Helios Towers plc

Hello everyone and welcome to the Helios Towers H1 2022 results. My name is Nadia and I'll be coordinating the call today. If you would like to ask a question at the end of the presentation, please press star followed by one on your telephone keypad. I will now hand over to your host, Tom Greenwood, CEO of Helios Towers to begin. Tom, please go ahead.

Thank you very much Nadia and welcome everyone today. Great to be speaking to you and thank you very much for your time. I'm on page two in the presentation. As usual, alongside me we have Manjit Dhillon, our CFO, and Chris Baker-Sams, head of strategic finance and investor relations. So the presentation takes a normal format. I'll take you through some of the key highlights. Manjit will take you through some of the financial details and then we'll open up for Q&A at the end. So look overall, very pleased to be presenting you our H1 performance highlights here. I think it's been a really strong start to the year for us, demonstrating both the continued growth and sort of rollout from mobile operators across our market Combining that with demonstrating the company's resilience and protection mechanisms embedded within our contract with some of the uncertain macro environments out there, plus some really good progress on our sustainability strategy. So look, I'm on page five now, which just shows the key highlights. As mentioned, number one, very strong tenancy growth, both organic and inorganic. So far this year, we've delivered 24% year-on-year site growth, of which 9% is organic and 20% year-over-year tenancy growth. In terms of last 12 months, organic additions, so year-over-year organic additions, we're at 1,767, which for a 12-month period in our business is fairly strong. In terms of our financial performance, obviously that is showing similar traits to the tenancy performance. Revenue up 25% year over year, 12% organic. EBITDA up 19%, 9% organic. Our margin of 51% as very much expected given some of the dilution with the new acquisitions coming on board and for Q2 was our first full quarter of Malawi which we closed right at the end of March. The margins very much were expected and very strong portfolio fee cash flow growth of 36% as well which we're very pleased with. In terms of our Progress on the M&A as everyone knows I think we have Oman and Gabon that we're still working on Oman is nearing completion with the license hopefully coming soon imminently now and Gabon we continue to progress of course we're fully funded more than fully funded for closing these announced deals and finally our tenancy additions as we guided to the start of the year 1200 to 1700 we maintain that guidance from now but you know I think are confident of it and have a good good pipeline such that we may be looking at more directionally for mid to high points here moving on now to slide six here again we see the last few years progression obviously tenancies growing 9% year-over-year and up quite significantly from 2020. Our EBITDA again growing 15% year-over-year when you look at the Q2 annualized of 278 million and to show good progress from our FY21 figure of 214 million and of course portfolio free cash flow driving that upwards by 20% when compared to the full year of FY21. So all in all we're progressing sort of in line or slightly ahead of expectations and we're pleased with the progress so far this year. But now move on to slide seven. Clearly we're at a time of the world where there's quite a lot of uncertainty out there and some of the headline figures that everyone's reading about, particularly say in the UK or US from an inflation point of view is looking quite staggering as compared to the last few years or even last few decades. But what we wanted to do on this page is really draw out some of these features of our markets, which may be a little bit different from some of the headlines that people are reading in the UK or US. but also demonstrate how our business is very robust and protected against certain macro pricing movements out there. So look first of all on the left-hand side what we're seeing at the moment and as sort of demonstrated I guess from our H1 tenancy rollout we're seeing good rollout from our customers as I mentioned before we also have a good pipeline in hand for the second half of the year and even going into next year You know, and subscriber growth across our market really is very strong at 4.4%. which you know as demonstrated here by some of our key customers as well they're clearly investing and you know we're supporting all of our customers in their continued rollout to gain even more subscribers going forward so there's quite a good kind of industry backdrop if you like within most of our key markets. You then couple that with the general macro GDP and actually across our markets on average GDP forecast is 5% so you compare that with global forecast of 3.2% and actually you know a number of our markets are growing very strongly and some indeed are actually net beneficiaries of the increase of sort of mineral and commodity and foodstuff prices that we're seeing so they're actually getting quite a lot of inflows We do have some markets though where such as Ghana and Malawi where we have been seeing a bit more FX volatility and sort of CPI increases but of course our business is largely insulated against those through A our CPI and general sort of power price escalators that we have and B our hard currency mix. So again our business and our contract is largely hedged against those. And of course, finally, there's the rising interest rate environment. Well, we have long-term debt at fixed rates, so we're not looking at any refis or anything like that around now. And of course, we're already fully funded for our position. So again, we're in quite a strong position out there from a both business operating perspective and a capital stroke balance sheet perspective, again, underpinned by 5.3 billion of contracted revenues from our customers. So, you know, business in a fairly strong position, I would say. Moving on now to slide eight, look, a quick reminder on the recent acquisition. Journey we've been on the first three Senegal, Madagascar, Malawi obviously now closed. Malawi off to a really good start having closed just at the end of March and really getting off to a good start in Q2 both operationally with power uptime improving. We're building sites now having received our first large build-to-suit order as well as colo order and you'll see that coming through later this year and into next year. As I mentioned earlier, Oman is very much nearing closing. We have extended the long-stop date with Oman Tiles to September 30th, albeit what we have would guide to is the simplicity in all your models and forecasts, just put Oman starting from January 1st. Just given the slightly unknown timing that we've been experiencing there, I think that would be prudent to do so. So that would very much be what we recommend there. And of course Gabon is moving. I would say Gabon, earlier in the year we were moving quite well. I think with the discussions there with the regulator, obviously alongside Airtel, that kind of slowed a little bit the last couple of months. We still very much are working on it but it has slowed down from earlier in the year but we continue to push on with that as well. Moving on to page nine and you know Senegal was the first acquisition in our recent acquisition journey and we recently had our anniversary there so we thought it'd be good just to highlight some of the key features of our first year operation there and you know I would say it's really been a good success Senegal and continues to be so here on the top right you see Kareem who's our Senegal managing director and Phil who's our regional CEO who covers Senegal and supports Kareem and the team there and the team has really done a great job over the past year or so first of all operationally we've improved Power downtime per tower by 96% since starting. When we took over the network, the downtime per tower per week was 5 minutes, 57 seconds. We've reduced that in a year to 14 seconds. And you can see a very nice comment there by the CEO of our main customer. Senancy growth has been good 7% and you know that continues we will be seeing further Build the Suit rollout and Polo rollout through H2 this year in Senegal so that's moving well and then obviously EBITDA growth has been strong at 12%. What I would say though is remember Senegal uses the Central African franc which is Euro pegged so what this EBITDA growth represents The 21 million there you see in Q2 that's euro EBITDA. Now euros depreciated 9% against the dollar since we closed. So actually on a constant currency basis you see that 21 million actually about 23 Thank you for joining us. And indeed next year what we'll present to you at one of these calls will be a roundup of all of our recent acquisitions in the same vein as this. Moving on now to slide 10, I mentioned earlier we're making really good progress on our sustainable business strategy and I'm very pleased to say that we received our first rating from MSCI which actually was triple A which I believe is their top ratings and we were very pleased about that so huge well done there to Seema our head of sustainability along with Manjit and to be honest a huge amount of the team from across the group who contribute to this. and also we've been included in the FTSE for good index you can see there on the bottom left again demonstrating our strong focus on sustainability practices and processes across the group. As you will remember we launched our sustainable business strategy at our capital markets day in May and you know that is generally progressing well through to 2026 On the right hand side here what we've done we've actually just shown you a few of the kind of internal KPIs that we're looking at and these cover everything from sort of network performance to rural So these are the kind of KPIs that we follow internally and we thought it'd be useful to show them here. So look, without further ado, I'll hand over to Manjit to take us through the next section. Over to you, Manjit.

