Unaudited trading update for the nine months and quarter ended 30 September 2022
+18% year-on-year Adjusted EBITDA growth
Oman closing nearing completion with towerco license received
2022 organic tenancy guidance tightened upwards to 1,400 - 1,700
London, 3 November 2022: Helios Towers plc (“Helios Towers”, “the Group” or “the Company”), the independent telecommunications infrastructure company, today announces results for the nine months to 30 September 2022 (“YTD 2022”).
|YTD 2022||YTD 2021||Change||Q3 2022||Q2 2022||Change|
|Adjusted EBITDA (US$m)1||206.8||175.0||+18%||70.7||69.4||+2%|
|Adjusted EBITDA margin1||51%||54%||-3ppt||49%||50%||-1ppt|
|Operating Profit (US$m)||62.9||42.0||+50%||23.1||25.4||-9%|
|Portfolio free cash flow (US$m)1||145.1||118.7||+22%||44.7||51.0||-12%|
|Cash generated from operations (US$m)||161.7||98.6||+64%||70.7||38.5||+84%|
|Net debt (US$m)1||1,148.1||835.9||+37%||1,148.1||1,082.4||+6%|
1. Alternative Performance Measures are described in our defined terms and conventions.
2. Calculated as per the Senior Notes definition of net debt divided by annualised Adjusted EBITDA.
Tom Greenwood, Chief Executive Officer, said:
“I am pleased to report another quarter of strong operational and financial performance, which highlights our focus on customer service excellence and the structural growth opportunity across the region, underpinned by a highly visible base of contracted revenues. Looking ahead, we are pleased to update our organic tenancy guidance for the year, reflecting performance year-to-date and our robust commercial pipeline. Coupled with our ongoing transformational platform expansion, which includes our targeted entry into Oman in Q4 22, we expect to enter 2023 in a strong position for continued growth.”
- YTD 2022 revenue increased by 25% year-on-year to US$408.8m (YTD 2021: US$326.8m), driven by acquisitions in Senegal, Madagascar and Malawi and strong organic tenancy growth across the Group, in addition to CPI and power price escalations. Organic revenues, excluding acquisitions, increased 14% year-on-year.
- Q3 2022 revenue increased by 4% quarter-on-quarter to US$143.4m (Q2 2022: US$137.9m).
- YTD 2022 Adjusted EBITDA increased by 18% year-on-year to US$206.8m (YTD 2021: US$175.0m), driven by tenancy growth (18%), with YTD 2022 Adjusted EBITDA margin decreasing 3ppt year-on-year to 51% (YTD 2021: 54%), reflecting the impact of acquired assets with low initial tenancy ratios and higher power costs across the Group, most notably in DRC, resulting in both higher revenues and power operating expenses.
- The Group’s Adjusted EBITDA is effectively protected from power price movements through power and CPI escalators embedded into customer contracts, although Adjusted EBITDA margin can decrease in a period of rising power prices as both power-linked revenues and related operating expenses increase comparably.
- Q3 2022 Adjusted EBITDA increased by 2% quarter-on-quarter to US$70.7m (Q2 2022: US$69.4m), with Q3 2022 Adjusted EBITDA margin at 49% (Q2 2022: 50%).
- YTD 2022 operating profit increased by 50% year-on-year to US$62.9m (YTD 2021: US$42.0m) due to growth in Adjusted EBITDA, partially offset by higher depreciation.
- Q3 2022 operating profit decreased by 9% quarter-on-quarter to US$23.1m (Q2 2022: US$25.4m), due to higher depreciation during the period.
- YTD 2022 portfolio free cash flow increased by 22% year-on-year to US$145.1m (YTD 2021: US$118.7m), driven by Adjusted EBITDA growth and timing of non-discretionary capex additions.
- Q3 2022 portfolio free cash flow decreased by 12% quarter-on-quarter to US$44.7m (Q2 2022: US$51.0m), reflecting the timing of tax and lease liability payments.
- YTD 2022 cash generated from operations increased by 64% year-on-year to US$161.7m (YTD 2021: US$98.6m), driven by higher Adjusted EBITDA, a decrease in deal costs and a one-off escrow deposit payment in relation to the Oman transaction in 2021 which did not occur in 2022.
- Q3 2022 cash generated from operations increased by 84% quarter-on-quarter to US$70.7m (Q2 2022: US$38.5m), primarily due to an improved working capital position.
- Net leverage of 4.1x increased by +0.7x year-on-year (Q3 2021: 3.4x), primarily due to acquisitions in Madagascar and Malawi, and +0.2x quarter-on-quarter (Q2 2022: 3.9x), remaining within the Group's medium-term target range of 3.5x-4.5x.
- Following closure of announced acquisitions, the Group’s net leverage is anticipated to be around the high-end of its medium-term target range.
- Strong balance sheet with 96% of drawn debt at a fixed rate, no near-term maturities and fully-funded for announced transactions.
- Business underpinned by long-term contracted revenues of US$4.0bn (Q3 2021: US$3.7bn), of which 99% is from multinational MNOs, with an average remaining life of 7.0 years (Q3 2021: 7.6 years).
- Pro forma for the announced transaction in Oman and potential acquisition in Gabon, the Group has contracted revenues of US$5.1bn.
- CPI and power price escalators embedded into customer contracts provides an effective hedge against inflation and power price movements over a full-year cycle.
