Release Date: March 13, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Helios Towers PLC (HTWSF, Financial) reported record tenancy additions and strong organic growth in both top-line and bottom-line metrics for 2024.
- The company achieved a significant milestone by generating $19 million in surplus free cash flow for the first time, marking a $100 million improvement over the previous year.
- Helios Towers PLC (HTWSF) has maintained a 10-year track record of uninterrupted EBITDA growth at a compounded annual growth rate of 26% since 2015.
- The company has a strong balance sheet with fixed interest costs, allowing for amplified growth in bottom-line free cash flow as operational cash flow increases.
- Helios Towers PLC (HTWSF) is well-positioned to benefit from structural growth in Africa and the Middle East, with mobile subscribers growing at 5% per year and data consumption expected to quadruple in the next five years.
Negative Points
- The company faces geopolitical risks, particularly in the Democratic Republic of Congo (DRC), where civil disturbances are a part of working life.
- There is a potential threat from satellite technology, which could alter network topography and impact the traditional mobile infrastructure model.
- Some markets, such as Senegal and Madagascar, are not experiencing tenancy growth in line with other regions, which could affect overall returns on investment.
- Helios Towers PLC (HTWSF) has a high level of financial leverage, although it is decreasing, with a target to reduce it to 3.5 by the end of 2025.
- The company is not currently prioritizing mergers and acquisitions, which could limit growth opportunities in new markets.
Q & A Highlights
Q: How do you feel about the consensus estimates for adjusted EBITDA in 2025, and what are the consequences of the ongoing strife between Rwanda and DRC for Helios Towers?
A: Tom Greenwood, CEO, expressed confidence in the business's performance and alignment with market consensus for 2025. He noted that Helios Towers has operated in DRC for 15 years, managing civil disturbances effectively by focusing on safety and maintaining critical mobile services. Manjit Dhillon, CFO, added that the increased tenancy guidance reflects confidence in the year's outlook.
Q: What factors influence your decision-making on cash returns, and how do you view the impact of satellite technology on your business model?
A: Manjit Dhillon, CFO, stated that the current focus is on organic growth and deleveraging, with potential shareholder returns being considered as free cash flow increases. Tom Greenwood, CEO, explained that satellite technology complements existing services by expanding connectivity in rural areas, but terrestrial networks remain essential for high-capacity needs.
Q: Can you comment on the joint venture between Orange and Vodacom in DRC and your approach to building towers?
A: Tom Greenwood, CEO, welcomed the JV as it focuses on rural areas with limited coverage, which complements Helios Towers' operations. Manjit Dhillon, CFO, noted that while leverage is not a constraint, the company prioritizes high-return organic investments and will selectively build towers where there is clear lease-up potential.
Q: How do you view the potential impact of satellite services like Starlink on your business, and what is your exposure to conflict areas in DRC?
A: Tom Greenwood, CEO, sees satellite services as complementary, potentially accelerating terrestrial network deployment in rural areas. He mentioned that only 1-2% of Helios Towers' sites are in conflict areas in DRC, and operations continue to provide essential services.
Q: Are there any concerns about renegotiating contracts with clients in local currency markets, and how do you view the willingness of mobile operators to outsource services?
A: Manjit Dhillon, CFO, explained that contracts are structured to share FX risk fairly, and Helios Towers offers a cost-effective solution compared to operators managing sites themselves. The company continues to see strong demand for its services, with no reduction in outsourcing willingness.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
