COMPANY PRESENTATION
8TH APRIL 2019
Website: www.heliostowers.com LinkedIn: www.linkedin.com/company/helios-towers
COMPANY PRESENTATION 8 TH APRIL 2019 Website: www.heliostowers.com - - PowerPoint PPT Presentation
COMPANY PRESENTATION 8 TH APRIL 2019 Website: www.heliostowers.com LinkedIn: www.linkedin.com/company/helios-towers Helios Towers | Private & Confidential Disclaimer No investment advice Third party sources cause actual results to differ
COMPANY PRESENTATION
8TH APRIL 2019
Website: www.heliostowers.com LinkedIn: www.linkedin.com/company/helios-towers
Helios Towers | Private & Confidential
2
No investment advice This Presentation does not constitute or form part
invitation or inducement or recommendation to purchase or subscribe for any securities in Helios Towers, Ltd. (the “Company”) or any of its affiliates
subsidiaries (together the “Group”) in any jurisdiction nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase
subscribe for any securities of the Company or any member of its group or with any other contract or commitment whatsoever. Further, it should not be treated as giving investment, legal, accounting, regulatory, taxation
their own evaluation of the Company and of the relevance and adequacy
the information contained herein. No warranty No representations
warranties, express
implied are given in,
in respect
this
law, in no circumstances will the Company, or any
its respective subsidiaries, shareholders, affiliates, representatives, partners, directors,
employees, advisers
agents be responsible or liable for any direct, indirect or consequential loss, loss of profit, damages or costs arising from the use
this Presentation, its contents (including the internal economic models), its omissions, reliance on the information contained within it, or on opinions communicated in relation thereto
arising in connection therewith. The information contained in this Presentation has not been independently verified. Third party sources Certain statistical and other information about the Company included in this Presentation is sourced from publicly available third party sources. As such it presents the views of those third parties, but may not necessarily correspond to the views held by the Company and the Company expressly disclaims any responsibility for, or liability in respect
Forward-looking statements This Presentation contains illustrative returns, projections, estimates and beliefs and similar information (together, “Forward Looking Statements”). The Forward Looking Statements can be identified by the use of forward looking terminology, including the terms “believes”, “estimates”, “anticipates”, “expects”, “intends”, “plans”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology. The Forward Looking Statements are subject to inherent uncertainties and qualifications and are based on numerous assumptions, in each case whether or not identified in the Presentation. The Forward Looking Statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied upon by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Nothing in this Presentation should be construed as a profit forecast. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond the control of the Company. Some important factors that could cause actual results to differ materially from those in any Forward Looking Statements could include changes in domestic and foreign business, market, financial, political and legal conditions. There can be no assurance that any particular Forward Looking Statements will be realised, and the performance of the Company may be materially and adversely different from the Forward Looking Statements. The Forward Looking Statements speak only as of the date of this Presentation. The Company expressly disclaims any obligation or undertaking to release any updates or revisions to any Forward Looking Statements to reflect any change in the Company’s expectations with regard thereto
any changes in events, conditions
circumstances
which any Forward Looking Statements are based. Accordingly, no reliance should be placed upon the Forward Looking Statements.
Helios Towers | Private & Confidential
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Tower market share
Tanzania
Sites
3,701
DRC
Sites
1,773
Congo B
Sites
380
Sites
891
Ghana
(annualised)
revenues from Africa’s Big 5 MNOs(4)
Market Share(1)
64%
Market Share(1)
63%
Market Share(1)
49%
Market Share(1)
21%
Contracted revenues(2)
(annualised)
