Helios Towers delivers strong results, but 2024 guidance underwhelms

Telecoms infrastructure firm Helios Towers has hinted that it is closer to distributing cash back to shareholders and said that 2024 is to be an "inflection year" for free cash flow following a period of busy acquisition activity.

The comments came after the company delivered a strong set of annual results for 2023, with tenancies and adjusted EBITDA ahead of expectations – though guidance for 2024 came in a little shy of market forecasts.

Helios, which builds and operates telecoms towers for mobile network operators (or tenants) across Africa and the Middle East, said tenancies were up 10% in 2023 to 26,925, with site numbers increasing 4% to 14,097. This pushed the tenancy ratio – the average number of tenants per tower – to 1.91 from 1.81.

The company also said it has changed its guidance for tenancy growth after a faster expansion of the ratio in 2023 and is working on hitting a tenancy ratio of 2.2 by 2026, instead a previous target of "22,000 towers by 2026".

Revenues were up 29% at $721m in 2023, while adjusted EBITDA rose 31% to $369.9m. Cash generated from operations surged 65% to $318.5m, while net leverage reduced to 4.4 from 5.1.

For 2024, the company expects to add 1,600 to 2,100 tenancies, make adjusted EBITDA of between $405-420m and generate portfolio free cash flow of $275-290m. According to analysts at Numis, the mid-points of these guidance ranges were all under current consensus estimates.

Helios said its focus is now on maximising returns through organic investments and strengthening the balance sheet, shifting its capital allocation priorities from acquisitions to supporting a reduction in net leverage to below 4.0 by the end of 2024.

"With free cash flow anticipated to move into positive territory over the near term, we are now close to a juncture where the capital we generate allows us the capacity to make distributions to our investors, both debt and equity holders, while still having ample resources to invest in our growth," said chief financial officer Manjit Dhillon.

The stock was down 0.6% at 79p by 0851 GMT.