Thanks, Tom. Hello, everyone. It is great to speak with you all today. I'll be going through the financial results and starting on slide 12. Continuing on from what Tom mentioned earlier, we've had a strong first half of the year, and that really reflects continued organic tenancy growth, complemented by integration of our acquisitions in Madagascar, Senegal and Malawi. On this slide, you'll see that we've summarized the main KPIs, which I'll 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 13, our site and tenancy growth. Again, we've seen strong organic and inorganic tenancy growth in Q2. From a site perspective, we saw a 24% increase year on year. reflecting organic growth of 9% which is plus 878 sites and complemented by 1,213 acquired sites across Madagascar and Malawi. From a tenancy perspective we've added 3,459 tenancies which is a 20% increase from Q2 2021. Organically we added 1,767 tenancies again a 9% increase year-on-year and inorganically we added 1,692 tenancies again coming from Madagascar and Malawi. Our tenancy ratio has dropped slightly on a group basis and this is due to the lower tenancy ratio of the acquired sites that we've bought on board which had a combined tenancy ratio of 1.4x so diluting the overall tenancy the overall group tenancy ratio slightly. Excluding these acquisitions our tenancy ratio has remained flat year on year and that really reflects the strong site growth across our market which provides an enlarged base for driving lease up and therefore returns going forward. On to slide 14, we've seen continued growth in revenue in EBITDA with 27% revenue growth and 19% EBITDA growth year on year up organically 14% and 9% respectively. The revenue growth is principally driven by tenancy additions in addition to a 3% increase in lease rate for tenants. The lease rate per tenant movement reflects a 4% increase across our established markets and partially offset by our new markets coming in with lower lease rates on average. Adjusted EBITDA grew by 19% year-on-year, 9% organically, again really driven by organic tenancy growth of 9% and again contributions from our new markets. EBITDA margin declined 3 percentage points year-on-year to 50% for the second quarter with one percentage point being due to increased corporate SG&A investments as part of our ongoing expansion to 10 markets which we've already included as part of our overall guidance for the year. The remainder of the margin impact is driven by the timing of higher fuel costs, particularly in DRC. There can be a lag between the local fuel price increasing when we escalate customer lease rates for those increases and so that's what we've seen a little bit in the quarter a bit of a higher opex base from fuel increases in q2 but of course that will normalize as our customer escalations kick in in q3 and there afterwards moving on to slide 15 excuse me where we highlight how the macro environment has evolved across our market and demonstrate how our earnings and revenue is well protected from these movements so starting on the top left of the table with fuel We can see that on average local fuel prices are up 31% year-on-year in 2022. We have power price escalators embedded in all of our customer contracts and accordingly seen a 4% increase in our revenues. Some of the more recent local price increases, again specifically with DRC, occurred shortly after the last contract escalation date, so there's been a bit of a lag in catch-up, however we'll see further quality escalations kick in in Q3 and Q4. From a fuel perspective though, the escalators have worked such that the revenue increase has broadly offset the increase in OPEX, so largely EBITDA neutral from a dollar perspective. Local CPI is up 6% year-on-year in our markets, which is actually lower than what we've seen in the US and UK for example, and that's principally driven due to markets at Tanzania where we're seeing inflation around the 4% level year-on-year. Our revenues are up 3% from our CPI escalators, which occur annually and that's in line with what we would expect given that just over half of our customer lease rates are tied to CPI. Further currency movements on a revenue blended basis, we've seen a depreciation against the dollar of approximately 3% and as Tom mentioned that's principally related to both movements in the Euro and also the Ghanaian Sedi. With circa 50% of our revenues either being in Euro pegs or in local currency denominators, That impact on our revenue base is just under 2%. So here we see the CPI escalators offsetting the FX impact really quite effectively with minus 2% FX impact being offset by 3% CPI increases. So whilst there have been macro movements, the contracts have escalated as expected, which when combined with 9% revenue growth from organic tenancies and 14% from inorganic growth leads to 27% year-on-year revenue growth. Moving on to slide 16. Here you'll see the usual breakdowns provided which are very consistent from previous updates and again further demonstrate our robust business structure underpinned by long-term contracts with a diverse quality customer base with strong hard currency earnings. 