IPO drives Helios Towers’ expansion plans

CEO Kash Pandya reveals how the company will spend $364m raised in a recent IPO.


In October telecoms infrastructure company Helios Towers raised $364m in an IPO. Speaking to David Thomas, CEO Kash Pandya describes the company’s plans to use the proceeds to acquire more towers and enter new markets.

Phone a business associate or send a text to a family member in Tanzania, Democratic Republic of Congo (DRC) and Congo Brazzaville, and there’s a good chance it will pass through infrastructure owned or operated by Helios Towers.

The fast-growing UK-headquartered firm has over 6,900 telecoms tower sites in five African countries, where it acts as landlord to the mobile network operators (MNOs) – including household names MTN and Vodacom – that provide wireless voice and data services used by millions of customers.

Founded a decade ago, the firm’s rise from modest beginnings in the Ghanaian market to significant pan-African owner-operator has caught the eye of investors, culminating in an October initial public offering on the London Stock Exchange, which valued the company at around $1.5bn.

Speaking to African Business as the firm released its Q3 results, including quarterly revenue of $97.3m, CEO Kash Pandya says that Helios Towers plans to use the proceeds of the IPO to rapidly acquire more towers and enter new markets where mobile technology and data use remain in their infancy. 

“Our view of the five-year horizon is we’re looking to have in order of 12,000 towers from 7,000 [today]. We’re very focused on expanding our geography from five markets… We want to go from five countries to eight countries [in five years]. We view our growth in terms of adding 5,000 towers – roughly 2,500 will come from organic growth in the five markets we’re in and the other 2,500 will come from M&A,” says Pandya.

That thirst for expansion in new and existing markets is driven by mobile penetration numbers that remain low by international standards despite a vast uptake in mobile use on the continent over the last decade. In three of the five markets where Helios currently operates – Tanzania, the DRC and Congo Brazzaville – mobile penetration is yet to top 50%. In South Africa, where the firm is just starting out, it tops out at 68%. With so many customers yet to acquire a mobile, let alone transition to advanced technologies such as 4G connectivity, Pandya says that the growth potential for tower operators remains strong across Africa. The excitement in the sector was reflected in American Tower’s $1.85bn deal for Eaton Towers, another tower firm with African operations, in May.

“The markets we operate in today are some of the lowest penetrated markets in the world and Africa when it comes to subscriber penetration. And that’s a really exciting proposition for our business,” says Pandya.

Given the market fundamentals, Pandya says that the five markets that the company currently operates in and three expansion targets on the immediate horizon represent just the beginning of the firm’s ambitions. This year, the firm set up Helios Towers South Africa with partner Vulatel. The infrastructure platform subsequently completed the acquisition of SA Towers, giving it access to a pipeline of around 500 site locations that it intends to develop. Pandya reels off the names of other countries – including Senegal, Egypt, Morocco, Namibia, Gabon, Ethiopia, Botswana, and Angola – which he says could provide future bases for expansion.

Going to market

That thirst for new markets has helped Helios make noise among an investment community that helped the firm to raise $364m during its generally warmly received October IPO. Helios initially priced its shares at 115p ($1.48) – towards the bottom of a revised range of up to 125p per share – before they rose 5.7% to 121.5p on the first day of trading. At the time of going to press, the share price remained steady at 122p. Pandya expresses satisfaction with the listing despite a tricky market backdrop for Africa listings in London this year. In June, telecoms firm Airtel Africa suffered a disappointing debut when its shares fell as much as 15% on opening day after Africa’s second-largest mobile operator listed on the London Stock Exchange. In October, trade finance provider Afreximbank postponed a $250m plan to list its global depositary receipts in London.

“We’re very pleased with the listing. While people will say we listed at the bottom of the range, we’ve been told subsequently that the listing was very successful when you consider the backdrop of equity markets globally. There were a number of IPOs on the London Stock Exchange that were pulled during a time when we successfully listed within the parameters we announced. Getting a listing away for an African-centred business I think is a very positive sentiment.”

Yet the route to the long-awaited IPO has been far from plain sailing. Amid unfavourable market conditions, the company pulled an initially planned IPO in March 2018, with reports at the time citing an expected value of around $2.47bn. Reports suggested that the IPO had been pulled as a result of political risk in Tanzania and the DRC. President John Magufuli of Tanzania had spooked investors with a raft of protectionist policies, while the DRC had been scheduled to hold a delayed general election, which eventually culminated in a victory for Félix Tshisekedi in December 2018. Today, Tanzania and the DRC represent Helios’ biggest markets with 3,637 and 1,801 sites respectively.  But Pandya insists that the firm was put off from the earlier listing by equity market dynamics rather than political risk, and points to encouraging stability in Tanzania and DRC today. 

“We did look at coming to market in Q1 2018. The timing and reason we paused the process was quite simply driven by equity market dynamics, and if you look back to Q1 almost 50% of IPOs coming to market had been paused because of external factors… What’s we’ve demonstrated is that actually it doesn’t really matter what’s happening politically in the markets we’re operating in. The nature of the mobile network market is that it’s an essential utility in African markets where there’s no fixed line infrastructure and mobile connectivity is wholly dependent on service providers in the market – the MNOs and tower companies.”

Further acquisitions

The successfully navigated IPO gives the company acquisition capital and a platform to raise further capital to buy thousands more towers, says Pandya, who arrived as chief executive in 2015 after eight years with UK power generation equipment business Aggreko. 

Many of those towers will be acquired from MNOs themselves, who typically sell towers to release balance sheet value and invest in consumer facing technology such as the rollout of 4G. Around the world, some 70% of towers have been outsourced by MNOs, according to Pandya, compared to around 27% so far in Africa, suggesting that Helios has plenty of scope for future purchases. He believes that of 225,000 towers in Africa today, 165,000 are still owned by MNOs. Indeed, keeping a close eye on the MNO market is a key part of Pandya’s role. In the company’s Q3 results, Helios recorded a 9% year-on-year increase to 14,226 tenants, who typically sign 10 to 15 year contracts. He argues that consolidation among MNOs offers further opportunity for Helios by forging financially healthier businesses able to keep regulators, customers and tower operators happy. That could well happen in Tanzania, for example, where there are six to seven leading operators compared to three to four in other countries. For Pandya, that it another encouraging trend as the business looks to its next expansion phase.

“The only dynamic we’re watchful of is consolidation and how that occurs. But otherwise we’re very confident in the markets we’re operating in. We’ve seen a lot of ups and downs over the last four and a half years in our markets, yet it hasn’t slowed down the growth [of Helios].” 

Want to continue reading? Subscribe today.

You've read all your free articles for this month! Subscribe now to enjoy full access to our content.

Digital Monthly

£8.00 / month

Receive full unlimited access to our articles, opinions, podcasts and more.

Digital Yearly

£70.00 / year

Our best value offer - save £26 and gain access to all of our digital content for an entire year!