Focused on Opportunities That Enhance ROIC
CAPEX IS TIGHTLY CONTROLLED AND FOCUSED ON OPPORTUNITIES THAT ENHANCE ROIC FY 24 FY 23 Capex breakdown ($m) FY 22 FY 23 Guidance • FY 23 capex of $203m, in line with expectations Acquisitions 557 20 FY 24 guidance Growth 171 113 • Capex guidance of $150m - $190m, Upgrade 16 35 reflecting higher mix
Slide 22: Strengthened Financial Position Through Deleveraging and Partial Tender
STRENGTHENED FINANCIAL POSITION THROUGH DELEVERAGING AND PARTIAL TENDER Debt KPIs FY 22 FY 23 Commentary Cash & cash equivalents 120 107 • Net leverage decreased by -0.7x YoY to Bond (Dec-25) 975 650 4.4x; target below 4.0x in FY 24 Convertible bond(1) (Mar-27) 247 247 • Extended average maturities
Slide 23: FY 2024 Guidance
FY 2024 GUIDANCE FY 22 FY 23 FY 24 Actual Actual Guidance(1) Organic tenancy additions +1,601 +2,433 +1,600 - 2,100 Adj. EBITDA $283m $370m $405m - $420m PFCF $201m $268m $275m - $290m Capex $765m $203m $150m - $190m of which $20m non-discretionary of which $35m non-discretionary of which c.$45m non
Slide 24: Key Takeaways
KEY TAKEAWAYS ✓ ✓ ✓ ✓ FY 23 organic Improved financial FY 24 organic Targeting 2.2x growth and ROIC position through growth and ROIC tenancy ratio by FY 26, exceeded extending maturities expansion reflecting capital expectations and deleveraging supporting free cash allocation priorities flow inflec
Slide 25: Q&A Thank you
Q&A Thank you Jërëjëf Medaase Zikomo Merci Matondi Asante Misaotra Shukranًشكرا Siyabonga Matondo Dakar, Senegal
Slide 26: Investor Relations
INVESTOR RELATIONS IR Contact Upcoming IR events Event 18-Mar JP Morgan Telecoms Towers Call Series 19-Mar Berenberg UK Corporate Conference 20-Mar Jefferies Pan-European Mid-Cap Conference Chris Baker-Sams 25-Apr Annual General Meeting Head of Strategic Finance and Investor Relations investorrelati
Slide 27: Appendix
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Slide 28: Market Overview: Macro and Industry Snapshot
MARKET OVERVIEW: MACRO AND INDUSTRY SNAPSHOT Mobile 4G/ 5G PoS Growth CAGR(3) Towers held by Credit ratings # MNOs(1) Credit ratings(5) Penetration(2) penetration(2) (2023 – 2028) MNOs(4) momentum(6) Tanzania 4 48% 20% 6% 0.7k B2(Pos)/NR/B+(St) Senegal 3 46% 36% 6% 2.6k Ba3(St)/B+(St)/NR Malawi 2 41
Slide 29: Q4 2023 Sites and Tenancies
Q4 2023 SITES AND TENANCIES Sites Tenancies Tenancy ratio Q4 22 Q3 23 Q4 23 YoY QoQ Q4 22 Q3 23 Q4 23 YoY QoQ Q4 22 Q3 23 Q4 23 YoY QoQ Tanzania 4,188 4,188 4,156 (32) (32) 9,422 9,648 9,680 +258 +32 2.2x 2.3x 2.3x +0.1x 0.0x Senegal 1,347 1,428 1,444 +97 +16 1,439 1,554 1,573 +134 +19 1.1x 1.1x 1.1
Slide 30: Positive Progress Across Key Metrics
POSITIVE PROGRESS ACROSS KEY METRICS – STRONG GROWTH AND ROIC EXPANSION, WITH DECREASING LEVERAGE YOY CAGR US$m 2019 2020 2021 2022 2023 (2019-23) Sites 6,974 7,356 9,560 13,553 14,097 +19% Tenancies 14,591 15,656 18,776 24,492 26,925 +17% Adjusted EBITDA 205.2 226.6 240.6 282.8 369.9 +16% Portfolio
Slide 31: 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 FY 23 revenue breakdown by customer FY 23 revenue breakdown by FX FY 23 revenue breakdown by segment 2% Largest customers 8% Airte
Slide 32: New Markets Demonstrating Lease-Up Potential
NEW MARKETS DEMONSTRATING LEASE-UP POTENTIAL TO SUPPORT ADJUSTED EBITDA AND ROIC GROWTH Market Sites Tenancy ratio FY 23 Adj. EBITDA(1) CAGR Senegal 1,444 1.1x $25m +12% (Closed: Q2 2021) (1,207) (1.0x) ($19m) Madagascar 591 1.3x $7m +16% (Closed: Q4 2021) (490) (1.2x) ($5m) Malawi 796 1.7x $12m +26
Slide 33: Leading ESG Credentials
LEADING ESG CREDENTIALS Third ‘AAA’ ESG rating from MSCI, Mar 24 FTSE4Good Index inclusion, Jun 23 Scored B, Feb 24 Gold rating, Feb 24 (the highest possible score from MSCI) (for a second consecutive year) (2023 rating reaffirmed) (rated top 5% of telecoms industry) ESG Risk Rating of 16.8 (Low Ris
Slide 34: Income Statement
INCOME STATEMENT 12 months ended 31 December US$m 2023 2022 Revenue 721.0 560.7 Cost of sales (450.4) (365.9) Gross profit 270.6 194.8 Administrative expenses (127.6) (114.1) Loss on disposal of property, plant and equipment 3.1 (0.4) Operating profit 146.1 80.3 Interest receivable 1.3 1.8 Other gai
Slide 35: Balance Sheet
BALANCE SHEET US$m 31 December 2023 31 December 2022 Non-current assets Intangible assets 546.4 575.2 Property, plant and equipment 918.3 907.9 Right-of-use assets 254.0 226.5 Deferred tax asset 39.7 Derivative financial assets 6.3 2.8 1,764.7 1,712.4 Current assets Inventories 12.7 14.6 Trade and o
Slide 36: Management Cash Flow
MANAGEMENT CASH FLOW 12 months ended 31 December US$m 2023 2022 Adjusted EBITDA 369.9 282.8 Less: Maintenance and corporate capital additions (35.5) (20.3) Payments of lease liabilities(1) (45.3) (40.8) Corporate taxes paid (20.9) (20.3) Portfolio free cash flow(2) 268.2 201.4 Cash conversion %(3) 7
Slide 37: Reconciliation of Adjusted EBITDA to Loss Before Tax
RECONCILIATION OF ADJUSTED EBITDA TO LOSS BEFORE TAX 12 months ended 31 December US$m 2023 2022 Adjusted EBITDA 369.9 282.8 Adjustments applied to give Adjusted EBITDA Adjusting items: Deal costs(1) (3.3) (19.1) Share-based payments and long-term incentive plan charges(2) (3.7) (4.5) Other/Restructu
Slide 38: ROIC Breakdown
ROIC BREAKDOWN US$m 2020 2021 2022 2023 Property, plant and equipment 594.7 708.2 907.9 918.3 Accumulated depreciation 713.0 833.3 934.0 1,127.5 Accumulated maintenance and corporate capital expenditure (180.6) (202.7) (224.8) (260.3) Intangible assets 23.2 231.4 575.2 546.4 Accumulated amortisation
Slide 39: Disclaimer
DISCLAIMER This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire or dispose of securities in Helios Towers plc (the "Company") or any other member of the Helios Towers group