98% of our revenue come from large blue chip MNOs comprising mainly Airtel Africa, MTN, Orange, Tigo, Axiom, Voda and Free Senegal. Our single largest customer exposure is 27% and that's spread across five different markets. We have strong long-term contracts with our customers and as at the end of H1 we had long-term contracted revenues of 4.2 billion dollars with an average remaining life of 7.2 years. This increases to 5.3 billion pro forma for Oman and Gabon and what this effectively means is that excluding any new wins and rollouts we already have that revenue contracted and that provides a strong underlying earning stream to the business. We also have 63% of our revenues in hard currency, being either US dollars or Euro pegged. As a reminder, this will increase to 68% pro forma for the announced acquisitions, which is due to close, which from an EBITDA perspective translates to 73% in hard currency. So a fantastic natural FX hedge for the business. And again, this is further complemented by escalators, which we have in all of our customer contracts, which we demonstrated on the previous slide. Finally on the slide with the new market expansion we're seeing a more diversified split of revenue per market and pro forma for acquisitions no single market accounts for more than 32 percent of revenues. Moving on to slide 17 and a look at our cash flow as mentioned earlier we've seen solid free cash flow of 100 portfolio free cash flow of 100 million this is up 36 percent year-on-year and that's principally driven by adjusted EBITDA growth in addition to the timing of non-discretionary capex. Portfolio free cash flow conversion was 74%. By year end, with further non discretionary capex outflows expected in H2, in line with our capex guidance, we expect this to be a touch lower towards 65 to 70% conversion level by the year end. With regards to working capital, we've seen a 53 million working capital outflow. And that just reflects the timing of customer payments, which is lumpy and can straddle period ends. And that's typical for our business. and finally some working capital is also raised to capex prepayments as we go into the second half of the year. Importantly receivable days remains in the range of 45 to 55 days which you've seen is consistent over the past few years. On to slide 18 and a look at capex. For H1 we incurred total capex of 132 million. This includes 43 million of acquisition capex principally related to our entry into Malawi and 89 million of organic capex. Our guidance for the full year remains unchanged and that reflects 650 million related to the acquisitions across Oman and Malawi in addition to some deferred considerations for Senegal and Madagascar. Our organic capex guidance remains unchanged at 160 to 200 million and we've incurred 89 million against that in H1. Non-discretionary capex remains again unchanged at roughly 30 million for 2022. So far we spent 9 million in the first half so the majority should come through in H2. Moving on to slide 19 which shows a summary of our financial debt our net leverage at H1 was 3.9x and continues to be comfortably within the target range of 3.5 to 4.5 we do expect this to tick up towards the higher end of the range as we close the other markets during the course of the year as we previously discussed but in general leverage very much under continued tight control as it stands today we have currently have 730 million of available funds which is sufficient for our announced acquisitions and our organic growth which for our established markets is self-financing. One thing to mention as well which Tom spoke about earlier is that we partnered with Rikiza in Oman, a great local infrastructure investor with significant local experience and expertise. They're investing 30% pro rata in the local business which not only de-risks the investment for us but assists with our leverage. So a great overall development and we look forward to working with and partnering with Rikiza over the coming years. Another good development to mention Last month we worked with Fitch for our first rating and received a rating of B plus for the stable outlook. This rating, which is our highest across the rating agencies, reflects our recent diversification to new markets, our leading market positions and long term earnings and cash flow visibility. And we are now rated by all three rating agencies. Finally, a quick comment on balance sheet. We sit on a very strong balance sheet with long term debt, as Tom mentioned, with the nearest maturity for drawn group debt not until the end of 2025. Our drawn debt has awaited average remaining life of four years. We have very limited floating exposure for 96% of drawn debt being fixed, again, giving us good protection against the rising interest rate environments. Overall, we're in a great position to say that if we do choose to do any financings or refinancings, we'll be doing this for strategic reasons and, where possible, continuing our trend to reducing the cost of debt. And finally, onto slide 20. Again, as Tom mentioned, our guidance remains unchanged and the group continues to target organic tenancy additions of 1,200 to 1,700 in 2022. We have exceeded our seasonality guidance for H1 with 675 organic tenancies delivered year to date. From a financial perspective, we're tracking inline or ahead with guidance with lease rate for tenants at 3% and EBITDA margins at 51%. So all in all, we're progressing well against our targets and remain very focused on continued delivery for the years ahead. and with that I'll pass back to Tom to wrap up.

