Helios Towers plc

Hi, everyone, and welcome to the Helios Towers FY23 Global Investor Call. Great to be talking today with everyone, as always, and I hope you're doing well. Thank you very much for your time today. Today, we'll be taking you through our 2023 performance, our 2024 outlook, and covering our capital allocation plan and strategic focus for the next three years. First up, on page two, we've got the usual lineup for you, myself, Tom, Manjit Dhillon and Chris Baker-Sams will cover the business, strategic and financial highlights and then be open for Q&A at the end. One point to mention, I'm very happy to say that Manjit's wife is due imminently to give birth to their second child. So if it happens during the call, Manjit might morph into Chris for the financial section. So now moving to page five, 2023 was a pivotal year for Helios Towers. being our first of the newly enlarged nine market platforms. In summary today, we run 14,000 mission critical digital infrastructure assets across Africa and Middle East, supporting almost 150 million people use mobile services for voice calls, internet, banking, trade, health, AI, social networking, streaming, and everything else being connected to the world enabled. Our number one strategic pillar is customer service excellence and we focus 24-7 on ensuring we can deliver the best possible service to our customers and in turn grow both our and their businesses and accelerate mobile usage across the markets in which we operate. In 2023, we focus on finalising our new market integration with our business excellence processes and people development plans now embedded across the group. We focus on supporting our customers and communities with organic roll-up in all markets for coverage capacity and technology needs and in doing this we focus on driving EBITDA, cash flow, ROIC and the leveraging. Our key focus for the next three years is equity value creation and this is supported by the dynamic of EBITDA and cash flow growth driving enterprise value higher and leverage lower thereby creating equity value growth over that time. I'm pleased to report 2023 finished with similar momentum that we saw through the year. It was a year of record tenancy addition, surpassing the 2400 level above guidance and expanding our tenancy ratio by 0.1x. Revenue EBITDA and portfolio free cash flow all increased by around 30% year on year, all ahead of guidance. Roik notched up two percentage points to 12% and leverage came down by 0.7x. Again, both ahead of guidance. As we move into 2024, we're continuing to focus on organic tenancy rollout for our customers and guiding to between 1600 to 2100 tenancy additions, which was similar initial guidance given last year. Double digit EBITDA growth and continued deleveraging by another half term in the year. Additionally this year we're seeing it as an inflection point for our bottom line free cash flow following a number of years of high growth and acquisition investment switching to neutral free cash flow this year and growing in the years following. Lastly we have future revenues contracted of 5.4 billion dollars equating to 7.8 years before renewals which grew by 700 million from the previous year demonstrating our customer service excellence Strategic Focus and Digital Infrastructure Assets provide the reliability our customers need to deliver to the end users. Now turning to page six. As we look at these charts, we can see the business accelerated in 2023, driven in part by a full year of the Oman acquisition coming through in the numbers. But most importantly, our organic EBITDA growth was at 17%. driven principally by lease up on our underutilized asset base and tight cost control. This fed through into cashflow and was the principal driver for our ROIC increase to 12% following the temporary dilution previously with the new acquisitions. Furthermore, we delivered above initial guidance on all KPIs as indicated by the green boxes on the chart. Looking now to page seven, to see how we execute our business to ensure it's sustainably profitable and delivers impact to our customers and in the wider world. Our people and business excellence strategic pillar is focused on investing in the development of high quality local people in our markets to create long-term sustainable value in the business. We have continued with 96% local staff across our markets in 2023 and accelerated our Lean Six Sigma training program such that over half our workforce now are trained in our processes to drive performance and efficiency in the business. You can see this coming through in our customer service delivery of power at 99.98% and the financial metrics growth we covered on the previous slide. As we look forward, we will continue to invest in our people to drive excellence in everything we do. Now we move to page 10 for an update on our strategy. When we launched our current five year sustainable business strategy in 2022, the world was a different place with low rate environment and significant M&A opportunities to go with it. As we communicated through 2023, our focus was on organic growth and lease up. And so what we're doing here is reconfirming that plan continuing for the short to medium term. Our previous strategic strapline of 22 by 26 reflected an ambition to increase our footprint by 8,000 Towers, with over half coming from new acquisitions. Now, almost halfway through our five years, we have seen a changing environment and have adapted our 2026 ambition accordingly. Therefore, the 22 by 26 now becomes 2.2 by 26, which represents our tenancy ratio ambition by 2026. Tenancy ratio is the main indicator for earnings, cash flow and ROIC growth in our business and reflects a largely organic plan for the next three years. Supported by the strong momentum we see for continued demand for coverage, capacity and technology as 4G and 5G start to proliferate further across our markets. This