Helios Towers plc

Hello everyone and welcome to the Helios Towers FY25 earnings call. I hope you and your families are doing well and staying safe and I extend my sincere thoughts to all of you caught up in the Iranian conflict. I'm Tom Greenwood CEO of Helios Towers and joining me today is Manjit Dhillon our CFO and Chris Baker-Sams who leads our investor relations. We're really pleased to be here discussing our 2025 performance with you. A year of record operational delivery, expanding returns, accelerating recurring free cash flow, strengthening of our capital structure and launching shareholder distributions. And we're even more excited to also be laying out our FY26 execution strategy. This marks another important step forward in our Impact 2030 strategy, our five-year framework designed to deliver disciplined and efficient capital allocation, leading to compounding return on capital and recurring free cash flow. Impact 2030 is built around five clear pillars. Capital efficient organic growth. Expanding tenancy ratio and ROIC. Accelerating recurring free cash flow. Maintaining our balance sheet strength. Increasing shareholder distributions. Our Helios Towers business model is simple. We invest our capital in high return growth projects. That growth expands EBITDA. That EBITDA converts into recurring free cash flow. We de-lever and we return surplus capital to shareholders. 2025 was a milestone year such that this model is now operating at scale. Such that we can distribute surplus free cash flow to shareholders whilst maintaining the long runway of growth in our addressable markets. So page three. I'll begin with the highlights and strategic progress. Manjit will then take you through the financials and we'll open up for the usual Q&A at the end. But before diving into it, I want to frame what we're seeing structurally across our markets because it's important context for everything that follows. We shared a slide at our Capital Markets Day in November. that showed our total addressable market growth pathway to 2030 and line of sight to 2050. So an extraordinary forecast period. This is because growth in demand is predictable as well as structural. And we'll unpack that 2030 growth in a later slide. Today our portfolio provides the critical connectivity for almost 160 million people. By the end of this decade that will grow to towards 200 million people with cheaper smartphones and increasing demand for data. Across our Africa and Middle East footprint subscriber growth remains approximately 5% per annum, the highest in the world. Mobile penetration is at around 50% and still well below that of the 90% we see in developed markets. Population growth continues at structurally higher levels of around 3% annually. So that means the population in our markets will be almost double by 2050. But the most powerful driver is data growth and data consumption is forecast to grow by four times, so quadrupling by 2030. And this is transformational. This growth is being driven by 4G densification, accelerating 5G rollout, streaming and digital media, fintech and digital banking penetration, enterprise digitalization and of course increasingly in AI enabled applications. Mobile connectivity in our markets is not discretionary, it's foundational and critical infrastructure and in most regions the only and many more. As data demand scales, network investment must keep up. And we are seeing that investment materialise through sustained mobile industry CapEx programmes across our footprint. This structural demand backdrop gives us multi-decade growth ahead. Turning now to the highlights. on page 5. 2025 was a year of continued strong growth, expanding returns and accelerating shareholder distributions. So let me break that down for you in how that unfolded in 2025. Operationally, we delivered record 2,538 tenancy additions, that's up 9% year over year, of which 421 were site additions deployed selectively based on our returns criteria. Tenancy ratio expansion of 0.1x to 2.2 tenants per site and importantly we achieved our 2.2 tenancy target over a year ahead of plan due to our team's relentlessly disciplined execution and the structural growth and telecom sector investment that exists in our markets for decades ahead. And this matters because tenancy ratio is the core driver of ROIC expansion and free cash flow generation. Financially, the operational growth translated directly into financial performance. EBITDA increased 12% to $471 million. Recurring free cash flow increased 40% to $208 million. Free cash flow, bottom line, more than tripled to $66 million. And of course, Group ROIC expanded up to 14%. This demonstrates the operating leverage inherent in our model. Co-locations deliver higher EBITDA margins and higher incremental ROIC, which now converts into high levels of cash flow generation. On our capital structure, we further strengthened the balance sheet. Net leverage reduced to 3.4x. Our credit ratings were upgraded to BA3 