Thank you very much Manjit. So just on 21 a quick wrap up here. So number one you know we've had a really strong start to 2022 with H1 operational and financial performance very much robust and moving in the right direction. I think we're demonstrating the resilience of our business and the robustness of our contracts in the midst of some moving macro elements here and of course we're seeing good progression with our tenancy rollout and investment from our customers and last but not least our guidance is being reiterated. Philip with that I will hand back to Nadia and we'll take some questions, thank you.

Thank you. If you would like to ask a question today, please press star followed by one on your telephone keypads. If you choose to withdraw your question, please press star followed by two. When preparing to ask your question, please ensure your phone is unmuted locally. And our first question today comes from John Caradis of Numis. John, please go ahead. Your line is open.

Thank you. Good morning, everyone. If I may, I'd like to ask three questions, one at a time. So firstly, aside from Airtel and Vodacom, you gave us some quotes at the beginning. Have you had any meaningful signals from customers of any plans for them to delay tenancy orders to Helios because, for example, of macro uncertainty? So apart from, so setting aside what Airtel and Vodafone said, please.

Hey John, Tom here, thanks for the question. The short answer is no. I can't actually think of any customer who's said that to us and we're for sure in conversations with basically most of our other major customers about new rollout at the moment. Indeed we have some orders in hand which You know, you'll see coming through in the second half and others that we're trying to win at the moment. So no, we haven't seen any sort of specific hold back from them as of now. Thank you, Tom.

The next one, have you experienced any meaningful change, positive or negative, in your supply chain versus previous periods?

Thanks again, John. Look, the supply chain continues to be different to what it was two, two and a half years ago, pre-COVID. And what that means is that typically shipping times are longer and shipping is more expensive. or albeit it's sort of relatively small dollars in terms of what we invest in capex. You don't really see that sort of in our numbers as such, but it is more expensive for a container on a ship. So no, we haven't seen any real changes up or down in the past few months, John, since the last update. But, you know, we're continuing to really plan ahead six to nine months. at the moment whereas you know before it was more like three months or maybe six months maximum so things have extended by about three months so you know we've already put out a lot of our orders for 2023 for example already we did that in June and July whereas three years ago we would have probably been doing that in September and October so that's the main change.

Awesome, thanks Tom and then lastly The closing of your tower acquisition in Oman could be as much as a sort of year late. If that is possible for you, have you at least been able to build some sort of shadow order book with the likes of Vodafone for example?

Yes, the short answer is yes. We always try and do that in any market to sort of get off to a good start on closing. So we'll have a sales process going on pretty much from when we first get on the ground and start opening an office and recruiting a team there. So yeah, Oman is no different in that sense and we are seeing traction from Vodafone there in Oman even prior to closing.

That's great. Thanks. Well done to the Helios team for another good set of results.

Thank you. Thanks, John. Appreciate it.

Thank you. And our next question comes from Jerry Delis of Jefferies. Jerry, please go ahead. Your line is open.

