Helios Towers plc

Good morning everyone and thank you very much for joining us. Welcome to the Helios Towers H1 2026 earnings call and I hope you and your families are doing well and thank you very much for being here with us today. Today we're going to cover two topics. Firstly our H1 earnings and outlook where we've delivered another very strong performance operational and financial and This has been driven by record tenancy growth, disciplined capital allocation, and operational excellence across the business. Secondly, we'll spend some time looking beyond today's earnings at the 15 year organic total addressable market through to 2040. And what is one of the most important aspects of the Helios Towers investment case, the long term structural growth opportunity across Africa and the Middle East for mobile infrastructure over the past few years we talked extensively about the strength of current demand and today we'd like to take a step back and examine what the next 15 years looks like and how mobile networks will need to evolve to support the rapidly increasing data consumption and why this creates decades of opportunity for tower infrastructure This deep dive covers one of our key pillars of the investment thesis and we expect to cover more of these in more deep dives from time to time going forward. So with that, let's move on. So I'll begin with the H1 highlights. Manjit will take you through the financial detail and then I'll return afterwards to introduce our multi-decade growth runway. before heading out to Marcus and Alan who will explain how networks need to evolve to meet that future data demand including looking at future network architecture of terrestrial and how satellites fit into that picture and then Sinesh will bring it back to the commercial opportunity across Africa and the Middle East before we conclude with Q&A Before we move to the H1 performance, I wanted to briefly frame today's presentation around the four components of the Helios Towers investment thesis. First, we operate in markets with a multi decade structural growth opportunity. Second, we built a world class operating platform and team with leading positions across high growth markets and a strong track record of delivery. Third, we've got a robust business model underpinned by long term contracts with top tier customers and inflation and power price protections. And fourth, we have a disciplined and flexible capital allocation framework, enabling us to invest in high return growth capex, strengthen the balance sheet and increasingly return capital to shareholders. And today's earnings demonstrate the strength of each of these elements coming through. In the second half, we'll go on to show why the long term growth opportunity extends well beyond the current impact 2030 period. So turning now to the first half highlights. There are four key messages I'd like you to take away from this slide. First, our customer demand continues to accelerate. We delivered a record of more than 2,500 new tenancy additions in the first half alone, including over 500 new sites. This drove a further 0.2x increase on our tenancy ratio year on year, taking it to 2.3 tenants per site today. Our customer order pipeline also continues to strengthen with demand already building for 2027. this reflects accelerating investment by our customers as they add coverage capacity and new technologies to their networks to satisfy that growing end-user demand second this demand is translating directly into strong financial performance with EBITDA increased by 14% year-on-year recurring free cash flow by 52% and ROIC increased by further 0.8 percentage points demonstrating both the quality of the opportunities we're investing in and the discipline with which we are deploying our capital. Third, our capital structure continues to improve, leverage down by 0.4 times year on year to 3.4x. And we completed 34 million of shared buybacks so far this year and have now returned $58 million cumulatively in buybacks since the program was launched last November. And today we're announcing our inaugural interim dividend of 0.6 pence per share being $8 million with a $25 million dividend expected in total for FY26. And this is another important milestone as we continue executing our impact 2030 capital allocation framework with a combination of growth investments, balance sheet improvement and increasing shareholder distributions. Finally, given the strength of customer demand, we're once again upgrading our guidance for this year. And we now expect between 3,500 to 4,000 new tenancy additions this year. We're increasing EBITDA guidance to between $520 to $535 million. We're increasing recurring free cash flow to between $220 to $235 million. And we're increasing discretionary capex to between $215 to $245 million to support the additional growth opportunity we're seeing come through. Importantly, our planned shareholder distributions of $76 million remain unchanged at the same time that we're accelerating our growth investment. Stepping back from this, perhaps the most important point is that none of this is being driven by one-off events. It reflects structural demand from customers investing to meet rapidly increasing subscriber and mobile data consumption opportunities across our markets. And that growth, of course, is underpinned by record $5.9 billion of contracted future revenues with an average remaining initial contract life of 6.5 years. Now, one of the things that has characterized Helios Towers over the past decade is consistency. In 2015, our EBITDA was around $50 million. And since then, we've grown it by around 10 times to over half a billion dollars today. And we've done that through multiple periods of global volatility, including oil price shocks, Brexit, US-China trade dispute, COVID, global inflation, rising interest rates, tariffs, and more recently, geopolitical conflict. Throughout that period, though, one thing has remained constant mobile connectivity has become increasingly essential to consumers businesses and governments and as connectivity has become more important demand for mobile infrastructure has