TIDMHTWS
RNS Number : 1573T
Helios Towers PLC
23 March 2021
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Helios Towers plc
Helios Towers enters into agreements with Airtel Africa Group
companies for the acquisition and rollout of over 2,500 sites
Supports the Group's entrance into four attractive new
markets
Includes build-to-suit commitment for 315 additional new
sites
London, 23 March 2021: Helios Towers plc ("Helios Towers", the
"Group"), the independent telecommunications infrastructure
company, has signed agreements with Airtel Africa Group companies
("Airtel Africa") to acquire its passive infrastructure operating
companies in Madagascar and Malawi and enter into exclusive
memorandum of understanding arrangements for the potential
acquisition of its passive infrastructure assets in Chad and Gabon
(together, the "Transactions"), all subject to required regulatory
approvals.
Transactions Overview
The Transactions comprise four separate agreements:
-- Two separate agreements, one for each market, for the acquisition of Airtel Africa's passive infrastructure companies in Madagascar and Malawi for a total expected consideration of $108 million. These acquisitions are both anticipated to close in or around Q4 2021, subject to separate customary closing conditions including required regulatory approvals
-- In each of Chad and Gabon, the Group has entered into
exclusive memorandum of understanding arrangements and, subject to
obtaining a passive infrastructure licence in each jurisdiction, is
expected to complete the acquisition of Airtel Africa's passive
infrastructure assets in those countries in or around Q1 2022
The Transactions assets are expected to generate aggregated
annualised revenues of $89 million and Adjusted EBITDA of $27
million (in the first full year of ownership), with further growth
anticipated through 315 committed build to suits ("BTS") and
colocation lease-up.
Transactions' Highlights
-- Represents 2,227 existing sites across Madagascar, Malawi, Chad and Gabon
-- Upon and subject to completion, Helios Towers will become the
largest independent telecommunications infrastructure company in
each of Malawi, Chad and Gabon with strong market share in
Madagascar
-- Expected to increase Helios Towers' geographic presence to 10
markets, delivering the Group's 2025 vision to expand operational
presence to at least eight markets, well ahead of plan
-- Further growth expected through 315 additional committed BTS sites
-- Together with the committed BTS and acquisition of assets in
Senegal announced on 12 August 2020 - which is expected to close in
H1 2021 - increases Group site count to c.11,500 towers, nearing
the Group's 2025 vision of expanding to 12,000+ towers
-- Long-term service contracts for an initial period of 12 years
provide $1.1 billion of future contracted revenue, which together
with the previously announced 15 year service agreement with Free
Senegal, increases Group contracted revenue to c.$4.6 billion and
extends average remaining life to 8 years
-- Strong hard currency Adjusted EBITDA mix at 85% for the
portfolio, reflecting EUR-pegged currencies in Chad and Gabon and
USD-linked revenues in Madagascar and Malawi, which further
strengthens Group Adjusted EBITDA in hard currency to c.70%
-- Aligned to Helios Towers' new market entry criteria and is
expected to deliver on the Group's disciplined internal returns
thresholds
-- Upon completion, the Transactions are expected to be immediately accretive to earnings
-- The Transactions are expected to be financed through Helios
Towers' existing cash and debt facilities
Madagascar and Malawi Acquisitions
The total consideration for the acquisition of the passive
infrastructure companies in Madagascar and Malawi is expected to be
$108 million, which represents an enterprise value of $124 million
including estimated transaction costs and capitalised ground leases
for the Group. These assets are expected to generate revenues of
$38 million and Adjusted EBITDA of $13 million in the first full
year of ownership.
In addition, Helios Towers has received a BTS commitment from
Airtel Africa representing an additional 195 sites over the three
years upon completion for which a further $11 million of deferred
consideration and $24 million growth capex are expected to be
invested by the Group.
In the year to 31 March 2020 the passive infrastructure
companies being acquired in Madagascar and Malawi generated net
profit before tax of $3 million with a reported gross asset value
of $94 million.
In line with Malawian local telecommunications infrastructure
licence requirements, the Group's Malawian operating company is
expected to obtain a 20% local Malawian shareholding which will be
maintained during the term of Helios Towers' operating licence in
Malawi. This will be effected at closing.
The Group expects to disclose consideration details for Chad and
Gabon upon signing of the acquisition agreements in each
market.
Markets Overview
Similar to Helios Towers' other markets, Madagascar, Malawi,
Chad and Gabon represent compelling markets for telecoms with a
combination of a young, growing and increasingly urbanised
populations plus high GDP growth, with each market forecast to
deliver GDP CAGRs of 4% - 6% over the next five years (IMF, October
2020). These dynamics will continue to drive increasing demand for
mobile communications and consequently the infrastructure
supporting it.