leads into our capital allocation plan on page seven. Our primary focus continues to be high returning organic growth which already in 2023 has driven a two percentage point increase in ROIC year on year. As we grow our EBITDA and cash flows we're targeting a half turn leverage reduction each year which sees us below 4x by the end of this year and around 3x by 2026. In 2023 we reduced leverage by 0.7x So continue to focus strongly on that as we move forward. Thirdly, as I mentioned earlier, our free cash flow is growing. And in 2024, we see our business move from high growth investment phase to a free cash flow inflection point, which will continue to grow in 2025 and 2026, supporting the potential for investor distributions from 2026 should the consensus at the time be to do so. And lastly, M&A. Whilst not ruling it out entirely for high returning strategic opportunities, it is low priority for us for the foreseeable, preferring instead to focus on high returning organic capital investments during this time. One example of a small acquisition that might come through this year is not a new deal, but actually the second closing of a little over 200 in building sites from the original Oman deal, which was subject to regulatory approval. A small bolt-on deal like this, which increases our market share in a key market and accesses key locations demanded for 5G in a dollarized setting, is the sort of deal we're talking about here. But moving to page 11, I've mentioned free cash flow inflection point a few times in this presentation, and here you can see it laid out. In fact, 2023 was our tenancy ratio and ROIC inflection point. After the past few years of high acquisition investment of purchasing underutilized power portfolios, which inherently dilutes these metrics in the short term, we now see the organic lease up happening and the tenancy ratio up by 0.1x and ROIC up 170 bits in 23 year over year. This is now feeding into the free cash flows and hence we expect continued growth on all these metrics through the next three years, with 2024 being the free cash flow intersection point. As I mentioned at the start, our key focus for the next three years is equity value creation, with now being a pivotal time for the business. With EBITDA and cash flow growth and enterprise value growing, whilst at the same time leverage reducing, creating a clear pathway for equity value creation over the next two to three years. Now tenancy growth is the main driver for our revenue earnings and cash flow growth and so on page 12 we wanted to explain the basic thesis of the embedded demand for tenancies across our footprint and why that will be continuing for many years ahead. The numbers you see here relate to our nine markets and as you can see from the green text at the bottom It is forecast that 32,000 new points of service are required over the next five years, being a 33% increase in today's installed space. A point of service is a set of antenna, so essentially a potential tenancy for us. In terms of why this increase is required from a network point of view, all antenna have a capacity limit. And so the number of phone users in its vicinity, as well as the behavior are the key input factors determining how many points of service are required for a good end user experience. And so to draw your attention to some of the key input stats, population is growing by 44 million or 13% from today, subscriber numbers are growing by 85 million or 24% from today, and data consumption is tripling all of which will drive the need for 32,000 new points of service over the next five years. In terms of how our business is poised to bring in a significant number of these as new tenancies, we look on the right hand side for our installed asset base. In seven of our nine markets with a market leading independent tower company, typically with between 30 to 60% market share, meaning we have the location to offer customers fast co-location rollout and are set up well to roll out new build to suit sites at a fast pace. Secondly, our asset base has significant capacity to attract new tenants with almost half of our current sites with one tenant and our markets all having between two to four major mobile operators meaning there's significant structural market dynamics to increase site utilisation meaningfully over the coming years. As we see on page 13, we have a strong track record of delivering tenancy lease-up across our portfolio. On acquired sites, which amounts around 10,000 in our portfolio, we have seen consistent 0.1x lease-up per annum across the various vintages of our acquisitions. Built-to-suit of which we have done around 4,000, typically have faster lease-up rates because we analyze each location and choose whether to build the site or not. And in fact, we've been getting better at doing this, particularly in the past couple of years with improvements to our geolocation tools and analysis. Our latest vintage is seeing 0.5x lease-up per year, which means it's taking two years to hit two tenants on the site. This compares to the earlier days of the business with a 0.2x lease up per year being five years to reach a two-tenant site. We're continuing to invest in our geolocation technology including utilizing some AI to ensure we are maximizing our hit ratio for achieving multi-tenant site status in the shortest time possible. And finally, on page 14, with a new market now fully embedded, we're very pleased with the performance so far with regards to lease up and ROIC evolution. which is following a similar trajectory as our more established markets. And as we move forward with our customer-centric approach and embedded market demand, we'll be fully focused on continuing to drive tenancy ratio and ROIC up across the entire portfolio to deliver value creation for investors. And with that, I'll pass over to Manjit and look forward to talking with you at the end for Q&A.