Lease-weighted average contract life remaining
Revenue
Source: Company as of 31 December 2018, except as otherwise indicated (1) Hardiman Report, April 2019. Market share as at year-end 2018. Based upon 3,613, 1,773 and 848 online and marketable sites in Tanzania, DRC and Ghana, respectively. (2) Refers to revenue contracted until 2035 (3) LQA = Last quarter annualised (4) Big 5 MNOs defined as: Airtel, MTN, Orange, Tigo, Vodafone/com
1
Company Overview
Attractive, Long-term Contracted Revenues
South Africa As of January 2019
Helios Towers | Private & Confidential
42 50 60 63 83 85 126 127 133 138 148 164 168 176 181 186 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18
5
CAGR FY 2015 – Q4 2018 LQA
Group Annualised Adj. EBITDA ($m)
1
Company Overview
35% 35% 39% 38% 40% 40% 42% 47% 46% 49% 25% 27% 28% 28% 51% 52%
Margin
(1) “Adjusted EBITDA” is defined as earnings before interest, tax, depreciation and amortization adjusted for discontinued operations, other gains and losses, investment income, loss on disposal of PP&E, impairment of intangible assets and PP&E, deal costs relating to unsuccessful tower transactions or successful tower transactions that cannot be capitalized, and exceptional items. Exceptional items are material items that are considered exceptional in nature by management by virtue of their size and/or incidence. Annualised Adjusted EBITDA calculated as per the bond definition as the most recent fiscal quarter multiplied by 4. This is not a forecast of future results
Margin has more than doubled through top-line growth and implementation of business excellence strategy
Helios Towers | Private & Confidential
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Source: Company
Existing Sites (net of consolidations) Site Asset Purchases New Build/BTS
Consistent year-on-year growth in sites, and near doubling of tenancy ratios 8 acquisitions in 9 years
c. 1,800 organic BTS
796 2,438 2,663 2,974 4,645 5,277 6,371 6,388 831 1,721 13 14 1,186 535 961 22 196 259 297 496 244 239 126 161
2,517 2,710 2,974 4,656 5,424 6,477 6,519 6,745 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
1.20x
Tenancy Ratio
1.22x 1.42x 1.57x 1.61x 1.93x 1.99x 1.85x Business Excellence 2.01x
1
Company Overview
Entry into South Africa announced in 2019
Helios Towers | Private & Confidential
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1
Company Overview
(1) United nations population prospects (2) Hardiman report, April 2019 (3) GSMA Intelligence, January 2019
Attractive Growth Indicators
c.29,000 towers in SA with only c.10% owned and operated by independent tower companies(2)
4G/ 5G
3G and 4G widely available, increased
4G densification expected and to be “5G ready”, with over 4 million 5G
connections expected by 2023(3) Multiple MNOs operating, including 2
57 million population, forecast to
increase by 3 million over the next 5 years(1)
MTN Vodacom Telkom Cell C
PoS indicated by 2024(2)
A high-growth market for HT – with attractive and diversifying dynamics Favourable Structural Dynamics
1 2 3 1 2 3
A leader in telecommunications
innovation in Africa, providing the
adjacent technologies which can
be leveraged in our four other markets
Helios Towers | Private & Confidential
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1
Company Overview
Helios Towers South Africa (“HTSA”) created through Partnership with Vulatel
being permitted
HTSA Acquires SA Towers Creation of infrastructure platform to drive growth in South Africa
1 2
Helios Towers | Private & Confidential
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1
Company Overview
Customers post +9% subs growth in Tanzania in FY 18(1) DRC customers report +10% subs growth in FY 18(2) Felix Tshisekedi sworn into office in DRC 24th January
GDP growth in our markets in 2018(3)
Africa Widely Identified as a Key Continent for Business Opportunities Positive Political, Economic and Industry Dynamics
(1) Tanzania Communications Regulatory Authority (2) GSMA estimates, 2018 (3) IMF 2018. Revenue-weighted average
Vodacom Airtel Halotel Tigo Vodacom Airtel Africell Orange
Helios Towers | Private & Confidential
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(1) Hardiman Report, April 2019 (2) Company estimates of towers that can be acquired in HTs markets (3) TowerXchange “TowerXchanges analysis of the Sub-Saharan African tower Industry”, March 2019
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Strategy