Madagascar Malawi Chad Gabon Total
----------------------- ----------- ------- ----- ------ ------
Markets overview:
Population (m)(1)
(2020) 28 19 16 2 65
GDP CAGR(2) (2020
- 2025) 5% 6% 4% 4% 5%
Mobile penetration(3)
(2020) 33% 34% 38% 63% 42%
Mobile subscriber
growth(3) (2020
- 2025) 8% 6% 5% 3% 5%
Mobile network
operators (#) 4 2 3 2 2 - 4
Points of Service
CAGR(4) (2020
- 2025) 7% 7% 5% 3% 6%
Transaction KPIs:
Sites 494 735 539 459 2,227
Site tenancy ratio(5) 1.3x 1.4x 1.2x 1.0x 1.3x
Committed BTS 135 60 60 60 315
Y1 Revenues (US$m)(6) 15 23 29 22 89
Y1 Adj. EBITDA
(US$m)(6) 5 8 7 7 27
1. United Nations, World Population Prospects 2019
2. IMF World Economic Outlook, October 2020
3. Unique mobile subscriber penetration and subscriber growth.
GSMA Intelligence Database, accessed February 2021
4. Hardiman report, March 2021
5. Group estimates
6. Revenues and adjusted EBITDA are Group estimates and reflect
expected performance of the acquired assets in the first full year
of ownership, with further growth expected through the 315
committed BTS and colocation lease-up
To support the anticipated expansion into new markets, Helios
Towers completed an internal reorganisation in H2 2020, creating a
new regional CEO structure and dedicated new markets team. This
reorganisation supports the Group's ongoing geographic and
operational expansion characterised by the previously announced
entry into Senegal, these Transactions and other potential future
acquisitions.
Commenting on the Transactions, Kash Pandya, Chief Executive
Officer of Helios Towers said:
"We are delighted to announce these acquisitions which,
alongside the previously announced entry into Senegal, means we
will deliver on our 2025 ambition to increase our operational
presence to at least eight markets well ahead of schedule and
represents a significant step towards our target of 12,000+ sites.
Additionally, as a result of service contract structuring and
market selection, our hard-currency revenues and adjusted EBITDA
will improve further, providing enhanced future stability for the
business and complimented by the 12-year service contracts with
Airtel Africa. We look forward to strengthening our relationship
with Airtel Africa and the other MNOs by delivering exceptional
services levels in these markets over the coming years, driving the
sustainable growth of communications across Africa."
Conference Call
Helios Towers' management will host a conference call for
analysts and institutional investors today at 13:00 GMT. Dial in
details for the conference call are:
Europe & International: +44 20 3936 2999
South Africa (local): 087 550 8441
USA (local): 1 646 664 1960
Passcode: 467494
Investor Relations
Chris Baker-Sams - Corporate Finance Manager
+44 (0)752 310 1475
Media Relations
Edward Bridges / Stephanie Ellis
FTI Consulting LLP
+44 (0)20 3727 1000
The person responsible for making this announcement on behalf of
Helios Towers is Paul Barrett, Group General Counsel and Company
Secretary.
About Helios Towers ("HT")
-- Helios Towers is a leading independent telecommunications
infrastructure company in Africa, having established one of the
continent's most extensive tower portfolios with over 7,300 towers
across five countries. It builds, owns and operates telecom passive
infrastructure, providing services to mobile network operators.
-- HT owns and operates telecommunication tower sites across
Africa in Tanzania, Democratic Republic of Congo ("DRC"), Congo
Brazzaville, Ghana, South Africa, and are due to establish a
presence in Senegal during H1 2021.
-- HT pioneered the model in Africa of buying towers that were
held by single operators and providing services utilising the tower
infrastructure to the seller and other operators. This allows
wireless operators to outsource non-core tower-related activities,
enabling them to focus their capital and managerial resources on
providing higher quality services more cost-effectively.
About Airtel Africa plc ("Airtel Africa")
-- Airtel Africa is a leading provider of telecommunications and
mobile money services, with a presence in 14 countries in Africa,
primarily in East Africa and Central and West Africa.
-- Airtel Africa offers an integrated suite of telecoms
solutions to its subscribers, including mobile voice and data
services as well as mobile money services, both nationally and
internationally. We aim to continue providing a simple and
intuitive customer experience through streamlined customer
journeys.
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END
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