Helios Towers is looking to make more acquisitions in Africa and the Middle East, despite reporting widening losses in its 2021 financial results.
Speaking to Developing Telecoms, CEO designate Tom Greenwood says: “We see a significant runway ahead in terms of both organic and potentially more inorganic growth over time just given the dynamics of our markets coming out from low levels of penetration and new technologies coming through 4G and 5G.”
Greenwood noted there is high demand for towers in developing markets. Helios’ footprint is mainly in Africa, although it gained a foothold in the Middle East last year in Oman.
“There is rising (network) densification and which means more towers are required. We're seeing continued inorganic opportunities across Africa and the Middle East driven by mobile operators continuing to look to divest their non-core assets of towers for all the reasons that we know about. As a result, we see opportunities for us to grow further over the next five years.”
Operators have been cashing in on tower assets globally to pay off high debts accrued from acquiring spectrum and upgrading networks. The GSMA forecasts that this will collectively cost the industry US$890 billion between 2020 and 2025.
Greenwood acknowledges this trend will be mirrored in developing markets with some operators planning to launch 5G in the near future as uptake of mobiles increases.
Currently, there is high tower ownership among operators, with around 75% still owned by MNOs notes Greenwood, which leaves plenty of scope for tower companies in developing markets. He did not detail potential acquisitions.
“There are multiple countries in both Middle East and Africa where mobile operators are thinking about selling their towers in the not too distant future, or are almost certainly going to do so. There’s more than a handful of countries with big tier-one mobile operators who could well be looking to divest those towers in the short to medium term,” says Greenwood.
Ethiopia
Telcos have been eyeing Ethiopia since its government opened the market to foreign players in 2021. It has long been seen as one of the very few nascent markets with low mobile penetration and huge opportunity from a population of over 100 million.
Greenwood says Helios has been tracking Ethiopia for over 10 years and there’s “clearly huge attraction” for the business, but Ethiopia is yet to open itself to tower companies, having only granted its first telecom licence to Safaricom, with a second player still being mulled.
Greenwood explains a market attractive to tower companies is one with multiple players with the sweet spot being around three to four operators. The firm will continue to monitor the market situation in the East African country.
Full-year 2021 results
Helios added 2,204 towers to a total of 9,560 sites by the end of December last year. Tower tenancies grew by 3,120 to 18,776, which was almost a split between organic (1,262) and acquired (1,858).
The company is now looking to target organic tenancy additions of 1,200 – 1,700 (prior 1,000 -1,500), and have 60% of tenancy additions to be on new sites (prior 40%).
Revenue grew 8% to US$449.1m, while EBITDA increases 6% to US$240.6m, and operating profit is also slightly up by 5% to US$59m, but net debt amounted to $948m up year-on-year from $692m.
Throughout 2021 the company has been on an acquisition spree and expects to finalise its buys in Oman, Malawi and Gabon this year. Upon closure of these deals the company will hit its 2025 targets ahead of schedule, one of which is to attain 12,000 towers.