Thanks, Tom. Hello, everyone. It's great to speak with you today. I'll be going through the financial highlights. So moving on to slide 16. Continuing on from what Tom mentioned earlier, we're delighted with our performance in 2023, delivering record organic tenancy additions and strong performance across all key operational and financial metrics, while proactively also strengthening our financial position in debt package. I think 2023 really demonstrates our playbook in action. identifying and adding attractive portfolio to our business which is what we did during 2020 to 2022 and effectively coiling the spring the 2023 being focused on driving value creation on the enlarged platform and I'm delighted with our outperformance which has largely been due to faster co-location growth on this slide as usual you'll see we've summarized the main KPIs which I'll now go through in more detail over the next few slides so moving on to slide 17 our sites and tenancy growth From a site perspective, we saw a 4% increase year on year, reflecting organic growth of 544 sites. And from a tenancy perspective, we added record organic tenancy additions of 2,433 tenancies, which is a 10% increase year on year and resulted in a 0.1% expansion in our tenancy ratio. We're particularly pleased with increased tenancy ratios in both Oman and Malawi by 0.1x in their first full year as part of Helios Towers, tracking to plan and shows how well both have integrated into our business. and onto slide 18. We've seen 29% revenue growth and 31% EBITDA growth year on year. And importantly, we've seen strong organic growth year on year, 17% on both revenue and EBITDA. And we've seen strong revenue and EBITDA growth in all three of our reporting segments and ended the year at the top of our updated guidance rate which we gave at Q3 at $370 million. Our EBITDA margin increased by one percentage points to 51%, again, driven by co-location steps. and excluding the impact of higher fuel prices, which increases both our power linked revenues and power expenses comparably, adjusted EBITDA margin would have been even higher at 53%. And I'll talk through that impact now on the next slide. On this slide, similar to prior results, I'll dig into the drivers of revenue and EBITDA growth in a bit more detail. The first four bars of each bridge, organic tenancy growth, power escalations, CPI escalations and FX, all combine to make up organic growth. and acquisitions being the contribution from Malawi and Oman. The organic tenancy growth we had during the year, year on year, has driven 29% growth in revenue and 31% growth in EBITDA. But focusing on the escalation movements, similar to previous presentations, the contractor escalators are performing as expected. As a quick reminder, we have escalators in almost all customer contracts. For power, roughly 50% of our contracts have costly power escalators and 50% have annual power escalators. These escalate in relation to the local pricing for fuel and electricity. So if the local prices go up, then the escalators go up. And if the prices go down, then the escalators go down. For CPI, we have annual CPI escalators, and they typically kick in between December and February. Our power escalators increase revenue by 31 million, and that falls through to 3 million EBITDA, driving the 1% EBITDA contribution as you can see on the right-hand side. The positive EBITDA contribution is also partly attributable to all of our investments we've made as a part of our Project 100 initiative, which improves power efficiency in 2023. This again demonstrates our business model has effectively offset any increase in OPEX due to higher power prices to protect our EBITDA on a dollar basis, while we continue to save fuel costs through our investment in power initiatives and reducing our reliance on fuel where possible. Moving on to CPI and FX, local CPI is under 10%, with the majority of our CPI escalators having already kicked in earlier this year which has now contributed 4% year on year when we look at 2023. The CPI escalators have effectively offset the FX movements on revenue and on the EBITDA side the escalators have well covered the FX movements which you can see in the dotted box. We have seen a slight gain this year in the dotted box however there are some years where you make a slight gain and some years where you make a slight loss and it really comes down to the timing of FX movements versus the CPI escalators. and if we dial the clock back to this time last year we're about minus three million on that dotted box so over a two-year period we are net flat which is a good place to be. The reason why we continue to show this analysis and will continue to show this analysis is because we think it's a really useful demonstration of the business mechanics and again standing back and to reiterate the message looking at this from an EBITDA level there is little to no impact to FX