continued to grow but market demand alone does not create value it is our operational excellence capability to deliver consistently across our markets combined with our disciplined capital allocation framework that enables us to turn that demand into growth for our customers, improve connectivity for the communities we serve and returns and growth for our investors. We've built strong local operating platforms with great people, digital processes, supply chains and technical capability required to deploy infrastructure at scale and then operate it reliably over the long term. So that combination of structural demand and operational excellence has delivered more than 10 consecutive years of EBITDA growth. And today's upgraded guidance continues that trend. Before handing over to Manjit, I wanted to briefly remind everyone of the framework we've been following since launching Impact 2030 last November. Our approach to capital allocation is simple. Our first priority is investing in high return organic growth opportunities. We expect to deploy more than $500 million in organic growth capex over the impact 2030 period. And these investments are capital efficient, accretive to ROIC and continue to generate incremental returns above 30%. that investment supports our target of more than 9% EBITDA compound annual growth between 2025 and 2030 and second we continue to strengthen the balance sheet leverage has a clear downward trajectory and we intend to operate within our target range of two and a half to three and a half times and a stronger balance sheet increases resilience and gives us the flexibility to continue investing when attractive growth opportunities arise finally cash generation continues to grow we're returning increasing amounts of capital to shareholders through a combination of buybacks and a growing dividend our target remains to deliver more than 400 million dollars of shareholder distributions through to 2030 important point here is that these priorities are mutually reinforcing strong operating cash generation is enables us to continue investing for growth while simultaneously strengthening the balance sheet and increasing our shareholder returns so that is the cash compounding sweet spot at the heart of impact 2030 and I'll now hand over to Manjit who'll take you through the financials in more detail thanks Tom and hello everyone it's great to be with you here today

Moving on to slide number nine, I'll be going through the financial results in a bit more detail. And we are really pleased with the strong set of financial results we put out today, where we've taken the strong momentum from Q1 into Q2. And it's that momentum that continues to build our robust pipeline and has allowed us to upgrade our full year guidance today by a further 500 tenancies. That means we're now targeting a record of 3500 to 4000 tenancy additions for FY26. Last year, when we delivered organic tendencies of 2,538, that was a record for the company. And we broadly hit that number already at the half year. So we're on course for a very strong year for growth and investment. And I'll extend a big thank you to our committed and talented colleagues and partners who are working in the field right now and rolling out for our customers as we speak. Now, later in the presentation, we'll be doing a deep dive into the multi-decade growth runway. But in short, the combination of population growth and lower smartphone costs is driving phenomenal data growth which is driving demand for mobile and therefore demand for mobile infrastructure. And we are seeing that demand and printing results that echo that consistently in our numbers now for many years. The tendency increase of 500 upgraded target will be split evenly between 250 new sites and 250 co-locations. We expect that the new incremental tendencies will be rolled out in the latter part of the year and therefore the incremental in-year EBITDA we're expecting to see is roughly around five million dollars and as such adjusted EBITDA has been upgraded to 520 to 535 million it's worth noting that the 500 tenancies will be expected to deliver over 10 million of annualized EBITDA which we'll see come through fully in 2027 and onwards we've also upgraded our recurring free cash flow to 220 to 235 million which is previously 215 to 230 million again with 5 million in-year impact and over 10 million of annualized impact later I'll go to the capital allocation overview but these tendencies are exactly the types of investments we are constantly looking for and should be deploying capital on as they give fantastic cash compounding returns and really drive the business forward so we're really very pleased to be up ticking guidance again today as really a testament to the market growth we're seeing and demonstrates the confidence we have in our pipeline for the remainder of the year which will set a fantastic foundation for achieving our overall 2030 targets Now to jump into the H1 results, and on this slide we set out our tenancy metrics. The graph on the left hand side shows the growth we've achieved in our total sites, increasing by 5% with 755 new sites added year on year, of which 524 were in the first half of the year. We've achieved record tenancy additions with 3,838 added year on year, with 2,511 of those in the first six months of the year, with DRC, Tanzania and Oman once again showing strong growth. Given our sites and tenancy additions our tenancy ratio has increased to 2.3 with particularly fast lease up in DRC, Congo B, South Africa and Tanzania. Now moving to slide 11 and you can see how the growth in tenancies has really translated into strong revenue performance increasing 11% year on year to 237 million. Our hard currency profile remains strong 69% of revenue and 71% of adjusted EBITDA are in hard currency. four markets are inherently hard currency DRC's dollarized Oman is dollar pegged and Senegal and Congo and Brazzaville are both pegged to the euro in our remaining markets we also have a portion of revenues linked to US dollars adding further to the overall mix our earnings are further protected by contractual protections