Existing Markets Adjacent New Technologies New Markets Small Cells Fibre Backhaul Data Centres
independent TowerCos(3)
Emerging market Population of >10m 3+ operators Stable and / or pegged currencies Infrastructure gap High subscriber growth Low mobile penetration Enhances group returns
Tanzania, DRC, Congo B and Ghana South Africa
c.6,000 new standard PoS indicated by 2024(1) Tower build program Dark fibre Edge data centres Significant organic and acquired EBITDA growth since 2015
c.12,000 new standard PoS indicated
by 2024 in established markets(1) Potential opportunities to acquire
c.4,200 towers in existing markets(2)
54 106 146 178 33 19 31 10 32
2015 Organic Acquired 2016 Organic Acquired 2017 Organic 2018Strong platform for growth in new and existing markets
Helios Towers | Private & Confidential
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“Congratulations for the good performance during May and June 2018”
Vodacom Congo, Chief Executive Officer
“We wish to understand and learn the principles so that we can share the knowledge with other African Opcos”
Vodacom Tanzania, Chief Technology Officer
“We would like to learn from your operation and help us do what you do”
Viettel, Chief Technology Officer
“Aside from the performance I am equally impressed by your HSE”
Tigo Tanzania, Chief Technology Officer
Efficiency Improvements since 2015:
delivery from Q4 15 to Q4 18(1)
and 2018 on pricing alone
60 to 12 between 2015 and Q4 18
employees per 100 towers reducing to
5.3 from 8.6(2)
Source:Company (1) Q4 2018 average weekly downtime per tower compared to Q4 2015 average (2) From December 2015 to December 2018 (3) Office space reduction in m2 in Tanzania, DRC and Congo B from December 2015 to December 2018
By the end
Of our staff will have been trained in Lean Six Sigma
Driving Efficiency Improvements Customer Service Excellence Focus Building a Business Excellence Culture Focus on developing local teams:
Trained in Six Sigma by the end of 2019
c.50%
c.35%
2
Strategy
Delivered significant achievements, with opportunities for further improvement
Helios Towers | Private & Confidential 6.7% 6.8% 6.9% 6.9% 6.9% 7.0% 7.2% 7.3% 8.2% 8.3%
Philippines Tanzania Senegal Bhutan Cambodia Djibouti Cote d'Ivoire India Ethiopia Ghana
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(1) ‘African cities surge to top of global growth league’ FT (11 September 2018) (2) World Bank 2018 (3) UN Population Prospects 2018, projected % population change from 2018-2035 for cities with a current population over 2.5m
“Africa has become the world’s most rapidly urbanising continent. From 2018 to 2035, the UN predicts that the world’s 10 fastest growing cities will be African....Urbanisation is what helped ignite the ‘Africa Rising’ narrative” Financial Times (2018)(1)
World Population Growth(1)
(Billion People)
Top 10 fastest growing economies in 2018(2)
(GDP)
3
Markets
96% 100% 103% 103% 104% 105% 108% 117% 121% 135%
Bamako, Mali Port Harcourt, Nigeria Kinshasa, DRC Addis Ababa, Ethiopia Antananarivo, Madagascar Lusaka, Zambia Abuja, Nigeria Ouagadougou, Burkina Faso Dar es Salaam, Tanzania Kampala, Uganda
Top 10 fastest growing cities 2018 - 2035(3)
(Population)
2018 Population
1.3 Billion
2100 Population
4.5 Billion
Sustainable long-term growth
Helios Towers | Private & Confidential
Our markets are expected to grow significantly in the coming years
38m(1)
new people in HT markets
8%(1)
increase in penetration
27m(1)
increase in people living in cities
67%(1)
below 30 years old
5.1%(2)
increase in GDP
51m(3) more
subscriptions across HT markets
Demand for Mobile New technology
+4x(4)
increase in 4G connections
Data usage
+11x(5)
increase in data usage in SSA
Infrastructure demand
~18,000(3) new
standard PoS indicated in HT markets
4G
(1) United Nations, World Population Prospects. 2018-2024E (2) IMF, World Economic Outlook October 2018. 2017-2023E (3) Hardiman report, April 2019. 2018-2024E (4) GSMA Intelligence, March 2019. 2018-2024E (5) Ericson Mobility Report, June 2018. 2017-2023E
Positive Macro Drivers Low Telecom Penetration High Equipment Growth
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3
Markets
Helios Towers | Private & Confidential HT Markets Sub-Saharan Africa G7
(1) United Nations Population Prospects, 2018 Revision. 2018-2023E (2) United Nations Population Prospects, 2018 Revision. 2018 (3) IMF World Economic Outlook, October 2018
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Macro
Strong GDP growth drives disposable income(3)