BB-. And you'll see in one of Manjit's slides later, The average credit spread we pay has collapsed from 620 basis points at the time of our IPO to 290 basis points today. A testament to Manjit's team and also the recognition the debt markets have for the strength of our business model. We also completed a $120 million convertible tender early, removing 41 million potentially dilutive shares, so maximising shareholder value. And by the end of 2025, we'd repurchased 11 million shares for $24 million at an average price of £1.58. So this is disciplined capital allocation in action. Now FY26 guidance. So looking ahead, our guidance remains fully aligned with impact 2030. Two to two and a half thousand tenancy additions, 510 to 525 million EBITDA, 210 to 225 million recurring free cash flow, Approximately 50 million dollars in share buyback as part of our multi-year program and of course 25 million our inaugural dividend with a progressive dividend policy. And of course all of this is underpinned by 5.3 billion dollars of contracted future revenues with an average remaining life of 6.6 years. So we're now scaling up growth, generating cash flow, deleveraging, and providing shareholder returns simultaneously. Now slide six shows what I would describe as metronomic delivery. And this is a great description of our business model. 10 consecutive years of EBITDA growth at 24% CAGR. That EBITDA growth is unbroken. And as we enter yet another year of uncertainty with the oil price and the Iranian conflict, we can reflect on that decade of track record despite upheavals such as Brexit, COVID, Ukraine, etc. So really, truly metronomic. We've taken group EBITDA from $54 million in FY15 to $471 million in 2025 and guiding to $510 to $525 million in 2026. This consistency reflects three things. One, structural market growth. Two, our business model the long-term contracted revenues with CPI and power escalators and of course three are operational excellence from our teams all across the business and disciplined capital allocation this is a truly compounding infrastructure platform business turning now to page seven so we exceeded FY25 guidance across all key metrics which was driven by our disciplined operational execution by all of our teams and people across the business, our disciplined capital allocation framework and the structural growth and ongoing telecoms industry investment in our markets. Tenancies above target, EBITDA ahead of guidance, free cash flow ahead of expectations and leverage below our stated level. Our teams have been focusing on execution discipline. which is very strong across the organisation. On page 8 we look at the long runway of growth ahead. Points of service across our markets continue expanding materially towards 2030 and of course beyond. We retain and work closely with our customers and in our planning and discussions we see plans for the future around accelerated network investment, 5G rollout coming in this new five-year cycle, rising ARPUs, increasing digital adoption and this is truly structural usage and network expansion. Helios Towers is positioned at the center of that demand with leading positions across nine markets and strong multinational customer relationships. Turning now to slide nine, execution matters. Our customer experience excellence offering is a key competitive differentiator. We deliver 99.99% power uptime, Faster built-to-suit and colocation delivery and lower carbon emissions per tenant. We provide global quality standards at approximately 30% lower total cost of ownership for our customers. That drives trust, growth and returns. This operational discipline underpins our financial performance. And now slide 10 brings it all together. We're making meaningful progress towards our 2030 targets. By 2030, we're targeting adding over 10,000 new tenancies to reach over 42,000 tenancies in total by 2030, at least 9% compound annual growth in EBITDA, at least $1.3 billion cumulative recurring free cash flow, and at least $400 million cumulative shareholder distributions. and importantly the growth capex we deploy each year consistently delivers around 35% incremental ROIC driven by high margin co-locations, selective new builds, meeting strict return thresholds. So that is a really powerful compounding engine. High return growth, expanding EBITDA, accelerating recurring free cash flow, declining financial leverage and rising shareholder distributions. We are now firmly entering what I would describe as the cash compounding sweet spot of the business. Helios Towers today is a structurally growing digital infrastructure platform with high incremental returns, strong cash flow visibility, improving credit quality and increasing shareholder returns. So that is our compelling long-term infrastructure equity story to you, our shareholders. And with that, I'll hand over to Manjit to take you through the financials in more detail and look forward to talking with you at the end for the Q&A. Thank you.

