Less than two years after it shelved its previous plans for a stock market listing, Helios Towers, which manages passive mobile tower infrastructure in five key sub-Saharan markets, is filing for an IPO on the London Stock Exchange (LSE).
The company had announced its previous IPO move in March 2018, but quickly abandoned that plan, fuelling speculation that it either couldn't achieve its valuation target of US$2 billion or that it was about to be involved in significant acquisition activity. (See Helios Towers Abandons IPO Plan.)
Now it's back on the IPO trail, announcing its intention to float at least 25% of its stock on the LSE. Existing shareholders would be including their shares as part of the listing but, in addition, Helios Towers would issue new stock as part of the offering, from which it expects to raise gross proceeds of $125 million. Those proceeds could be used to expand into new geographic markets or expand the business into adjacent areas, it noted. There's no indication of the potential corporate valuation at this stage.
Helios Towers has, in total, more than 6,800 towers and operates in five markets: Tanzania (its biggest market by towers, where it has more than 3,600 sites); the Democratic Republic of Congo (DRC); the Republic of Congo (Congo Brazzaville); Ghana; and South Africa, where it is in the early stages of bringing commercial sites to market.
It provides managed mobile tower services to network operators, with more than 86% of its revenues coming from five mobile operator groups, namely Airtel, MTN, Orange, Vodacom and Tigo (Millicom). On average, it has more than two "tenants" using each tower but, on average, can accommodate more than four tenants per tower, so it has existing capacity to deal with additional demand, which is growing. In addition, it believes it is competitively and geographically well positioned to pick up additional business as mobile operators expand their reach and network capacity as the 4G services market grows and as 5G plans are considered.
Helios Towers builds and runs mobile towers that are used by mobile operators to host their active network equipment such as antennas.
It generated revenues of almost $191 million in the first half of 2019, an increase of 7% compared with the same period a year earlier, while its adjusted EBITDA (earnings before interest, tax, depreciation and amortization) grew by 15% year-on-year to $99 million during the same period.
Kash Pandya, CEO of Helios Towers, noted: "The Sub-Saharan Africa telecommunications market is and will continue to be one of the most exciting and high growth in the world. The underlying demographic and macro-economic trends are compelling: a young, growing and increasingly urbanised population whose demand for high quality mobile voice and data services continues unabated, which is being further fuelled by expansion of 3G and 4G services and one day 5G services; and GDP growth that across our markets is expected to be 4.5% per annum to 2024 [according to the IMF World Economic Outlook Database, April 2019]."
He continued: "We have a proven track record of growth based on both acquiring site portfolios as well as building new sites to provide high-quality services which is underpinned by our business model of long-term contracts with blue-chip MNOs with significant levels of currency protection. Whilst our business excellence programme has already generated significant improvements in our margins, we are beginning to see the investment in our tower infrastructure bear fruit in terms of Portfolio Free Cash Flows. When considering a listing on the LSE we will be focusing on the exciting opportunities for our business and its growth prospects, while providing new investors with the opportunity to commit to a business through public equity participation, adding to our successful tranche of listed bonds."
News of the IPO comes as major international mobile operators consider their mobile tower infrastructure strategies, particularly as they size up the crushing costs associated with building out full 5G capabilities, winning new spectrum licenses and launching next-generation services. Vodafone Group, in a bid to raise some capital, plans to spin off its tower assets in a move valued at more than $20 billion, while Telefónica is considering something similar as debt piles start to weigh on balance sheets. (See More Towers for Sale: Telefónica's Turn to Offload Assets and Vodafone shares soar as it values towers spin-off at $20B.)
Such moves, plus the trend towards greater network sharing (of active as well as passive assets) by mobile operators in markets such as China and Italy points more towards a fruitful future for mobile tower wholesale companies. That, on top of a wealth of encouraging economic and mobile market growth statistics in the markets in which it is active, can only give Helios Towers hope that its IPO plans and financial future look positive. (See China Spices Things Up With 2-Become-1 5G Plan and Fastweb, Wind Tre Take 5G Network Sharing to the Limit.)
— Ray Le Maistre, Editor-in-Chief, Light Reading for Connecting Africa.
This year did not begin the way most people expected it to, so what does the future of the telecoms sector look like in Africa in 2020? In this Connecting Africa online event, local analysts and industry stakeholders will discuss what African operators’ priorities for the year should be and the most significant market trends expected to dominate in 2020.
Will MNOs focus on sweating their current assets rather than investing in new technologies like 5G?
What impact will COVID-19 have on the continent’s networks?
What are the hot market trends in Africa when it comes to voice, data and mobile financial services?
The majority of 5G in Africa is still in the testing stage. However, as operators prepare their networks for the technology jump, what strategies are they deploying to ensure they gain the full value that 5G can offer Africa? This digital symposium will give you an insight into the opportunities and challenges facing Africa’s 5G rollout, with some country specific case studies unpacked.
How 5G-ready is African enterprise?
Is 5G a priority for in Africa, should it be? Or can operators and businesses focus on growing their 3G and 4G networks for enterprise instead?
What are the most significant enterprise business applications for 5G deployment on the continent, and where can 5G facilitate IoT applications?
Africa was the birthplace of Mobile Money and while it continues to rise in popularity, the industry is quickly evolving and launching more mobile-based financial services every day. In this Connecting Africa online event, local analysts and industry stakeholders will discuss how telcos are disrupting the financial services space and what the rise of Mobile Money 2.0 will look like for Africa.
From cash to mobile: heading towards a cashless society
Expanding MFS offerings beyond mobile money transfers
MNOs vs banks vs fintechs: an evolving competitive landscape
Unconnected and unbanked: fintech to improve financial inclusion
The rise of micro-loans and insurance through mobile platforms
Africa has the fastest growing population in the world and also the youngest, with 60% of Africans under the age of 25. It is clear that the next billion connected are going to be the mobile-only generation. This digital symposium will bring industry experts together to discuss Africa’s digital divide and how to get devices into the hands of young Africans and empower them to join the digital revolution.
Who’s Driving? The role of government & regulator, private tech companies, and public-private partnerships
Device affordability: are we reaching a tipping point?
Status check: Satellite vs Fiber and the enduring infrastructure gap
Exploring the wider societal and economic benefits of a connected, digitally literate continent