and power prices and we're well protected from macro volatility. with the key driver of growth being tenancy additions, both organically and inorganically, plus operational improvements, all of which are within our control and how we want to operate the business. And onto slide 20, focusing on our drivers of free cash flow. Our strong adjusted EBITDA performance and improved cash conversion supported 33% growth in portfolio cash flow year on year, and we exceeded our updated guidance provided at Q3 by approximately 5 million at the midpoint. Our levered portfolio free cash flow has increased by over fivefold to almost $100 million. Alongside EBITDA growth, this was driven year on year by improvements in working capital, largely receivables, and leveraging our growth on our largely fixed interest cost base. We continue to invest in highly selective discretionary capex, totaling $168 million. As a reminder, this investment is only undertaken should we identify opportunities that boost cash flow returns. and our Capital Allocation Committee made up of myself, Tom and other ExCo colleagues frequently evaluates the best opportunities for capital efficient growth. As we go into 2024, we see continued growth in the portfolio and again we expect this growth to be leveraged on a broadly fixed cost base to drive free cash flow. You can now see in the call-out box that we've been in an investment mode over the last few years but there has been an inflection and we expect to see that to continue with free cash flow being neutral this year and growing there afterwards. With that in mind, moving on to slide 21 and a focus on capex. This continues to be tightly controlled and focus on opportunities again that drive ROIC, including co-location, OPEX fishing projects and highly selective built suits. And this again is in line with the capital allocation strategy that Tom outlined earlier. Looking at what we incurred in 2023, we incurred total capex of $203 million, which is mainly made up of growth capex reflecting record organic tenancy additions during the year. This is down from 395 million in 2021 and 765 million in 2022. In terms of guidance where we expect to be for 2024 for capex, we're guiding between a range of 150 million to 190 million dollars which consists of 105 to 145 million of discretionary capex and about 45 million of non-discretionary capex. The discretionary capex is lower than what we guided to in our previous medium term guidance and this is really due to the higher amount of co-locations compared to sites being targeted, again reflecting our updated strategic vision of achieving 2.2 tenancy ratio by 2026. And on to slide 22. Our net leverage at the end of FY23 has decreased by 0.7x during the year to now 4.4x, now within our target range, which is one quarter actually earlier than we previously guided. We've always had a clear path to deliver the business at about 0.5x per annum on organic EBITDA growth and we're committed to continue to deliver that. Looking forward to this year, we target to reduce our net leverage by another half a turn to below 4x by the end of the year. As I mentioned previously, we have approximately 400 million of undrawn debt facilities together with circa 100 million cash on balance sheet, meaning we have close to half a billion of available funds. About 50% of the cash on balance sheet is held at group with the remainder spread amongst the opcos for capex and working capital purposes. and we saw during the course of 2023 one of our best ever years of cash up streaming which is mainly done through shareholder loan interest payments. Our debt remains largely fixed with more than 80% of debts drawn being at fixed rates and importantly all of this is non-tenure debt with the average remaining life being around four years. So all in all we're in a great position with our capital profile. And finally moving on to slide 23 our guidance for 2024. We expect to deliver between 1,600 to 2,100 organic tenancies in the year. This is aligned with our prior medium term guidance, although we do expect a higher mix of co-locations compared to sites. For adjusted EBITDA, we expect to be in the range of 405 to 420 million and portfolio free cash flow to be in the range of 275 to 290 million. Due to the favorable mix of co-locations versus sites, we expect to deliver lower capex in the range of 150 to 190 million that I mentioned earlier. Combined, we expect these metrics to support reducing our net leverage to below 4x and to support mutual free cash flow for the first time in the company's history, excluding the impact of a potential small closing in Oman that Tom mentioned earlier. All in all, I think 2023 was a fantastic year where we were able to demonstrate how we are capturing the opportunities from our expanded portfolio, and we expect more of the same capital efficient growth in 2024. And with that, I'll pass back to Tom to wrap up.