Thanks, Tom. And hello, everyone. Thank you for being here today and online. Starting on slide number 12, I'll be going through the financial results in more detail. 2025 was another year of Helios Towers outperformance, where we exceeded expectations. As you'll see on the left hand chart, we delivered another strong year of tenancy growth, beating our updated guidance with a record year of tenancy additions. And this has really been the key driver of our 12% year-on-year EBITDA growth. And I'll go through the usual bridge which sets out the underlying movements in a few slides time. We spoke to you at our Capital Markets Day about our clear growth algorithm. Strong mobile market growth drives our tenancy growth, which drives our dollar EBITDA, which drives our recurring free cash flow. and we saw this in practice again in 2025, contributing to a 40% increase in recurring free cash flow to $208 million. As presented at the CMD and set out by Tom, we have entered our cash compounding sweet spot, which has enabled us to generate excess capital after investing in the really attractive, high-returning organic investments to now commence shareholder distributions, which we began last year with share buybacks, which we have continued during this year and will continue to execute. Looking ahead to 2026 we have committed to delivering discretionary capex of 110 to 140 million dollars, share buybacks of 51 million and our inaugural dividend of 25 million. Now let's jump into some of the detail and moving on to page 13. On this slide you can get a clear sense of the growth we're seeing in both the number of sites and tenancies. We continue to see clear progress underpinned by our leading market positions and focus on customer experience excellence. Starting on the left we added 421 more sites, that's 3% up year on year, to just shy of 15,000 at 14,746. New organic builds are an important element of our strategy and ultimately adds to the hopper to which we can then drive further co-location lease up. We are very selective in our approach to new site rollout, using our analytics from our proprietary GIS platform to ensure the sites that we have have strong day one ROICs and importantly clear potential for lease up. We achieved record tenancy additions in the year, increasing by 2,538 in year, equating to 9% year on year growth. We're seeing growth across all our markets with particular large increases across DRC, Tanzania and Oman, our three biggest markets, two of which are dollarized or dollar pegged. As Tom mentioned previously, we're also delighted to achieve our 2.2 tenancy ratio target one year ahead of plan, underlining the growth of our markets through our focus on customer experience excellence and our capacity to capture that growth. Now moving on to slide 14, our revenue growth. We've seen revenue growth across all three of our geographic regions. Taken together they were up 8% year on year to 854 million. We have a strong hard currency profile with 68% of our revenues being in hard currencies which translates to 71% of our adjusted EBITDA being in hard currency. As a reminder four of our markets are innately hard currency including Oman, DRC, Senegal and Congo Brazzaville. These are either dollarized or pegged to the euro meaning that the revenues our customers receive are hard currencies and that's also what they pay to us. In our remaining markets we also have a portion of our revenues linked to hard currencies adding further to the overall mix and our earnings are further protected by contractual protections including annual CPI escalators and annual and quarterly power escalators and de-escalators. Additionally, 70% of our revenue comes from investment grade customers and 99% coming from blue chip mobile network operators. Finally, we sign long-term agreements with our customer partners with initial terms of 10 to 15 years and they are largely non-cancelable. Today, our contracted revenue of $5.3 billion has an average remaining life of 6.6 years which excludes auto renewals which would increase this further. Ultimately, we have secured minimum revenues of $5.3 billion without pursuing any new business, providing a strong underlying earning stream that we layer on top to the further growth driven by tenancy rollout. Now moving on to slide 15. Here you can see the key drivers of revenue in EBITDA in more detail. As with previous quarters, the key driver of our growth is tenancy additions, with our escalators working effectively to offset macro movements to protect our EBITDA on a dollar basis. You'll see a small decrease in power-related revenues across the year and this is due to decreasing fuel prices in DRC and Tanzania which we passed on to our customers. However, this also resulted in our own cost base reducing and when combined with our upsides from OPEX reducing capital investments we made during the year we saw some upsides from power when it comes to EBITDA which you can see on the right hand side. Also on that bridge you can see that the key driver of growth is through tenancy additions and operational leverage from lease up with 9% growth from organic rollouts predominantly driving the 12% overall year-on-year growth in EBITDA. We demonstrate once again that our business structure continues to be robust, resilient and operating exactly as we designed it to. Now moving on to slide 16. And on this bridge we detail how our growth in EBITDA flows through to recurring free cash flow. The key driver is that our EBITDA is growing faster than our cost base, resulting in a high cash flow through. We are particularly pleased that across the year we achieved recurring free cash flow ahead of expectations, growing by 60 million off the back of 50 million EBITDA growth. Non-discretionary capex, lease liabilities, taxes and interest were all broadly stable slash increased marginally year on year, which means that that incremental EBITDA has a high flow through to the bottom line. and this was further assisted by working capital being ahead of expectations, supported by the timing of customer payments. All of this results in our free cash flow tripling year on year to 66 million, demonstrating the cash compounding effect of our tenancy growth. Finally on this slide, following the launch of our new five year strategy, we also began our shareholder distributions with 24 million of buybacks completed last year and we're continuing that programme well this year. On to slide number 17. And here we show an overview of how our well-invested platform supports our high incremental returns through disciplined CapEx deployment. Fundamentally we are focused on disciplined capital allocation and ensuring we make the best investments possible. On the left hand side you can see how over the past three years our investment in growth CapEx has led to high returns. The dark blue bar shows our growth capex incurred, the orange bar our incremental EBITDA, and the green bar shows incremental portfolio free cash flow, i.e. the cash generated from our tower assets. And that's the numerator for our return on invested capital calculation. Here we can see that our strategy over the last three years has consistently delivered incremental 30% plus return on invested capital on our investments, which shows that we are allocating capital to really compelling investments. and we will always ensure we fuel the compounding engine of our business which are these types of investments with that in mind we are guiding to between 110 to 140 million of discretionary growth capex during the course of 2026 which is really exciting because they will drive returns and the overall pipeline of opportunities is looking incredibly strong now onto slide 18 and looking at our balance sheet and credit profile I'm pleased to say that we've seen further improvements in our credit ratings this year. Fitch, S&P and Moody's all upgraded their ratings, most recently Moody's upgraded us to BA3. This really is testament to the strength of our business. Through our diversification efforts, our consistent delivery, we have also materially improved our spread, which is now half of what it was at the time of the IPA. All of this reflects the work we've done to drive cash flows and reduce our net leverage, which now stands at 3.4. We de-levered fairly quickly. and where we are today is down by 0.6 year on year and down by 1.7 since our temporary high in 2022 following our acquisitions. Finally, I wanted to mention that on average, our average remaining life of our facilities is roughly three years with $337 million of available funds through a combination of cash on balance sheet and undrawn deadlines. So we are in a very good position to deliver on our strategy. Which takes us to slide 19 and our guidance we have issued to the market today. Our 2026 guidance demonstrates meaningful progress towards our Impact 2030 targets, with continued strong growth, cash flow evolution and shareholder distributions. We are targeting to between 2,000 to 2,500 more tenancy additions for the year. This represents a 6% to 8% year-on-year growth. For adjusted EBITDA we are targeting a range of $510 to $525 million, which represents an 8% to 11% year-on-year growth. recurring free cash flow we expect to be between 210 to 225 million this represents between a one to eight percent year-on-year growth and for discretionary capex as i mentioned we're targeting between 110 to 140 million dollars in terms of shareholder distributions we expect roughly 76 million dollars which consists of a 51 million share buyback and 25 million of our dividend payments So looking ahead to 2026 we do so with momentum and confidence with a strong balance sheet and a robust and resilient business model which has proven time and time again that our platform has the ability to capture the phenomenal growth drivers in our markets and I'm really excited to deliver again this year. With that I'll pass back to Tom to wrap up.