Yes. Good morning. Thank you for taking my questions. Two questions, please. When we think about your full year guidance on tenancy ads, the 1200 to 1700, I suppose that implies quite a wide range of outcomes for the second half. 60% of full year tenancy ads are guided to come from new sites. I think you probably have quite good visibility then on that sort of element of the guidance. So how should we think about the reasons why the full year guidance range on tenancy ads remains so wide? Where is the sort of And then secondly, related to the sort of Amman situation, we obviously read about other parcels of mobile network operator towers that might be available or becoming available within your footprint. At what stage do you think that there's a sort of an opportunity cost tied up in Amman which doesn't enable you to move for Thank you. Yeah, thanks. Thanks, Joey. So yeah, look on the tenancy guidance. Yeah, look, we're aware that the 1200 to 1700 is fairly wide.

I think we're filling Fairly confident about it and you know as I said earlier I think some directionally mid to upper half of that range is I think sort of where we're where we're tending to which is which is obviously good um I mean you know at this point of the year there's basically a couple of things which can drive that sort of up or down one is the timing of rollout so particularly when you're doing a lot of build to suits you're reliant on a huge amount of external parties to actually get the build pursuits up and running and therefore recognized. Principally you're reliant on a bunch of external agencies who need to provide permits such as environmental agency, local municipality for a building permit and more often than not the Civil Aviation Authority. So those three agencies all operate at different paces sometimes they're quick sometimes they're slow and it can just provide variability. Often as well they're processing sites in batches if we're doing a whole bunch of sites at one time for example the Civil Aviation Authority in a given market may be processing 50 or 100 sites at the same time. if they process it quickly great, if they don't then you know that probably means they're going into next year so it can be a bit binary from that perspective which is why at this point of the year we're still a little bit cautious about things like that and you know the other factor obviously is the sales process itself so there's a number of opportunities which we're in fairly advanced stages on we're feeling quite good about them but you know they haven't signed on the dotted line yet so again that brings a bit of variability into it as well but all in all we're feeling quite good about the progress certainly so far this year in H1 and the pipeline that we've got for H2 we're feeling reasonably good about. The second question on Oman, basically when would we walk away? We're not in that headspace to be honest, at least not at the moment. While things have moved slowly there, they are moving. We're just sort of coming out of the summer break where a lot of things slow down or sort of shut down for a month or two. but we are we do understand that our license is kind of imminently to be to be signed so we're waiting eagerly for that and then once that has come through then we'll be in the kind of the closing straight proper as it were which is effectively just getting all the legal things ticked off and money drawn from our partner Rakhiza prior to closing so We are confident of closing Oman. We're not looking at dropping it at all in any way. I'm confident that we'll close that reasonably soon. I think there are opportunities out there in terms of other power deals. They come up, obviously, generally quite regularly. um again we're you know we always assess them um but uh you know we're very happy with what we've signed and announced and we're just super focused on closing uh closing them and uh and moving forward thank you very much that's very clear could i just ask a follow-up on a different question please um you mentioned again you know planning ahead with inventory levels six to nine months uh are you confident that

current inventory levels are sort of enough could there be a scenario in which you might decide you have to sort of raise stock levels a bit further in order to sort of be very comfortable that you can sort of deliver on build to suit objectives um yeah we are comfortable with current inventory levels i would say um we're actually quite well stocked

In some of our key markets where we well either believe or know that we've got rollout coming and soon so I think we're quite happy at the moment you know as always there can be peaks and troughs on this from time to time We're looking at a few potentially very large rollouts which are more next year's business to be honest rather than this year's but that may mean that we need to increase inventory levels a bit for a short term period in which case we would do that but yeah nothing kind of out of the ordinary to be honest Gerry we're just keeping things roughly at this level with the sort of natural peaks and troughs that occur as it's utilised and new inventory brought in.

That's great. Thank you very much for that.

Thanks.

Thank you. Our next question comes from Alex Roncia of Bank of America. Alex, please go ahead. Your line is open.

Hi, everyone. Thanks for taking the question. I will add actually three most of them actually following up on some of the earlier questions. The first one is just on KPIs and Roche interaction in H1. Just wondering if it's just, you know, and you highlight it to some points, but is it faster build? Is it just faster permits from regulatory agency or is it just higher demand from MNOs? And, you know, likely, obviously, you've talked a little bit about no change in guidance, confidence in, you know, mid to high range, but I do believe that MNO budgets are kind of set in Q3, Q4 every year. So do you think implicitly that they kind of front-loaded their BTS program this year? And secondly, just on my man, and I think for you, you know, this is kind of more of a blueprint and, you know, test for Middle East. Are you already discussing with new partners there? And will the partnership actually with Rakiza help the younger man or is it just And then lastly, it's maybe a bit more holistic, but obviously given the volatility we're seeing on energy markets, looking backwards or even forwards, anything you think you should have done or could have done better and differently in terms of matching energy costs and your contract rates and escalators? Thank you.