- Sites increased by 2,107 year-on-year to 10,872 sites (Q3 2021: 8,765 sites), reflecting 894 organic site additions and the acquisition of 1,213 sites in Malawi and Madagascar.
- Sites increased organically by 178 quarter-on-quarter.
- Tenancies increased by 3,140 year-on-year to 20,913 tenants (Q3 2021: 17,773 tenants), reflecting 1,448 organic tenancy additions and 1,692 additional tenancies through the acquisitions in Madagascar and Malawi.
- Tenancies increased organically by 364 quarter-on-quarter.
- Tenancy ratio decreased 0.11x year-on-year to 1.92x (Q3 2021: 2.03x), reflecting the dilutive impact of the acquired assets from Madagascar and Malawi (Tenancy ratio - Madagascar Q3 22: 1.20x, Malawi Q3 22: 1.59x), which the Group targets to increase over the medium-term as these acquired assets are leased-up.
- The Group continues to progress with the closing of Omantel’s passive infrastructure assets, with Helios Towers Oman receiving its towerco licence in October 2022, and today reiterates its expectation of closing the transaction in Q4 2022.
- The Group also continues to engage on obtaining a local towerco license in Gabon in relation to the potential acquisition of Airtel Africa’s tower assets. However, timing remains uncertain following continued delays in the licence process.
Environmental, Social and Governance (ESG)
- In October 2022, Helios Towers South Africa attained level 1 B-BBEE certification, reflecting the Company’s commitment to a high level of corporate and social investment into the communities in which it operates.
- As previously reported, Helios Towers was awarded a 'AAA' ESG score from MSCI in H1 2022, the highest score from the investment research firm, in addition to being included in the FTSE4Good Index, a series designed to measure the performance of companies demonstrating strong ESG practices.
2022 Outlook and guidance
- Following strong operational performance and coupled with a robust commercial pipeline, the Group has tightened upwards its FY 2022 organic tenancy guidance to 1,400 – 1,700 (prior: 1,200 – 1,700), of which 60% are expected to be sites.
- As a result of higher power prices expected in FY 2022, which increase both power-linked revenues and related operating expenses comparably, the Group has updated its Adjusted EBITDA margin guidance to 50 - 51% (prior: 51 - 53%)
- In-line with the updated organic tenancy guidance the Group has tightened its FY 2022 target capex range to US$830m – US$850m in FY 2022 (prior: US$810m – US$850m)
- Year-to-date, the Group has deployed capex of US$214m, including US$63m of acquisition capex principally related to the acquisition in Malawi.
- Excluding acquisitions, the Group anticipates US$180m - US$200m of capex, of which, US$27m - US$32m is non-discretionary capex.
- The Group anticipates acquisition capex of approximately US$650m in 2022, reflecting the acquisitions in Oman and Malawi, and deferred acquisition payments in Senegal and Madagascar.
For further information go to: www.heliostowers.com
Chris Baker-Sams – Head of Strategic Finance and Investor Relations
+44 (0)752 310 1475
Edward Bridges / Stephanie Ellis
FTI Consulting LLP
+44 (0)20 3727 1000
Helios Towers’ management will host a conference call for analysts and institutional investors at 09.30 BST on Thursday, 5 May 2022. For the best user experience, please access the conference via the webcast. You can pre-register and access the event using the link below:
Registration Link - Helios Towers Q3 2022 Results Conference Call
Event Name: Q32022
If you intend to participate in Q&A during the call or are unable to use the webcast, please dial in using the details below:
- Europe & International: +44 203 936 2999
- South Africa (local) :087 550 8441
- USA (local): +1 646 664 1960
- Passcode: 863641
About Helios Towers
- Helios Towers is a leading independent telecommunications infrastructure company, having established one of the most extensive tower portfolios across Africa. It builds, owns and operates telecom passive infrastructure, providing services to mobile network operators.
- Helios Towers owns and operates telecommunication tower sites in Tanzania, Democratic Republic of Congo, Congo Brazzaville, Ghana, South Africa, Senegal, Madagascar and Malawi. Following recent acquisition agreements and subject to regulatory approval, Helios Towers expects to establish a presence in two new markets across the Middle-East and Africa. Including these acquisitions and committed BTS, the Group’s total site count is expected to increase from over 10,500 towers to over 14,000.
- Helios Towers pioneered the model in Africa of buying towers that were held by single operators and providing services utilising the tower infrastructure to the seller and other operators. This allows wireless operators to outsource non-core tower-related activities, enabling them to focus their capital and managerial resources on providing higher quality services more cost-effectively.
Alternative Performance Measures
The Group has presented a number of Alternative Performance Measures (“APMs”), which are used in addition to IFRS statutory performance measures. The Group believes that these APMs, which are not considered to be a substitute for or superior to IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These APMs are consistent with how the business performance is planned and reported within the internal management reporting to the Board. Loss before tax, gross profit, non-current and current loans and long-term and short-term lease liabilities are the equivalent statutory measures (see ‘Certain defined terms and conventions’). For more information on the Group’s Alternative Performance Measures, see the Group’s Annual report for the year ended 31 December 2021, published on the Group’s website. Reconciliations of APMs to the equivalent statutory measure are included in the Group’s Half-Year and Annual financial reports.