Thank you very much Manjit. So in summary 2025 we're very pleased with our progress there delivering on all the key metrics ahead of market expectations and you know most importantly our teams across the business are focused on customer experience excellence and that keeps getting better day by day week by week and that gives us a really strong momentum coming into this year so most importantly we're excited about 2026 and the following years after that we've talked about the long runway of growth ahead not just a few years but decades ahead driven by all of the mega trends that we've talked about and our business is optimally positioned across our nine markets to deliver on this we've got a strong pipeline sales pipeline coming into this year and we're really looking forward to updating everyone as we go through the quarters this year on the progress of the business and our delivery towards our impact 2030 strategy over the next five years so thank you very much everyone and we'll now move to the Q&A.

Thank you, Manjit, for the prepared remarks. The way we'll structure this is we'll do Q&A in the room first of all, then go to the conference call and thereafter do questions posed on the webcast. Given John's taken the front row seat, we'll go to you first.

Thank you very much. Good morning. So first of all, congratulations to the entire team for these results. It's John from . I have three quick questions. Number one, when will the share buyback resume? Number two, I think you're about touching distance to the end of the first quarter. How does it compare versus a year ago, particularly in terms of tenancies? And number three, I know it's ridiculous to be asking you this question about the Middle East, given that the war started only 12 days ago and the person that started it is unpredictable, also to himself. But is there... Thank you very much. Thanks very much, Manjit.