Yeah, thank you. Thank you very much, Alex. Great question. So let me take them in order. So yeah, look, in terms of the KPI, so I guess the question is sort of why the higher tenancy rollout this this H1? Is it quicker? Is it just more orders? Yeah, look, I think it is largely is more orders in hand at the start of the year. So quite a lot of These tenancies that have rolled out in H1 were obviously negotiated or ordered towards the end of last year or very early this year. I think that's just a factor of M&O demand and their need to both expand their networks and also upgrade or increase their density. General volumes through networks have obviously increased in the past couple of years particularly on the data side and so that really drives the need for more for more tenancies or more antenna which means a tendency for us so yeah I think it's just simply more volume rather than any specific speed to roll out point and you know I think it's probably worth making the point that you know often particularly Q1 and to some extent H1 for us can actually usually be the you know quite quiet because M&Os typically get their budgets done in Q1 or Q2 and then you know that leads to orders being placed and then more rollouts in the second half of the year for us and this year has been slightly different on the upside for us for that which has been good and I think it's just down to sheer volume In Oman there are other Towers portfolios in that market. There are other Towers portfolios obviously around the Middle East which may well be on offer for sale at some point. We'll always look at and other key portfolios that come up for sale in both our countries and also the regions in which we operate. So there could be potential there for expanding our network either in Oman or across the region at some point. We do know though that these deals tend to take quite a long time as we always experience. you know in terms of our strategy and what we're focused on right now um as we articulated previously at the capital markets say that you know the focus for this year 2022 and and you know going into next year is very much focusing on closing the deals we've signed and announced integrating them into our business getting our business excellence processes going across all these markets and driving the organic growth with a view of potentially more acquisitions in the you know slightly more medium-term horizon of course what that means is that work you know needs to start now from a business development point of view because the gestation period on these deals typically is you know one to two years so you know it's good that there are opportunities out there of course we'll always look at them sometimes we'll like them sometimes we won't and we'll walk away very happy to do that and we'll look at kind of assess each opportunity one by one and just your last point there on Rakeza yeah for sure Rakeza our partnership we have there with Rakeza I think is a great partnership we're very pleased with Rakeza as our partner in Oman and you know look forward to a very long and fruitful relationship with them in the country Just on final point, energy volatility, anything we could or should have done better. I mean, I think what we've done well, I think, is our customer contracts are, I think, very well hedged, both from an energy point of view, but also from a currency point of view. But I guess here we're speaking specifically about energy. We have energy pass-throughs basically in all of our major contracts across the group which does mean that we're pretty well insulated, weather prices are going up or down, obviously at the moment they're going up. Now, it's not 100% perfect, there is obviously a short time lag there with some of our contracts being quarterly and some being annually, so it's not an absolute perfect hedge. but it's fairly it's fairly good I would say I think what we're really focusing on now and you know have have been focused on past years but very much but even more so now is reducing reliance on fuel in general and you know we've articulated that through our carbon reduction strategy and you know today we have some form of renewable technology either hybrid batteries or solar on about 30% of our sites if you exclude the very recent acquisition and as we articulated last November in our carbon investor presentation we're aiming to take that up to about 75% of our entire portfolio over the coming years and that will really help to even reduce further Thank you and the next question comes from Omar Mayher of EFG Hermes. Omar please go ahead your line is open.

Thank you. Good morning, gentlemen. Thanks a lot for the presentation and the insights. Just two questions from my side. One is on Congo Bee. So I guess if I look at the last nine months, the pace of expansion in site additions has been faster than what we've seen in many years in that market. And at the same time, we're not seeing any meaningful pickup in number of tenants, essentially. If I look at the tenancy ratio, it's been largely sliding a little bit down. I wanted to understand if you could provide some highlights and explain what's happening in that market. You're obviously probably seeing some future demand coming and that's why I'm guessing you're expanding the number of sites, but at the same time, What is delaying this pickup in the tenancy in that market? And then my second question is on Ghana, actually. With the recent news that we saw on potential acquisition of Vodafone in Ghana, how does that change things for you?

Yeah, thank you very much, Omar. Thanks for the question. So, look, taking the first one, Congo B, yeah, look, we've seen some good site growth there, and this has been through build-to-suit orders. which to be honest we haven't seen much of in the previous five or six years so it's been great to be getting those built-to-suit orders in. The thing about built-to-suits is typically they will be a one tenant site from day one and then over time we aim to put co-location tenants on them We usually expect a build to suit when we underwrite it to get a second tenant on between three to five years. That's roughly the sort of norm or the sweet spot. Obviously, we try and push harder on that from a sales perspective and try and get them on, you know, within six months or one year or even from day one in some cases. But the norm is three to five years when we underwrite the build to suit. So that's why initially you see when the site growth is happening, you see that grow but the tenancy ratio will get diluted a little bit because unless you're adding collocation as well at the same time, inherently the fraction that calculates tenancy ratio will drive a slightly lower ratio initially. but a larger asset base and then over time as you put more colos on that tenancy ratio should grow so we're very much on plan in Congo Bee as I said three to five years is the norm and you know you should see that tenancy ratio grow and these new builders suits over that time scale going forward. in Ghana Vodafone yeah we've seen the announcement obviously we continue to work with Vodafone as we do with all of our customers in Ghana and you know from a contract perspective there's no change We're monitoring that situation and we'll be working with the new owners as and when that deal closes and for now it's very much business as usual.

