Helios Towers shares slide despite strong first half

Helios Towers announced a strong set of first-half results on Thursday, with upgraded full-year guidance, but its share price was well below the waterline as investors reacted to a fall in quarterly profit.

The FTSE 250 mobile network infrastructure owner said its operating profit for the second quarter was $65m, down from $67.3m in the first.

Looking at the first half, however, operating profit surged 91% year-on-year to $132.3m, driven by adjusted EBITDA growth and a favourable update to the depreciation policy for its tower assets.

That contributed to a substantial reduction in its loss before tax, which narrowed to just $0.4m from $39.4m in the first half of 2023.

The company reported a 19% year-on-year increase in first-half adjusted EBITDA to $206.2m, with revenue rising 11% to $389.9m.

Its adjusted EBITDA margin also improved, reaching 53%, up by three percentage points from the same period in 2023.

Helios Towers also reported a strong cash flow performance, with portfolio free cash flow increasing 14% year-on-year to $142m, and cash generated from operations up 19% to $175.7m.

The company’s net leverage decreased to 4.2x, down from 4.8x a year earlier, following successful refinancing efforts that extended its debt maturity while maintaining a competitive cost of debt.

Operationally, Helios Towers saw its site count grow 2% to 14,185, with a record increase in tenancies to 28,574, up 10% year-on-year.

That saw its tenancy ratio improve to 2.01x, reflecting a year-on-year increase of 0.14x.

In response to its solid first-half, Helios Towers tightened its 2024 guidance upwards.

The company said it now expected organic tenancy additions to range between 1,900 and 2,100, with adjusted EBITDA anticipated to be between $410m and $420m.

Its outlook for portfolio free cash flow was revised to between $280m and $290m, and capital expenditure was expected to fall between $155m and $190m.

“I am delighted to see our strong performance continue across our business, with our team delivering record year-to-date tenancy additions and power uptime for our customers - all leading to strong adjusted EBITDA growth, cash generation, returns expansion, and continued deleveraging,” said chief executive officer Tom Greenwood.

“Accordingly, we have tightened our full-year guidance upwards across a number of key metrics.

“Alongside the consistent growth, I am pleased with the improvements to our financial position.”

Greenwood said that following rating upgrades by Moody's and S&P to B+ equivalent, and Fitch updating its outlook to positive, Helios executed a successful bond refinancing in May.

“Through this transaction, we extended our average maturity to five years and kept our blended cost of debt broadly stable despite rising rates over the past few years.

“We are progressing well towards our 2026 strategic targets, including tenancy ratio expansion and free cash flow generation, and the team are pleased to deliver consistent performance for our stakeholders despite the broader macro volatility.”

At 0943 BST, shares in Helios Towers were down 6.66% at 114.06p.

Reporting by Josh White for Sharecast.com.