Why don't you do the buyback one and I'll cover the other two. Sure. So on buybacks, we've actually been, we've started during the beginning of the year. So every single day you've seen consistent buybacks and that will continue during the course of the year as well. So we really haven't paused, it's just been a continuation. Shall I pick up Q1 or would you like?

Sorry, Manjit, you stopped it about two or three days ago, so I'm getting really dependent.

No, sorry, that was on the R&Ss, sorry. So on that piece, it's just that we're now amalgamating the R&Ss to be on a weekly basis, I think, rather than on a daily. So the buyback has continued, it's just been a change in the reporting. Apologies, yeah.

Good spot.

Yeah, good spot there.

and yeah look in terms of sales pipeline for this year we're seeing good strength in it at this point of the year we actually have our chief commercial officer in the room Sainesh and Alan our delivery director as well so you might be able to catch them afterwards but You've probably seen in general across the industry there is acceleration in overall investment. A lot of this is directed at new coverage, new capacity and technological upgrades. As you know a lot of our markets are operating under You know, 2, 3 and 4G at the moment. 4G has had a big push over the last couple of years. Some of the markets have now started 5G and the ones that haven't we expect to probably in the next two years. So as we look at this five year 2030, impact 2030 strategy, you know a big part of that is the 5G cycle for most of our markets which we're really excited about and we're already working with our key customers in terms of planning that and really supporting them in terms of the densification required for that so yeah we're feeling very good about ourselves at this point in the year in terms of pipeline for the year and actually pipeline for the next year and the next year is actually growing as well because it's not always just the Thank you very much. From an operational standpoint, no impact on operations. The business is very robust and resilient. And your point on the power price is obviously something we're mentoring. You understand the way that our contracts operate with respect to that. Our primary focus always is to provide power at virtually 100%. We've got the resilience across our supply chain, whether that's diesel fuel or equipment such that we feel very resilient on that, like we did in COVID a few years ago, to be honest, where we didn't miss the beat. So we're feeling very strong in that respect.

So Airtel Africa last time around got hammered in terms of its profitability because of the power prices going up. Do you sense from any of your customers, given that the power prices are on the rise, them thinking maybe I should roll out less fast or move to 5G less fast? I know it's only a couple of weeks since the start of the war but anything you can say maybe extrapolate from your experience post-Russia-Ukraine effects.

We're not seeing that at all and actually the last three years we've seen our record tenancy additions each year and we're seeing a very strong pipeline for this year as well. The power cost is a cost, but it's... In the grand scheme of things, it's a relatively smaller cost in the entire ecosystem. Obviously, the majority of our power comes from grid power, some from solar and hybrid batteries, and then some from fuel as well. So to give you a picture of a typical 24-hour period across our entire portfolio, about 17 hours comes from the grid power. Anyway, and then of the balance of the other seven hires, roughly half and half is, you know, diesel and then solar and hybrid batteries. So that gives you a kind of flavor of the entire ecosystem. Thank you.

Thanks very much Graham and from Jefferies. Just two questions on 2026 guidance. So going back to your 2000 to 2500 tenancies you're expecting, could you just give us a sense of the split between sites and colos? In 2025 your site addition has increased meaningfully. just in terms of how that trends for 26 and what's driving that increase from your customers in terms of a bit more on the site additions and then as we think about that and the discretionary capex for 26 how do you think about making that decision with your customer to invest and build a new site in terms of you mentioned internal return requirements but how does that break down in terms of a new site what is the business case that you have to approve there when you put a new one on the ground thanks