Thank you, Thomas. Since we're on Ghana, if I may just a quick follow up on that. We've seen the average lease rate sliding. It has been going down for a while in Ghana. So is it an issue of competition or is there something else that is pressuring the lease rates that we're not aware of?

Yeah in Ghana specifically, Ghana is one of our markets with probably the most exposure to the local currency which is the Ghanaian Steady and that has obviously dropped off against the dollar recently so when you wait we report in dollars so when you're looking at the average Revenue per tenancy for Ghana you're seeing it in our report in dollars and obviously because the Fed is appreciated you're seeing a lower figure but there hasn't there hasn't been any change to the underlying sort of lease rates there and you know we will be seeing power price Thanks very much.

Thank you. Our next question comes from Jonathan Kennedy-Good of JP Morgan. Jonathan, please go ahead, your line is open.

Hi, good morning Tom and Manjit and Chris. Thanks for the opportunity to ask questions. Just a couple of quick ones from me on the level of CPI inflation that you're observing in the country is obviously a little bit lower than what I thought it would be versus developed markets. How is that rolling over? And do you think the inflation levels have peaked or given currency devaluations in some of these markets, do you think that could rise still? Any thoughts there would be helpful? And then in terms of the tenancy seasonality, obviously you've mentioned pretty strong in the first half. Are there any obvious and many other kind of drivers of that in the key markets. I'm talking more from an organic perspective, DRC Tanzania, and whether there are certain operators that are driving this. And then finally, just on cash flow repatriation to your hold co, are there any issues in certain jurisdictions? Thanks Jonathan for the questions. Let me take them in order. The level of TPI inflation, as you've seen, the blended average across our markets is about

6% clearly that's lower than headlines you're seeing elsewhere UK, US etc in the world. We do have quite a wide range without those so you know Tanzania is 4% I think DRC is 6% obviously DRC is dollarized and there are two largest markets so have the biggest sort of impact on this on the average and then at the other end of the spectrum You've got Ghana and Malawi, which are well into the 20s in terms of inflation. Now, those two markets typically run double digit inflation anyway, so they've gone up from low to mid double digits to sort of 20s. Of course, those two markets are pretty small for us, particularly Malawi, which is very small from an overall group percentage perspective. So there's not much impact on us from that. The question is, has it peaked? I guess that's the million-dollar question for a macroeconomic expert way above my pay grade. But look, I would suspect that there's probably still a bit more to come. Sometimes you see a bit of a ripple effect when inflation happens in the US and Europe, and then it maybe ripples out elsewhere. So let's keep monitoring that. We're not overly concerned about that. We do have the CPI escalators in our contracts. So to the extent that we do see a little bit more come through, say in Tanzania and DRC, which obviously have fairly low inflation at the moment, then we'll absorb that through our escalators. But let's see. I think both of those markets, to some extent, have a fairly strong position here with the commodity and foodstuff prices around the world going up because they export a lot of it. So I think they're maybe on a slightly different track to countries like the UK, which is obviously in a slightly different place. So let's see. Tenancy seasonality, next question. Any obvious drivers of that? Look, I think we're actually seeing that there's no single one customer that's driving that, to be honest. I think we're seeing good competitive tension between the mobile operators in our key markets, particularly Tanzania and DRC. They're both markets with extremely low mobile penetration today. They've both got four major mobile operators. with no one of them over I think 35 or 40 percent being the max and all the sort of number one market share in both markets. The very evenly spread market share which is a very healthy environment for mobile operators and clearly a good environment for power companies to operate in and we are the beneficiaries of that healthy competition between the mobile operators. um so yeah no no obvious sort of one single customer driving that i'd say we're seeing you know reasonably good demand across the board or across most of the board and then the final one on on cash flow repatriation Manjit do you want to play that one yeah yeah absolutely so we still hold around 80 to 90 percent of all of our cash up at a group level so we're still having uh you know we've always had the ability to upstream cash the only potential things which which

Thank you for joining us today. and you mentioned Ghana I mean look in that market we do actually receive a about 20 to 25 percent of our revenues are linked to US dollars and received in US dollars so we can always move that around the business as well but in general you know still the vast majority holds up a group which is consistent with how we've operated since inception.

Great thank you that's very helpful. Thanks.

Thanks Jonathan.

Thank you and as a reminder if you would like to ask a question today please press star followed by one on your telephone keypads now. And our next question comes from Simon Coles of Barclays. Simon please go ahead your line is open.