including power and CPI escalators with CPI escalators typically escalating in Q1 and prior price escalators which go up or down depending on local pricing and these escalate either quarterly or annually depending on the contract. Around 70% of our revenue come from investment grade customers and all revenue come from blue chip mobile network operators. Our customer contracts typically have an initial term of 10 to 15 years and are largely non-cancellable and today our contracted revenue of $5.9 billion has an average running life of 6.5 years which excludes auto auto renewals which would increase this further. Ultimately, we have secured a minimum revenue stream of $5.9 billion without pursuing any new business, providing a strong underlying earning stream that we layer the growth driven by incremental tenancies on top. So now on slide 12, this illustrates the key drivers of revenue and EBITDA growth in a bit more detail. Now many of you will recognise this analysis and consistent with previous quarters, tenancy additions remain the principal growth driver. while our escalators help to offset macro movements and protect US dollar earnings. Tenancy additions contributed 7 percentage points of the 11% revenue growth with CPI escalators and FX contributing the balance. At the EBITDA level, tenancy additions contributed 12 percentage points to the overall 13% growth as CPI and power price related movements largely offset the corresponding revenue increase. In a few slides, we'll walk through the total addressable market out to 2040. I would encourage you to keep this analysis in mind because the opportunity becomes even more compelling in that context. We've already demonstrated that the business can consistently convert tenancy growth into US dollar revenue growth and attractive US dollar returns. What we'll then show is that the underlying market provides a multi-decade runway for tenancy growth. Importantly, this extends the duration of the proven value creation engine, reinforcing the opportunity for sustained long-term US dollar returns, which is ultimately what we find so compelling about the business. Turning to slide 13 and disciplined capital allocation remains central to Impact 2030. As set out in the capital markets day, our priority is high returning organic investments, i.e. co-locations, OPEX initiatives and selective new builds. These investments deliver blended returns of more than 30% on invested capital and we will continue to allocate capital where returns are the most attractive. Our overall capex for H1 was $115 million, discretionary capex being $102 million, which resulted in an additional 2,511 tenancies. The continuing strength of this demand and its carry-through into our pipeline means we've upgraded our guidance by $35 million to reflect the additional 500 tenancies. Non-discretionary capex remains unchanged at $50 million, as do planned shareholder distributions of $76 million for the year. Now, the revised discretionary capex range of 215 to 245 million represents a meaningful portion of our impact 2030 guidance of 500 million plus to be spent on discretionary growth investments. This reflects the strength of customer demand and the opportunity to reinvest now in high returning sites and tenancies. At the CMD, we kept over 400 million of our accumulated $1.3 billion of recurring free cash flow and allocated. this gives us the flexibility to capitalize on growth opportunities when they land which supports in turn higher recurring free cash flow generation in the future all of this while continuing the shareholder distributions already announced now we're only two quarters into a five-year impact 2030 program so for now we are not upgrading the broader targets but we are extremely encouraged by the performance to date and will continue to monitor our medium-term trajectory and provide updates as we get better visibility Onto slide 14, which demonstrates that despite the ongoing global volatility, we have continued to strengthen both our balance sheet and our debt maturity profile. Through proactive balance sheet management, we've reduced our blended cost of debt to 6.7% while maintaining an average debt maturity of approximately four years. In addition, we've recently secured a 250 million term loan, which remains undrawn and provides us with flexibility to manage the potential maturity of the convertible bond in March 2027. Following these transactions, we now have more than $500 million of available liquidity through cash on balance sheet and our undrawn debt facilities. Our net leverage also continues to decline, reduced by 0.4x year on year to 3.4x. Overall, this provides us with a strong financial platform from which to execute our medium term strategy. Which takes us on to slide 15 and a quick reminder of our upgraded full year 2026 guidance. We delivered record size and tenancy greater than H1, and the strength of demand across our markets gives us confidence to upgrade once again. We now expect 3,500 to 4,000 tenancy additions representing 10 to 12% year-on-year growth. Adjusted EBITDA of 520 to 535 million representing 10 to 13% year-on-year growth. Recurring free cash flow guidance is now 220 to 235 million representing 6 to 11% year-on-year growth and discretionary capex guidance increased to 215 to 245 million to fund the additional organic growth we're also progressing with shareholder distributions as planned we've invested 58 million through the buyback program since it began last year and today we're also announcing our inaugural interim dividends of 8 million dollars which reflects the intended one-third two-thirds phasing with the final dividend in respect of FY26 expected to be paid in H1 2027 subject to the usual approvals overall this is a very strong start to impact 2030. We're converting structural mobile demand into tenancy growth, cash generation and attractive compounding returns while maintaining balance sheet discipline. With that, we'll now do a deep dive on the multi-decade runway and why we feel incredibly excited and confident about our markets and our future growth opportunities within them. Tom, back to you.