I'm currently on the basis of the guidance we have today it's going to be roughly around 500 a minimum of 500 we expect but that you know people will see how that kind of progresses during the course of the year and these are really good investments by the way so whenever we have any new sites we go through the same process internally which is GIS marketing so we look at where that site's going to be located we look at the population demographics look where the towers are so we get a bit of a census to the probability of lease up and then we're able to kind of progress on that basis but these are effectively investments that day one do about 12% return on invested capital but that's not why we make the investment we're making because of that probability where we think that kind of lease up will come and we've become very very good at it or a lot better certainly we're now getting average lease up within two to three years which is fantastic and from that point on you've got cash compounding growth for pretty much a lifetime So when we're going through those conversations with the customers, we're trying to get early visibility of where they're looking to go. Now sometimes it's going to be expansion of the network, sometimes re-identification of the network, and more often than not it's a bit of both. And so we're working on that basis. And we have also pretty good visibility of where The different customers hotspots are and where they might need to kind of improve as well so we're also doing proactive marketing so every time we know where a site's going to go we'll be proactively making sure that we're trying to get that lease up as quick as possible and once we get that and we start to get that data come through it goes to the capital allocation committee to which Tom and I are members and everyone there as well and we go through that kind of layers of analysis to make sure we're making the best investment possible on that piece but We'll always have capital for really really good build suits. It's the lifeblood of what we're trying to do and then leasing up there afterwards.

Any other questions in the room?

Is there anything notable about the split of those 500 sites between rural, urban, just anything that you would call out in terms of how that's trending?

I'd say typically our portfolio is more urban dominated, so it's normally just over 50% urban slash semi-urban. The semi-urbans still have a very, very good population density. I'd say it's probably a little bit more on that kind of urban-suburban kind of mix. And definitely coming from markets like DLC, Tanzania, they seem to be doing a good amount, supplemented by markets like Madagascar, Senegal and Malawi. Thanks.

Okay, I think we'll now then go to the conference call. Any questions on there as well too? Ben, over to you.

Please press star 1 now on your telephone keypad and to redraw your question press star 2. Also ensure your line remains unmuted locally. You will be advised when to ask your question. Please press star 1 now on your telephone keypad. We'll give a few seconds. Well, it seems that we don't have any questions so I will hand them back to you.

Okay, thanks Ben. A few questions on the webcast as well too. One from Michael Brown at Lombard ODA. Does the 10,000 tenancy requirement up to 2030, does that include M&A in that assumption? And what does it mean for the CAPEX requirements as we look forward from 2026 up to 2030?

Short answer is no, it's purely organic. That's the primary focus of our Impact 2030 strategy as we think about our capital allocation. That's driven by the demand and the financial returns available from that.

Thanks Tom. One more question on the webcast as well. It's from Vinod Surundram from Alliance Bernstein. Funding plans. Any plan to issue USD Euro bonds this year to refinance your term loans? And question number two is what are your strategic priorities in the medium term? Target net leverage or shareholder returns or M&A?

I can take both of those. So on the financing that we have a very very strong balance sheet as it stands to date. Average remaining life is three years but as always we keep ourselves very very active and ready should opportunities appear so we'll be proactive about managing our balance sheet as we always have done so it's certainly something that we'll be monitoring actively. In terms of priority rankings, I mean the reality is we can do everything and that was effectively the message from the Capital Markets Day. We'll be able to see organic growth which is always going to be our primary focus in terms of where we allocate capital because of the slide I went through a few slides time which shows the high returns on that. but we're going to be generating excess capital because of the cash compounding engine of our business so we have excess now to give out to shareholders so we'll see that come through and all the while reducing our net leverage so we're in short able to do all and I think Tom's answer just a minute ago M&A is lower down in the priority rankings we don't need to do M&A to get growth we have more than enough of it in our markets we're able to get the best returns from those markets as well so we're very very well structured to capture all those opportunities over the next few years

Thanks Manjit. No more questions on the webcast so now handing back to you Tom for closing remarks.

Great. Well first of all thank you everyone. This is the first time we've done this in person so thank you for everyone coming and thanks for the questions we're really excited about the business you've seen the numbers in terms of what we've released today 25 was a very strong year but in our mind 25 you know done that we're really excited about the future we've got a you know strong and very much We're already executing your CRQ1 numbers actually in more like a matter of weeks so very much already looking forward to that and you know we've got a very strong line of sight ahead both in terms of the top-down structural demand which you know I think everyone knows about but also the More granular localised customer interactions as well. So we're feeling really good about the business. We're feeling really excited. We can't wait to get the Q1 out and then the others after that. And really looking forward to keeping everyone updated as we move through this year. So thanks very much, everyone. And we'll look forward to talking with you soon.