Helios Towers plc

Welcome everyone, great to be talking to you today. I'm Tom Greenwood, the CEO and with me I have Manjit Dhillon, our CFO and Chris Baker-Sams, Head of Strategic Finance and Investor Relations. On page three you see the agenda and this morning's call is really a run-through of our Q1 release which came out a little earlier this morning. We'll talk through some highlights, we'll talk through some Financials and then of course there'll be a good time for Q&A at the end but also today we have our Capital Markets Day which is happening later kicking off at 1pm London time this afternoon and I know that a lot of you are either attending in person or planning to log in virtually. If you still want to register you're able to click on the link here on the on the page and register so look forward to talking to you all later and at that we'll be launching our new five-year sustainable business strategy and as well as the people that you have on this call there'll also be some of the wider executive team there for you to meet some of whom will also be presenting so really look forward to that later. So moving on to the Q1 highlights and now I'm on page five of the presentation So look, Q1 was a really solid quarter. We've delivered 23% in revenue growth year on year, 20% EBITDA growth, EBITDA margin in line at 52%, which of course has been slightly diluted with all the new assets that we've bought on, which we're all now ready to lease up and start driving those margins and returns, and cash flow as well, up 34% year on year. Of course, a huge amount of all of this was driven by our tenancy increases. We added over 1,500 year over year and also closed on our eighth market in Malawi in the quarter. All of this driving site count up 43% year over year and tenancy growth 29% and both of those around 9% on an organic basis. So really seeing strong tenancy rollout coming through and in fact our Q1 tenancy rollout on an organic basis was 359. So one of our strongest ever and typically quite a quiet quarter for our business due to rollout cycles with our customers. Of course late last year we told you about this and we mentioned that we were pre-ordering some capex so that we could continue the momentum in Q1 without any delays to roll out due to supply chain issues and of course we're very pleased that we did that because it has enabled us to deliver on a strong quarter. Other news, we're still continuing our processes of closing Oman and Gabon, so those are moving in the right direction and aiming to close those in Q2 and H2 respectively. And finally, our guidance is reiterated for the year, which is centered around the organic tenancy additions being 1200 to 1700, so around 8% at the midpoint. and finally a reminder that all of our revenues and earnings are very well protected against inflation and power price movements through the contractual escalators in all of our contracts. So in a sort of global environment where we're seeing quite a lot of increases or volatility in those sorts of measures our business is very well protected against those through our contracts so feeling very good about a robust earning stream going into the latter half of the year and of course into future years. Moving on now to slide six and here we just see some of the main KPIs In chart form, as you can see, tenancy showing good growth as we move into Q1. We've added about 1,500 since the end of last year, with about 1,100 coming from the Malawi acquisition and 359 organic in our other markets. So making good progress there. EBITDA as you can see has stepped up fairly significantly if you look at the quarter one annualized of 274 million that is already a 14% increase on our FY21 EBITDA which was 241 million you see there in the middle so of course what this means is if we did nothing for the rest of the year and did not sell another single tenancy then our EBITDA would continue on this level. Of course we are going to be selling more tenancies and driving more efficiencies so we're feeling good about a good base that we've got in Q1 at 274 ready to drive that further upwards as we move through the year. and finally here you can see that the cash flow metric also has stepped up as would be expected principally driven through the EBITDA increase. Moving on to slide seven and again here our sustainable business strategy is very much in full swing and in fact as I mentioned earlier later today at our capital markets day we will be launching our new five-year sustainable business strategy. She's centered around our purpose of driving the growth of mobile communication across Africa and Middle East and of course our mission which is to deliver exceptional customer service through our business excellence platform and create sustainable value for our people, environment, customers, communities and investors. So look, later on today I, Manjit and some of the other EXCO members will be taking everyone through a presentation which really looks into what we're going to be doing for the next five years where we're focused on and of course all elements of our business from business excellence to Lean Six Sigma to our customer service excellence mantra and of course our sustainability angles of which we cover all of it. First and foremost our targets are to drive returns and margin and value over the coming years through our business, through leasing up the new enlarged platform that we have and we're very confident of doing that. So look forward to speaking to everyone later on this. Next up, a quick roundup on page 8 of our acquisition activity and of course we closed Senegal and Madagascar last year. We've just closed Malawi at the end of Q1 there. That's got off to a very smooth start. We're seeing some good operational performance coming through as well as good interest for new rollout in that market. so that's very exciting for us and then Oman as I mentioned and Gabon we're now in the you know working on the final processes around closing those deals so Oman Q2 and Gabon H2 as we previously communicated so look forward to bringing those into the fold as well as we move through this year and we'll have therefore completed our Big expansion from 5 to 10 markets, 7,000 to 14,000 towers and ready to really go off that enlarged base with significant embedded lease up and growth going forward. I'll now hand over to Manjit to take us through the financial section.