Thanks very much, Manjit. So key takeaways, I guess, FY23, we had a strong year of organic growth and exceeded expectations across multiple metrics. We're really excited about 2024 and the offerings that we can provide our customers through this time. and then looking slightly further out to 2026, we have a clear pathway to 2.2x tenancy ratio and a highly focused capital allocation policy to support ROIC enhancement and value enhancement. So I'll hand back to Seb now and we'll go into Q&A.

Thank you. Once again, if you would like to ask a question, please press star 1 on your telephone keypad or press star 2 if you would like to withdraw your question. And our first question comes from Graham Hunt at Jefferies. Please go ahead.

Yes, thank you very much for the questions. Two from me, maybe one for Tom and one for Manjit. First question, just going back to the gross you call out on slide 12, how comfortable are you that you're under these Slightly reduced capex forecast. You're going to be able to take your fair share of this growth opportunity that you see ahead of question one. And then question two, maybe a little bit more specific around KPIs. What do we have to see on the balance sheet or from free cash flow to see your priorities shift back towards inorganic allocation? And then related to that, what's the most important metric for you when it comes to deciding around shareholder remuneration.

Thank you. Yeah, thanks very much, Jeffrey.

Yeah, look, with regard to tenancy growth, you know, I think that we're, you know, and CapEx, you know, we're comfortable with the levels that we've settled at. I think, you know, as a There will always be a balance between built-to-suits and co-locations. We have a good underutilized portfolio with significant room from a demand point of view for co-locations and obviously doing built-to-suits as well. I think it's about striking the right balance between Thank you very much. Thank you. and I think with the numbers that we've presented, we can feel confident in delivering that. I think on the point around when does inorganic growth come back on the horizon, I think what we're setting out today is really the view through to 2026. and you know our key strategic focus during that time is organic growth and supporting our customers growing in our existing nine markets um and you know delivering our business largely like that um you know and you know we always monitor what's going on in the market with regards to you know new acquisition opportunities and and things like that i think to some extent the The global rate environment over the past couple of years has slightly slowed mobile operator divestments of power portfolios because the valuations are obviously impacted. We are seeing some power code divestments of portfolios across the world, which have been quite well publicized. You know, for us, I think that we want to follow this plan that we're setting out today. We've got a clear direction and clear vision and clear operational execution plan of how we get there. You know, and I think over the next two to three years, that will deliver the best value for investors. and you know we'll we'll need to keep monitoring what's happening in the outside world with interest rates and things like that over that over that time period and then you know lastly I think you mentioned investor distributions yeah look you know we're based on our clear plan we we see a route to that by 2026 with you know Earnings and Free Cash Flow Growth and Leverage Reduction. We're not committing to that, but it's definitely something that we're looking at and discussing and considering and the business plan allows for that. So we will be speaking with investors closer to the time and ultimately we'll need to make a decision on that at the time. depending on both internal and external factors. But that's the direction of travel of the business plan at this point.

Got it. Thank you very much.

Thanks, Geoffrey.

Our next question comes from David Wright at Bank of America. Please go ahead.

Thank you guys very, very much.

I had a couple of questions the first is very simple and probably very easy it's just on you making the EBITDA on power I mean obviously power is normally just passed through so is that EBITDA gain on the non pass-through power that you guys maybe have to absorb or are you sort of you know you're not more obliged to kind of pass on the efficiencies Maybe there's just a simple answer to that. And then my second question is, you mentioned this in-building opportunity in Oman. I suspect in-building coverage is going to be more and more relevant for the telcos with the high frequency and low building penetration 5G. And by definition, if it's relevant for telcos, it's going to be relevant for guys. So I just wondered if you could Talk about that opportunity. Maybe given it's sort of emerging markets, we're a little bit sort of behind the curve and it's more about just sort of macro coverage right now. But if you could talk about that and also maybe on that example in Oman, if there's any sort of, is there any sort of capital targets or capital hurdles you could give us on that?

