Helios Towers plc

Hi everyone and welcome to the Helios Tales H1 2024 Global Investor Call. Really excited to talk to everyone today and I hope you and your families are all doing well. So we're looking forward to providing you with our progress through the first half of 2024 and of course our outlook for the rest of the year. So on page two we've got our usual lineup. Myself, Tom, Manjit, Dhillon and Chris Baker-Sams. We'll cover the business, strategic and financial highlights and then look forward to the Q&A at the end. So moving to page five. Very pleased to say that our business continues to deliver with the strong momentum that we started the year with in Q1 and our outlook for the year remains strong. Our key strategic equity value creation targets including ROIC, cash flow generation and deleveraging have all seen improvements in the quarter, the half year and the last 12 months. And we remain laser focused as a team on expanding enterprise value, reducing leverage and creating significant equity value. As 4G and 5G continue to proliferate our markets, as well as general significant coverage and capacity demand requirements, We continue to partner with all key customers in helping deliver high quality mobile services to the people across our markets. Remember that in our market fixed line largely has been leapfrogged so mobile through our infrastructure is the only form of connectivity for most of the population. Thank you very much. This being the fastest growth anywhere in the world and really driving the demand for the infrastructure and services that we provide. Given these dynamics, our ability to deliver service excellence to our customers and our uniquely positioned portfolio, we've delivered over 1600 tenancy additions in H1, a record number and seen tenancy ratio expand Tendency growth has been the key driver of our financial metrics with revenue up 11% EBITDA and portfolio free cash flow up 19 and 14% respectively and ROIC up to percentage points. Furthermore, we continue to strengthen our balance sheet with leverage reduction of 0.2x in the quarter and 0.6x year on year. We've secured our debt at fixed rates for the next five years and also saw upgrades from Moody's, S&P and Fitch in the quarter. In terms of full year outlook and following the strong performance in H1, We're tightening our guidance up at the bottom end for tenancies and EBITDA and continue to track well towards our targets for leverage being below 4x and the inflection point for free cash flow being neutral this year and growing higher thereafter. Now turning to page 6 where we can see the progress year to date versus our guidance. And as you can see from these, we have good confidence in achieving our guidance by year-end. Tenancies are well over the halfway point, 1649 additions year-to-date. Q2 annualized EBITDA is 416 million already, so towards the higher end of our guidance before the mid-year, and with a similar dynamic for portfolio-free cash flow. Our teams have done a great job working collaboratively with our customers on rollout, which has delivered a very high quarter of tenancy additions in Q2 with 888 added, which to some extent reflects some tenancies earmarked originally for H2 accelerating into H1. Hence, we haven't shifted the top end of our guidance yet, but we will continue to monitor progress and provide a further update at our Q3 release. We've got a strong pipeline of tenancies and are currently working with all key customers on rollout plans and executing that day in, day out. And you should not infer from this strong Q2 that there is any structural change and flattening off of growth, quite the opposite in fact, and hence there's more upside pressure on the guidance figure

I think when we come to Q3.

Now to page 7 where we see how our tenancy ratio expansion is driving the equity value creation financial metrics. And over the 18 months since FY22 when we completed the last of our four acquisitions, our tenancy ratio has expanded from 1.81 tenants per site to 2.01. at H124. And this being the key driver for ROIC increase, which has increased 260 bits to 12.9% over that period. Furthermore, our bottom line free cash flow, which you can see at the bottom of the chart in red, is well on course for reflection this year, following the previous few years of high acquisitions and growth capex investments now starting to pay back. and we expect the minus 10 million at H1 to be neutral at year end and continue upwards after that. On page 8 is a slide you've seen before and here all I'm doing is reiterating our disciplined approach to capital allocation and returns. We continue to be focused on accretive organic growth and deleveraging. targeting below 4x by the end of this year and around 3x by 2026, at which point we expect there to be capacity for investor distributions. M&A remains at the low end of capital allocation policy for the foreseeable. Moving to page 9, and here I wanted to showcase the success that our Oman team has had since starting operations there in December 22. Oman, as a reminder, was the largest of our four acquisitions a couple of years ago and really demonstrates well the execution of our integration and growth strategy. Oman is led for us by Jadawi Al-Riyami as the MD of our market there and supported by Phil Lowidon at regional level. In focusing on our people and business excellence strategic pillar, from day one we ensured a strong localized team with 91% local workforce. They've now trained almost half of our team on Lean Six Sigma as well as fully rolling out all of our systems and processes and embedding the Helios Towers culture of customer focus and excellence. All of this has contributed to a 92% improvement in power performance since starting operations and a 0.36x increase in tenancy ratio, which has been the key driver in the 46% EBITDA increase. We're very pleased with how our team and partners have performed so far and worked so collaboratively with our customers and are very excited for the future performance of Helios Towers OMAR. And finally, to page 10, we take a look at our sustainability KPIs, and I'm very pleased we're making good progress here across the board. Just to pull one out from here, we're continuing to increase our power-up time performance, reaching 99.99% across the portfolio in H1, meaning that our customers' networks are improving continually and subscribers in our communities are experiencing better and more reliable mobile use quality. Our strategy on business excellence and leveraging technology to improve performance continues as we strive towards our 2026 target across all of these measures. And with that, I'll hand over to Manjit and look forward to talking with everyone in the Q&A.