Real GDP Growth 2017-2023E
238m addressable population in HT’s markets
Population (m)(1)
Young Population with c.70% under 30(2)
0-30yrs 30+yrs 11% 3%
HT Markets G7
Favourable urbanisation trends(1)
Increase in urban population (2018-2024E) as % of population
+27 million
will move to cities
5.1% 3.3% 1.6%
HT Markets Sub-Saharan Africa G7
(revenue weighted)
TZ 60 DRC 85 CB 5 GH 30 238 276 782 766
Population 2024E
1,064 1,241
+2%
CAGR
+3%
CAGR
+0%
CAGR
SA 58
67% 35% 33% 65%
HT Markets G7
3
Markets
Helios Towers | Private & Confidential
44 58 38 63 5 6 39 44 99 104
2018 2024F Tanzania DRC Congo B Ghana South Africa
15% 17% 27% 33% 48% 26% 29% 73%
Tanzania DRC Congo B Ghana South Africa Avg HT Markets Nigeria G7
43% 68% 36% 35% 19% 31% 21% 6%
Tanzania DRC Congo B Ghana South Africa Avg HT Markets Nigeria G7
(1) Hardiman Report, April 2019. Unique mobile subscribers 2018 (2) GSMA Intelligence, March 2019. Unique broadband subscribers 2018
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+18,000
additional PoS indicated
(3) Point of Service or Operator Tenancy as opposed to Network PoS signifying different technology equipment placed on a site by a single operator. Given multiple technologies, Network PoS can considerably exceed equivalent PoS (4) Hardiman Report April 2019. Company estimate for G7 based on subscriber growth
Underpenetrated mobile markets(1) 2018-2024E MNO PoS(3) Growth(4)
Telecoms
40% 37% 49% 53% 67% 47% 49% 85%
Tanzania DRC Congo B Ghana South Africa Avg HT Markets Nigeria G7
Mobile broadband penetration is low(2) Mobile subscription growth(1)
2018-2024E 275 224
3% CAGR
CAGR 2018-2024E: +9% +4% +2% +1% +5%
3
Markets
Helios Towers | Private & Confidential 2017 2018 2019 2020 2021 2022 2023 Sub-Saharan Africa North America China Western Europe
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(1) Ericsson Mobility Report, June 2018 (2) Company as of December 2018
Increased Mobile Data Consumption(1) (2017 Indexed = 100)
Increase in mobile data traffic in SSA
(2017 – 2023E)
Increase in mobile data traffic in China, North America and Western Europe
(2017 – 2023E)
3
Markets
4G Licence Awarded Tanzania 2015 DRC 2018 Ghana 2016 Congo B 2016 South Africa 2012
+535
Amendment Colocations added since 2015(2)
Helios Towers | Private & Confidential USD 62% XAF/EUR 3% LCY 35% USD 53% XAF/EUR 4% LCY 28% Power LCY 15%
Building Customer Relationships
(1) TCO = Total cost of ownership by MNO. Includes opex, maintenance capex and financing cost at 8% (2) Based on FY 2018 results (3) Airtel, MTN, Orange, Tigo, Vodafone/com
Long Tenure
Minimal cancellation rights
Automatic renewal clauses
Menu pricing for amendment revenue
Inflation and power price escalators
Take-or-pay commitments (colocation/BTS)
Strong Long-Term Contracts Sustainable Long-Term Pricing Strategy
Lease Rate
Consideration per site Higher Sustainability Lower Sustainability
Deal Range
Replacement cost TCO HT Deals:
Lease Rate Discount to TCO(1)
~35%
20
4
Robust Business Model
FX and Inflation Protected(2) Strong Blue-Chip Client Base
Future Contracted Revenue by Customer Revenue FX Mix EBITDA FX Mix
Africa's Big 5 MNOs 81% Other 19%
(3)
57% Hard Currency 65% Hard Currency
Helios Towers | Private & Confidential
(1) Excludes intangibles (2) Non-discretionary capex is defined as maintenance and corporate capital expenditure (3) Calculated as Adj. EBITDA – Tax paid –– Maintenance and Corporate capital expenditure (4) Based on analysis of 5,874 sites, using TIA-222-H Standard For Antennas And The Supporting Structures For Antennas And Small Wind Turbines
Strong Unlevered Recurring Cash Flow(3) Low Non-Discretionary Capex Expected Going Forward
Capex(1) ($m)
16 72 123 158 2015 2016 2017 2018
($m)
21
Non-discretionary capex(2) level of $20-25m p.a. 4
4
Robust Business Model
Maintenance & Corporate Upgrade Growth Acquisitions
19% 4% 27% 50%
At capacity +1 tenancy +2 tenancies +3 tenancies An Attractive Asset Base, Ready for Future Tenants Available capacity to accommodate up to c. 4.1x tenancy ratio(4)
81% of sites with capacity, lease-up ready and colocation
demand can be accommodated with minimal incremental capex
2016 2017 2018 2019
281 171 119 100
(excl. SA)
Helios Towers | Private & Confidential
43% 68% 36% 35% 19%
Tanzania DRC Congo B Ghana South Africa
Invested to ensure lease-up ready in all markets
81% sites ready for new tenants Capacity of 4.1x on tenancies today In-market expansion options New Markets options Adjacent Service options
