Helios Towers reports operating loss as it eyes expansion options

(Sharecast News) - Helios Towers reported a 9% improvement in full-year group revenue on Thursday, to $388m (?303.75m), which it said was driven by continued growth in its number of sites and tenancies.
The FTSE 250 mobile tower owner said fourth quarter group revenue was 3% higher at $100m.

It said full-year adjusted EBITDA was 16% firmer year-on-year for the 12 months ended 31 December at $205m, which the board said reflected both tenancy growth and continued improvements in operational efficiency, with its adjusted EBITDA margin expanding three percentage points to 53%.

Fourth quarter adjusted EBITDA was 2% higher at $54m, making for the 20th consecutive quarter of adjusted EBITDA growth.

Helios Towers said its operating loss was $5m for 2019, swinging from a profit of $3m in 2018.

The board said 2019's loss included $63m of exceptional items, deal costs and non-cash costs related to its continued site consolidation programme, which widened from $32m in 2018.

Net debt at year-end totalled $627, narrowing from $657m, which resulted in net leverage of 2.9x as at 31 December, compared to 3.5x at the end of 2018.

On the operational front, Helios Towers said the number of tenants increased 8% year-on-year to 14,591 tenants, with tenancy numbers rising 3% in the fourth quarter specifically.

The number of sites improved 3% year-on-year to 6,974 total sites, and 1% in the fourth quarter.

Helios said the tenancy ratio rose to 2.09x from 2.01x.

In March 2019, the group entered the South African market through a partnership with Vulatel to create Helios Towers South Africa; and through the subsequent acquisition of SA Towers in May, which delivered a pipeline of more than 500 sites.

The board also noted that on 18 October, Helios Towers was admitted to trading on the Main Market of the London Stock Exchange.

The company said it was continuing to monitor markets to determine an adequate window for a potential refinancing of its existing capital structure, through the issue of notes.

It said the refinancing was also expected to consist of a new revolving credit facility in an amount up to $70m, and a new $200m term loan, to be used for inorganic growth opportunities and general corporate purposes.

"Helios Towers has had another strong year, both financially and operationally," said chief executive officer Kash Pandya.

"I am particularly proud that we have now delivered 20 consecutive quarters of adjusted EBITDA growth driven by continued tenancy growth and operational efficiencies.

"We also entered a dynamic fifth market - South Africa - early in the year, which gives us valuable experience of the most pioneering digital market in Africa."

Pandya said the company's successful listing on the London Stock Exchange in October provided "market affirmation" of its strategy and ambition.

"In 2020 and beyond, we will continue to focus on driving profitable revenue expansion by leveraging the exciting growth in our sub-Saharan markets, our long-term client contracts and sustained improvements in our operational excellence, with an appropriate eye on further inorganic opportunities.

"Helios Towers is investing heavily in local expertise, capabilities and training that deliver the services for our mobile network operator customers and their users, as well as generating broader economic benefits in the countries in which we operate.

"We also remain keenly focused on delivering on the structural opportunities present across Africa."

At 0926 GMT, shares in Helios Towers were down 6.06% at 92.25p.