We could profile similar, different, etc. Interesting. Thank you. Yeah, sure. Thank you very much, David.

Yeah, just quickly then on the power question. So yeah, with regard to what you see there on the chart, that's essentially related to our Project 100 investment in renewable energy products, which as well as reducing carbon emissions at a site, also reduces fuel consumption and therefore OPEX. So in 2023 we invested about 12 million dollars in that project and the three you see there is effectively the savings that came from that. Just to clarify the point on pass-through, we passed through unit price changes of fuel and electricity through our revenue contract but not fuel volume changes. So that saving there is what you're seeing from from our investment. And yeah, just on on IBS and using Oman as an example. Yeah, you're absolutely right. You know, for data driven networks, in building solutions, you know, outdoor death, and any kind of infill, you know, potentially through street furniture, small cells, etc. is you know more and more relevant to give the end users a good 5G experience particularly as you say if they're using higher frequencies so the 3500 band for example and you know we are seeing in building solution demand across a number of markets now we do have a number within our portfolio today across some of our other markets including Tanzania for example and Oman from a telecom network evolution point of view is very much in the 5G space now. So it's out of all of our nine markets, it's the most advanced from that perspective. And so therefore products like in-building solutions and others are very, very relevant to all the customers in the market.

I was just going to ask you on that one, Tom, and thanks for the energy, that's completely cleared that up. I mean, is this something that you sort of envisage as being a kind of second wave of capital sort of investment, or are the sums just much smaller? I mean, for instance, when you get to 26 and you're obviously sort of Are we just talking much more niche, much more smaller numbers?

Yeah, I don't think it changes the capital profile or forecast. It's essentially just a part of that. And that even applies to this year and last year for us, you know, within our tenancy count. and sort of CapEx guidance for this year there are a small amount of you know IBS sites for example so yeah so it doesn't change anything it's essentially just in there already and I think that as SciQ becomes more relevant in more of our markets then you know some of the new build pursuits that we would have been doing a few years ago you know that they'll now be IBS but you know for infill and better coverage in buildings etc so yeah so it doesn't really change the capital forecast or profile it's just embedded within that.

Okay very good thank you and best of luck Manjit.

Thank you David. Our next question is from John Caridis from Numis please go ahead.

Thank you. Hello, everyone. Just a couple, please. Firstly, how much would the second closing of the Oman deal cost approximately? And then secondly, we're sort of touching distance from the end of the first quarter of 24. Is there anything you can say about tenancy ads so far, please?

Yeah, sure.

Manjit, do you want to take that one?

Yeah, absolutely. So on Oman, the potential second closing is in the region about 50 million, although our minority shareholder will be fronting up a bit of that. So actual cash out the door for Helios would be in the region about 35. But again, we'll keep you updated on that as the year progresses. But as it stands today, no certainty on timing, but we are working on that in the background. With regards to tenancies so far during the course of this year, again, strong start to the year. We've already just over 500 tenancies added. So again, hitting the ground running in 2024 and I think the pipeline is looking very strong for the year. So we're feeling very confident about the prospects.

That's great. Thank you both. Well done to the team and good luck with baby Dhillon.

Thanks, John.

Thank you, John.

As a reminder to register a question please press star 1 on your telephone keypad. Our next question is from Emmet Kelly from Morgan Stanley. Please go ahead.

Yes, good morning everybody and thank you for taking my questions. I have two questions please. The first question is on currencies in your markets. It's obviously been a tough year for some of the currencies in emerging markets. and especially in Africa just last week we saw a big depreciation of the Egyptian pound and the Nigerian currency has obviously been weak as well among others could you maybe just remind us a little bit please of your currency mix in terms of what percentage is at dollarized invoices that you print or the exposure that you have to currencies that are pegged to the euro please and then the second question and just coming back to slide 12 which was obviously very informative where you show that 47% of your sites have just one tenant. The question I have is, are there any constraining factors on those 47% of the sites? So for example, do the telcos have their own towers nearby or do you have maybe a high weighting of rooftop sites where maybe there's a constraint there as well? Please, thank you very much.