Thanks very much Manjit. So now for the second half of our presentation which moves into the deep dive and this is a really you know key strategic discussion for investors today. We often receive questions around how long the growth opportunity for telecom towers in Africa and the Middle East will continue. Well the answer in our view is decades and we'll lay out why here. We also received another frequent question from investors around how satellites will play a role in mobile networks in the future. And, you know, rather than discussing these topics only at a high level, we've examined the underlying physics, the engineering and the market dynamics that will shape mobile networks for the coming decades. And the conclusion is clear. Data demand is set to grow significantly. The overwhelming majority of that demand will continue to be carried through terrestrial networks and satellite technology will play an important and complementary role in expanding that coverage that connectivity So there are really three conclusions from this first mobile data demand is still at the early stages of its growth journey and Data consumption in our markets has increased by six times over the past five years And this is really what we're seeing in the business on the ground today with record tenancy rollout in each of the past three years and expecting a fourth record year this year as we've guided to all in support of the data consumption demand growth and Forecasts show that data consumption will increase by a further 12 times by 2040 Well ahead of the seven times increase expected globally second the Overwhelming majority of that demand will continue to be served by terrestrial networks with 97% of all data demand to be carried by terrestrial infrastructure in 2040 and supporting that volume of traffic will require sustained investment in dents and networks greater capacity and successive generations of mobile technology and and this obviously underpins the long term investment thesis of Helios Towers and provides growth opportunities for decades ahead and third, satellite technology should be viewed as complementary to terrestrial satellites will extend coverage into locations that have previously been uneconomic or impractical or impossible to collect and they're also opening up new locations where terrestrial sites can now be built using satellite backhaul and these locations were not previously possible for cell towers later in the presentation we'll actually show you a live example from Madagascar where this is already happening today so satellite extends the reach of the overall communications ecosystem while terrestrial networks continue to provide the capacity to serve large numbers of users bringing these factors together we estimate that the total addressable organic market for our nine markets is approximately 72,000 additional tenancies by 2040. Now that is around twice the size of the Helios Towers footprint today. The reason for this long term growth opportunity starts with the demographics. Africa and Middle East are expected to see decades of outsized population and mobile growth relative to the rest of the world. and here you see between 2025 and 2040 the population of Africa and Middle East is expected to grow by around 600 million people that represents growth of around 33% compared with 5% across the rest of the world unique mobile subscribers so people getting phones for the first time are expected to increase by around 800 million across the region growth of 43% compared to 12% elsewhere And smartphone devices are expected to increase by approximately 1 billion across the region, which is a growth of 80% compared with just 20% across the rest of the world. So these numbers are clearly very significant. Quite simply, more people, more mobile subscribers and greater smartphone adoption will drive the increasing demand for digital services. And as more people use more data intensive services, Operators will continue to have attracted investing opportunities for new subscribers and increased data Adding to the coverage and capacity requirements of the networks This creates a powerful and sustained demand environment for shared mobile infrastructure as well as the whole mobile industry at large And ultimately, as I've said, everything comes back to one number. It's data consumption. Data is the currency of our industry. And globally, total data consumption is expected to increase by around seven times by 2040. And across the Helios Towers markets, data consumption is expected to increase by around 12 times over that same period. So our markets are expected to grow at almost twice the global rate and that's an extraordinary level of demand growth and it's been driven by a number of structural factors working together as I said population increasing mobile penetration rising smartphones are becoming more affordable users are migrating from 2G and 3G towards 4G and 5G and over time 6G and customers are more and more using mobile networks for video, social media, financial services, education, commerce, healthcare the list goes on AI enabled applications increasingly as well and therefore you know the key question is not whether demand exists the key question is how networks evolve to support it and that's exactly what this next section addresses so let me briefly introduce the three colleagues who will take us through the next section Marcus Weldon is our senior technical advisor at Helios Towers and the former president of Nokia Bell Labs one of the world's leading innovation institutions Marcus will set out how future networks need to evolve including the role of spectrum, network density, satellite and AI Alan Fairburn is our chief technology and digital officer and the executive director of DRC Alan brings deep operational experience across Africa and the Middle East and will translate the technology into the practical infrastructure required to deliver it and Sinesh Vallabh is our chief commercial officer with more than two decades experience across Africa telecoms Sinesh will bring the discussion back to the customer demand the market growth and the commercial opportunity for Helios Towers so they'll take us through the underlying technology and the infrastructure required and right through to the customer and growth opportunity. So Marcus over to you.