Hi guys thanks for taking the question. Sorry first ones back on on tenancies. If we take a step back last year was probably a little bit lighter than we would have hoped so and then you obviously spent a bit of extra capex to drive tenancies this year. if we were to say remove those tendencies would we say that you're actually just running in in the middle of the range because you're you're saying that you're sort of hoping that you're going to end towards the mid to the upper end and then if we think to next year I think you said you've got some big rollout contracts being discussed does that make you confident that you're sort of potentially upper end of your medium term guidance at least in in 2023 understand if you can't comment too much on that but just wondering how that's going. Then secondly, thank you for the slide, I think it's 15, that's super helpful. Is there any big difference between markets and I'm mainly thinking about DRC on whether the escalators are quarterly or annually, is it still 50-50 in DRC just because the revenue per tenant there looks a little bit mixed whereas say Tanzania has been growing quite nicely but I realise there are lots of moving parts in there. and then sorry if I can just ask one last final one, on M&A are you seeing multiples from private sellers come down at all given what we're seeing with interest rates globally? Thank you.

Hey Simon, thank you very much for those questions. Let me take them in order, so tenancies last year being light, yeah I think H1 last year was a little bit light but H2 was I think last year we ended up with one of our highest ever years for organic tenancies by the end of the year, albeit absolutely H1 was light. I think we did about 170 tenancies in H1 last year but ended well above 1,000 or around 1,100 I think. The progress so far this year has clearly been good. I think that we are in a position of having a reasonably good amount of either orders in hand or conversations ongoing for new rollout, which could come into this year or could go into next year's business, depending on when the conversations finalize and when the rollout starts. So, you know, I feel quite good about the number of conversations that we're having with multiple different mobile operators. So it's not like we're just reliant on one mobile operator, for example. We're obviously very, very diversified on that front. So I think, you know, I think this year could be another strong year for tenancies, as I mentioned. Before in terms of our guidance 12 to 1700 you know we could very well directionally be going towards middle or upper of that range which would of course mean that that would be our I think our highest rollout ever in a year certainly higher than last year and the year before so that's good directionally I guess In terms of the capex, the capex really follows the tenancies particularly when it comes to build pursuits because build pursuits require capex so that essentially kind of goes hand in hand with the tenancies. Slide 15, I think your question was about DRC escalations and yeah most of them in DRC are quarterly and on M&A What are we seeing on the multiples? I guess sellers may well have a preconceived idea of what they want or what they expect from a valuation point of view. That may well be based on multiples or tower values that were paid a year or two or three years ago. who knows and we may have a different view for that and that's fine and I guess it depends on how many other buyers there are out there who have the same or different views and at the end of the day some deals may trade or may not trade you know sellers may think oh well we'll just wait a bit inflation is running at 10% on the US dollar so maybe it's not the best time to do a tower sale at the moment or maybe they'll think the opposite We'll look through that and buyers will look through that on the assumption that it comes down at some point and still be confident of getting a good deal. We take each one on a case-by-case basis. As I said, this year and to some extent next year is all about the integration and the consolidation of the deals that we've announced and really starting to get the best out of them. within the HelioStars group and you know we'll look at any new M&A opportunities that come through and we may align with the seller on expectations or we may not and if we don't then that's fine we'll happily walk away and if we do great but of course you know these deals do have fairly long gestation periods so again that aligns quite well with our focus right now on integration and consolidating what we've got.

Okay thank you.

Thank you and our final question comes from Stella Cridge of Barclays. Stella please go ahead your line is open.

Hi there morning everyone many thanks for all the updates so far. I wondered if you could give us an update on the planned funding for the remaining acquisitions so for example What you would consider the main sources to be and what kind of minimum cash balance you'd like to keep? Obviously, given that we've had a bit of volatility in global markets, that would be great. Thanks.

Yeah, sure. I'll pick this one up. So really, for the remaining acquisition, which is Oman in the short term, that's 575 million. We've clearly got cash on balance sheet, which would be utilized against that. Now we have Rikiza as a 30% investor. They will be investing pro rata for that. We are also investigating potentially a smaller local line in Oman. What we're finding at the moment is actually there's some really quite attractive pricing, particularly in Oman for local debt. So we may do a small portion of that. And if we do do that, that would actually, if all goes well, actually continue to reduce our overall cost of debt on a group basis. So I think a combination of the three cash on balance sheet, the keys coming in. potentially a small line up at the group level we have undrawn debt facilities that are about 270 million at the group level and maybe also a little bit of local debt in Oman as well. All of those will be the main sources of funding for Oman and for Gabon it's a smaller acquisition so again that will be funded either through cash on balance sheet or the group facility.

Okay that's it from me, thanks Manjit.

Thank you.

Thank you, we currently have no further questions so I'll hand my call back over to Tom for any closing remarks.

Thank you very much Nadia and thank you everyone for dialling in today. Thanks everyone for the questions as usual. If there's anything you want to follow up on, you know where we are. Please feel free to contact me, Manjit, Chris anytime. Very happy to talk to you again and look forward to seeing you all soon. Have a great day. Take care.