Thanks. Manjit, do you want to take the first one? I'll take the second one.

Yeah, sure, absolutely. So on the currency dynamic, in general, we try to target markets where possible, but they are innately hard currency. So just going through market by market, DRC is dollarized, Oman is dollar pegged, Senegal and Congo are euro pegged, and those pegs are very strong. So innately, they have your hard currency protection, but are also supplemented by CPI contractual escalators I spoke to you earlier. and then some of our other markets you can find the other contractual escalators that we have so Tanzania we get about 30% of our revenue coming through in dollars or comes in dollar spots and the same and similar mixes in some other markets like Madagascar and Malawi when you bring all of that together 64% of our revenues are in hard currencies and 71% on EBITDA but again a good chunk of that coming through from the innate piece I mentioned a bit earlier and that's why we also show the bridge which actually does show the kind of the FX movement as it actually hits our EBITDA but also showing how the CPI escalators also offset some of those movements too and that's why it hasn't been so big a movement for us as a company. We are seeing a couple of currencies which are a little bit more volatile the likes of Ghana and Malawi where we've seen some devaluations and higher CPI prints but these are two of our smaller markets and our bigger markets are certainly providing a bit more stability. So for now, we're not seeing too much impact from those movements. And Tom, if you want to take the second part. Super, thanks.

Yeah, sure. Thanks, Emma, for the question. Yeah, so on page 12, the 47% single tenant sites, you know, a quite large portion of them, about three quarters actually come from our new market. So we've acquired underutilized portfolios, you know, with a tenancy ratio on day one of close to one. and many more tenants per site. So I guess that would be expected and our teams are all focused on leasing them up. With regards to physical constraints, which you mentioned, it's very rare that you can't add a second tenant or a third or a fourth in that matter to a site just down to physical constraints. That's not usually the case. There's always a bit of strengthening and so on. So it's really, you know, that's not a limiting factor. It's really just, you know, the demand coming from the mobile operators. How many mobile operators are there in the market? For one, in ours, there are typically two to four major mobile operators as well as some smaller players. And, you know, how quickly do they want to roll out? That's really the main question as to how How quickly sites get leased up?

Thank you very much.

Thanks. Our next question is from Rohit Modi from Citi. Please go ahead.

Thank you so much, guys. And good luck Manjit again. Sorry, I missed a part of the conference. It was an issue. So in case you answered it earlier, apologies from my side. My first question is, Can you give a bit more color around this change in your strategic focus from site to tenancy additions in terms of what part of just the inorganic growth that inorganic tenancy, non-organic site additions that you were planning earlier has been dropped or this also means that additions in your existing market site addition in your existing market has also been dropped to some extent and which are key markets where you think you'll be adding lesser sites. Secondly, I'm just confirming that The population coverage target which you had earlier has been dropped as well. I'm guessing this is predominantly because, particularly because of the inorganic growth that inorganic additions that you were planning has been dropped. But just checking if there's any change there. Thirdly, on your LTIP targets, that was based on previous targets. Is there any change around that as well? Thank you so much.

Yeah, thanks. Thanks very much. So just on the strategy strapline point, so changing it to 2.2 by 2026, that's basically just highlighting that we're focused on an organic plan. We're not holding back on organic investment. And as you can see from 2023, we've had a very busy year of new tenancy rollouts. and really continuing with that cadence over the coming years. We see a clear pathway to 2.2 tenants per site or indeed more than that over the next three years. So that's really the focus. It's just essentially where we're continuing with pens down on most acquisition opportunities as we were doing through 2023. So it's really just continuing with that in mind. And yeah, on the population, you're exactly right. That's just simply due to the change of dropping the inorganic out of the 2026 ambition. And sorry, I couldn't quite hear the third point you had Rohit.

I can take that one. I think Rohit that was based on any other sustainable business KPIs changing. The only one that I'd flag actually is just on our carbon emissions per tenant targets. We are at the moment still re-baselining our analysis to take into account the new markets and we're hoping to come out with updated targets in the next few months. That's the only one to mention, otherwise the other sustainable value creation KPIs are the same.