Prepared for Growth
4
Source: Company as of 31 December 2018 (1) Source: Hardiman Report, April 2019
+18,000 additional PoS
indicated 2018-2024 MNO PoS Growth(1)
Robust Business Model with Strong Recurring Cash Flows
6
Long-Term Contracts Sustainable Pricing Strategy FX and Inflation Protected Diversified Blue Chip Client Base Sole Independent TowerCo in 3 out of 5 markets
66% 63% 49% 21%
#1 #1 #1
1
Tanzania DRC Congo B Ghana
HT market share (excl. South Africa)
77%
Urban 23
Exposure to Large High Growth Markets
Population Growth
Young Population
Urbanisation
GDP Growth
Business Excellence Driving Margins Higher
5
Localised workforce
2
High Telecoms Infrastructure Growth
3
5
Wrap-up
Delivering growth and quality for our stakeholders
Helios Towers | Private & Confidential
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Source: Company (1) Estimated annualised CO2 savings as of December 2018 (2) 2018 average monthly KM driven compared to FY 16 average monthly KM driven
Training and code of conduct extends to suppliers Global Whistleblower Hotline in place
Ethics Health & Safety Environment Values
Comprehensive suite of policies aligned with international best practice Group-wide strategy to positively monitor and improve our contribution to the environment
430 solar solutions, 640 hybrid sites and 400 grid connections installed, saving over 5,000 tonnes in CO2 emissions per year(1) 330K km monthly reduction in site travel,
resulting in 48K litres fuel being saved(2)
Group program for training and reinforcing our value; 6
Appendix
Helios Towers | Private & Confidential
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an existing tower
adds additional equipment
through acquisitions (sale & leaseback)
to-suit)
Tower with 1 tenant Colocation: Multiple Tenancies Amendment: Equipment Addition Acquire and Build Towers
active equipment on HT towers
80%-90% Adj. EBITDA margin flow
through(1)
1 2 3 4
(1) Based on management estimates
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Appendix
Helios Towers | Private & Confidential
Previously at:
team with extensive experience came together in 2015
track record of margin growth
class capabilities within the
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Philippe Loridon
CEO HT Tanzania
Helen Ebert
Chief Legal Officer
Roy Cursley
Director of Delivery and Technology
Colin Gaston
Director of Special Projects
Tom Greenwood
Chief Financial Officer
Alex Leigh
Chief Commercial Officer
Jeffrey Schumacher
CEO HT Ghana, HT Congo Brazzaville & HT South Africa
Nick Summers
Director of Sustainability and Organisational Development
Léon-Paul O. Manya
CEO HT DRC
Kash Pandya
Chief Executive Officer
Previously at:
Previously at:
Management
Previously at:
Previously at:
Previously at:
Previously at:
Previously at:
Previously at:
Previously at:
6
Appendix
Helios Towers | Private & Confidential
Source: Company. Based on FY 2018 results.
Impact on Adj. EBITDA Fuel FX
+10% (10%)
Price Movement
c.+2.5% c.(2.5%)
c.+3.0% c.(3.0%) EBITDA Impact TZS GHS EUR c.+0.9% c.(0.9%) c.+0.3% c.(0.3%)
28
Fx Power Tanzania DRC Congo B Ghana Group
+65%
EBITDA in Hard Currency Pricing adjusted for fuel, electricity and inflation
Revenue Mix
TZS 77% USD 23% USD 100% USD/EUR-peg 100% GHS 81% USD 19% CPI 55% Fuel 32% CPI 64% Fuel 27% Elec 9% Elec 14% CPI 84% Fuel 15% Elec 1% CPI 60% Fuel 19% Elec 22%
Strong Contractual FX and Inflation Protection
6
Appendix
Helios Towers | Private & Confidential
Debt KPIs
29
Gross and Net Leverage Commentary
in Adj. EBITDA
(1) ‘Other’ relates to unamortised loan issue costs, accrued bond and loan interest, derivative liability and shareholder loans (2) Annualised adj. EBITDA calculated as per the bond definition as the most recent fiscal quarter multiplied by 4. This is not a forecast of future result (3) Calculated as gross debt divided by Annualised Adj. EBITDA for the quarter and Adj. EBITDA for the year (4) Calculated as net debt divided by Annualised Adj. EBITDA for the quarter and Adj. EBITDA for the year
($m) FY 17 Q4 17 FY 18 Q4 18 Cash & cash equivalents
120 120 89 89
Bond 600 600 600 600 Term Loan
25 Lease Obligations + Other (1) 115 115 121 121 Gross Debt 715 715 746 746 Net Debt 595 595 657 657 Annualised adj. EBITDA 146 164(2) 176 186(2) Gross Leverage (3)
4.9x 4.4x 4.2x 4.0x
Net Leverage (4)
4.1x 3.6x 3.7x 3.5x
4.9x 4.4x 4.2x 4.0x
4.1x 3.6x 3.7x 3.5x
FY 17 Q4 17 FY 18 Q4 18
Gross leverage Net leverage
6
Appendix