Over to you, Manjit. Thanks, Tom. Hello, everyone. It's great speaking with you all today. I'll be going through the financial results and starting on slide 10. Continuing on from what Tom mentioned earlier, we've had a very strong quarter of organic growth driven by organic rollout and complemented by our new markets, Madagascar, Senegal and Malawi, all of which have really hit the ground running. And on this slide, you'll see we've summarized the main KPIs, which I will be talking through in more detail over the next few slides. But in general, we're seeing good growth across a number of these key metrics. So jumping into the detail and moving on to slide number 11, and we see really robust organic and inorganic tendency growth in Q1. From a site perspective, we saw a 43% increase year on year, primarily due to 2420 sites that were acquired across our new market, but which were also supplemented by strong organic growth of 733 sites. Year on year we've added 4,501 tenancies which is a 29% increase from where we were in Q1 2021. 1,545 tenancy additions were driven through organic rollout and 2,956 day one tenancies in our new markets of Senegal, Madagascar and Malawi. Tenancy ratio in our established markets remain constant at 2.14 and on a group basis tenancy ratio has dropped slightly by 0.22 to 1.92. and that's really due to the integration of new markets which have a combined day one tenancy ratio of 1.2 we will see the overall group tenancy ratio dilute as we continue to integrate our acquired portfolios which come with generally lower tenancy ratios on day one than the group average however as reiterated previously this is a great opportunity we're growing our asset base and the number of sites which we can develop adding further co-locations over the coming years and we'll see our tenancy ratio and other metrics compound over the coming years as well. But all in all, very pleased with site and tenancy momentum in Q1 and as Tom mentioned, we managed our supply chain effectively with forward purchasing of capex at the back end of last year, which has meant that we can roll out tenancies efficiently at the start of the year, which you can really see coming through here now. We've got a good pipeline of opportunities ahead. We're exactly where we want to be and a laser focus on delivering more built suits and colos during the rest of the year. Onto slide number 12. and looking at our revenues and adjusted EBITDA. We've seen growth with both revenue and EBITDA up 10% year on year on an organic basis and up 23% and 20% respectively when also incorporating the new markets. EBITDA margin is reduced by two percentage points in line with guidance we gave over a month ago and that again is really driven by the impact of lower margin acquisitions which have diluted the group margin on day one and also due to an investment that we made in our SG&A to ensure that the business is well set up for doubling of size and scale. But again, pleased with these results, we have a well invested platform delivering strong organic and inorganic tendency growth which we see and will continue to see coming through our revenues and EBITDA in the quarters and years to come. Now, if we move to slide 13, you'll see the usual breakdowns provided which are broadly consistent from previous quarterly updates. We have strong currency hedge business which is underpinned by long-term contracts with blue chip mobile network operators. 99% of our revenue come from international MNOs comprising mainly Airtel, MTN, Orange, Tego and Voda and Free Senegal who we purchased the Senegalese portfolio from. We have strong long-term contracts with our customers and as at Q122 we have long-term contracted revenues of 4.2 billion dollars with an average remaining life of 7.4 years. which increases to 5.3 billion dollars pro forma for Oman and Gabon which are due to close during the course of this year and this means excluding new wins and rollouts we already have that revenue contracted and in the bag providing a strong underlying earning stream to the business. We also have 64% of our revenues in hard currency being either US dollar or euro pegs and as a reminder this will increase to 68% pro forma for the announced acquisitions which translates to 72% when looking at it from an EBITDA perspective being in hard currency. This provides a strong natural FX hedge for the business which is further complemented by our annual inflation escalators which we have in all of our contracts with our customers. Moving on to SPY14 and we look at CAPEX and yet to date we've deployed $73 million with the majority of that $40 million related to acquisition CAPEX, principally the Malawi acquisition. Our capex guidance though remains unchanged at 160 to 200 million excluding any capex we'll spend on new acquisitions and we've incurred 33 million against that. We've also guided to 650 million for the full year for new acquisitions and we've incurred 40 million of that again principally related to Malawi and a search we have 610 million to deploy on acquisitions relating to Oman and Gabon. We have forward purchased 30 million of capex in Q4 for organic rollout of tenancies in Q1. Again, managing supply chain effectively has meant that we've hit the ground running this year. We continue to actively monitor and manage our supply chain so that we can efficiently roll out for our customers, something which we always look at and continue to do going forward. Moving on to slide 15, and here we show a summary of our financial debt. And as at Q1, our net leverage is 3.7x and continues to be within our range of 3.5 to 4.5. We have strong liquidity with $830 million in available funds made up of $483 million of cash on balance sheet and $345 million of unutilised debt facilities across the group. We're fully funded for our near-term organic and inorganic expansion plans with long tenured debt. We're in a great position where there is no immediate need to raise any additional capital. However, as always, we remain agile and ready should strategic opportunities arise. I'm glad to say we sit here with a very strong balance sheet. Finally on slide 16 we're tracking in line with our FY22 guidance we've had 359 organic tenancy growth in the quarter and as Tom mentioned we typically see Q1 and Q2 as being our slower periods for rollout given the budget cycles of MNOs but we're tracking well against the budget guidance we've given. Lease rate for tenancy whilst reported is 2% we're looking at the seven markets excluding Malawi Our escalators do come over the course of Q1, so in January, February and March. If we take our March position, our lease rate per tenant is actually in line with guidance. And finally, adjusted EBITDA margin is in the middle of guidance at 52%. So all in all, progressing well against our targets and remain very focused on continued delivery for the year ahead. With that, I'll pass back to Tom to wrap up.

Thanks very much, Manjit. So I'm on slide 17 for a quick wrap up. Just to remind you, you know, we've had a seasonally strong tenancy additions in Q1 with 359 tenancies come through and of course strong financial performance in line with expectations, revenue 23%, EBITDA 20% on an overall basis. We've closed our Malawi deal, which means we're now in eight markets and over 10,000 towers and we're progressing well on the final two Oman and Gabon. We've reiterated our 2022 guidance and of course later on today we'll be launching a refreshed five-year sustainable business strategy and look forward to seeing as many of you there as possible. And so with that I'll hand back to Ruby who can coordinate the Q&A.