Thank you.

The next question comes from Stella Cridge from Barclays. Please go ahead.

Hi there, morning everyone. Many thanks for all of the updates. There's a couple of things I wanted to ask about. First, just on this topic of exposure to the EM markets, could you just talk a bit about dollar availability in Tanzania and DRC? Do you expect this to be kind of business as usual in 2024 or are you seeing any difficulties?

and just secondly I noticed the comment in the release about you know monitoring refinancing opportunities I just wondered from your point of view what might look as the most interesting opportunities at the moment it'd be great I'll take those so with regards and dollar availability specifically in TZDRC starting with DRC that it floats and we get dollars from our customers so and that one is, to put it short, very, very simple. In Tanzania, we do find some peaks and troughs in terms of availability. However, what you're able to get your hands on is a basket of other currencies, liquid currencies, so you can get your hands on Euros, etc. So what typically we do is if we are sitting on shillings, we look to exchange in one of those other hard currency or one of the other hard currencies. and Upstream it in that way. So it's not always direct dollars, you can get yourself Euros, give it up to Group and then convert to any other currencies that you require. So in general, we've been able to manage that very well. And again, that helps to support the record Upstream we had where we Upstreamed over 100 million across the Group in 2023. With regards to refinancing, we've got two years on high yield bonds and that goes out to December of next year. So the aim here is not to have that go current. And so we'll be monitoring market conditions and our options during the course of the year. Base case would be to refinance that with a bond instrument. But we also have undrawn debt facilities as part of our partial tender that we did last year, which can cornerstone a refinancing should it be required. And that was done at a very great as well. So we feel very confident. We've been in good conversations with our bond investors who have always been very supportive and continue to be. So we'll be monitoring our options through the course of the year.

That's great, many thanks for coming back on that.

Our last question for today comes from Gustavo Campos from Jefferies. Please go ahead.

Hey, thank you very much for the presentation. Congratulations on the results and once again good luck Manjit. Just two questions from my end. How much CAPEX is committed for 2024? I'm talking like the non-discretionary Thank you very much. Thank you very much. Thank you very much. and if you could also touch on the EBITDA margin outlook on your guidance, that would be great. Thank you.

Yeah, I'll take those.

So in terms of CAPEX, what do we need to incur? Again, I think it's very much the non-discretionary. So that's pretty much the maintenance HSE CAPEX that we do on a year-on-year basis. and so that is definitely kind of baked into our numbers now sometimes you end up going a little bit beneath that so last year we were a little bit shy of our overall target and we've been seeing a lot of the bounce back during the course of this year so I'd say that is by the definition non-discretionary being that we have to make sure we incur that during the course of the year outside of that though in terms of our discretionary capex we have the capacity to flex that as we see fit obviously with the tenancy growth that we've seen so far during Q1 some of that's already been committed and the pipeline that we've got will be committing a good portion of that during the course of the year. Sorry, can you remind me of the second question? Sorry.

Yes, no problem. I just saw a slowdown in the growth from 2022. Sorry. Yeah. Yeah. And even the margin outlook, please.

Yes. So sorry, just in terms of the growth, one of the factors, if you look at it from a headline level, would also be the incoming new markets that you would have seen come through in 2022. Effectively now you've got a more stabilized portfolio so most of the growth is purely organic rather than organic and inorganic. From an organic perspective though as you look at it year on year it's generally been the same if not slightly accelerating in 2023 so that's what you're seeing come through the numbers.

Perfect thank you and lastly on EBITDA margins how do you you expect them to to play out this year?

Yeah I think in general we expect it to increase by about one percentage point in the base case but certainly it's all dependent in terms of where fuel prices move as well as we demonstrated previously given where we're seeing things at the moment we think that that's still achievable but certainly could be a bit higher if we're able to see some other operation improvements come through as well so anywhere between one percent maybe a little bit higher than that during the course of the year all right perfect thank you very much appreciate it thank you

We have no further questions on the call, so I will hand the call back to Tom now.

Thank you very much. Well, look, great to talk with everyone today. Thank you very much for dialing in and your time. Thanks for the questions. And we look forward to seeing you all very, very soon. Take care and have a great day.