Helios Towers plc Towers Helios Helios Towers plc Annual Report and Financial Statements Annual Report and Financial Statements Statements ReportAnnual and Financial 2019 DRIVING THE GROWTH OF COMMUNICATIONS IN AFRICA Helios Towers plc Annual Report and Financial Statements 2019 Who we are Contents Overview 01 2019 Highlights OUR VISION IS TO 02 At a glance 04 Our journey BE THE LEADING 05 Chair’s introduction TELECOMS 06 Investment proposition INFRASTRUCTURE COMPANY IN AFRICA Helios Towers plc (“HT”) is a leading independent tower company, providing mobile network operators (“MNOs”) with tower site space, power and related services. We operate in some of the fastest-growing mobile markets in the world, driven by young and urbanising populations, high GDP growth and through continued expansion of communications infrastructure. PG.5 In a continent with minimal fixed line connectivity, mobile is the CHAIR’S INTRODUCTION driving force in communications, and a key enabler for social and economic development. Strategic Report OUR PURPOSE 08 Chief Executive Officer’s statement Our purpose is to drive the growth of communications in Africa. 12 Q&A with our CEO and CFO We play a pivotal role in advancing African mobile telecoms services, 14 Market overview and the resulting development of economies and communities. 20 Business model 22 Our strategy OUR VALUES 28 Sustainability Throughout Helios Towers, we hold true to our three core values 38 Chief Financial Officer’s statement of integrity, partnership and excellence. 41 Detailed financial review 46 Risk management INTEGRITY 47 Principal risks and uncertainties Doing the right thing. 49 Viability statement 50 Section 172 statement PARTNERSHIP 52 Operating review With our stakeholders, where each party respects and benefits from the other. EXCELLENCE Our constant goal is to be the best we can be, in everything we do. From the clear imperatives of our legal responsibilities, to how we act towards people, inside and outside the business, these values guide and govern how we behave each day. And we don’t just apply these values throughout our organisation, but by extension through our partnerships with both key suppliers and our customers. For more information go to PGS.12-13 www.heliostowers.com Q&A WITH OUR CEO AND CFO 01 Helios Towers plc Overview Strategic Governance Financial Annual Report and Financial Statements 2019 Report Report Statements 2019 Highlights FINANCIAL KPIs Revenue (US$m) PGS.22-23 2019 387.8 CASE STUDY | GROWTH 2018 356.0 +9% +3% 2017 345.0 Adjusted EBITDA ∆ (US$m) 2019 205.2 2018 177.6 +16% +22% PGS.24-25 2017 146.0 CASE STUDY | BUSINESS EXCELLENCE Adjusted EBITDA∆ margin (%) 2019 52.9 2018 49.9 +3.0ppt +7.6ppt 2017 42.3 Operating profit/(loss) (US$m) 2019 (4.5) 2018 3.3 ($8m) PGS.26-27 +$27m CASE STUDY | SUSTAINABILITY 2017 (24.0) Governance Report OPERATIONAL KPIs 56 Chair’s introduction 58 Board of Directors Sites 60 Corporate governance report 66 Nomination Committee report 2019 6,974 67 Audit Committee report 2018 6,745 +3% 76 Directors’ remuneration report +3% 2017 6,519 97 Directors’ report 100 Statement of Directors’ responsibilities Financial Statements Colocations 101 Independent auditor’s report 2019 7,617 111 Consolidated Income Statement 2018 6,804 +12% 112 Consolidated Statement of other +5% comprehensive income 2017 6,468 113 Consolidated Statement of financial position 114 Consolidated Statement of changes in equity 115 Consolidated Statement of cash flows Tenancy ratio 116 Notes to the Financial Statements 2019 2.09x 152 Company Statement of financial position +0.08x 153 Company Statement of changes in equity 2018 2.01x +0.02x 154 Notes to the Company Financial Statements 2017 1.99x 157 List of subsidiaries 158 Officers and professional advisors 159 SDG reporting Δ Alternative Performance Measures as defined in the 161 Glossary Alternative Performance Measures section of the annual report on pages 54–55. 02 Helios Towers plc Annual Report and Financial Statements 2019 Overview At a glance WHAT WE DO 1 ACQUIRE AND BUILD TOWERS Grow tower portfolio through acquisitions or organically through build- to-suit sites Our principal business is building, acquiring and 2 INITIAL CUSTOMER: operating telecommunications towers that are ANCHOR TENANT capable of accommodating and powering the MNO places needs of multiple tenants. These tenants are their active typically large MNOs and other telecommunications equipment on the HT tower providers who in turn provide wireless voice and and is the data services to consumers and businesses. initial customer to occupy the tower We offer comprehensive an MNO. Our portfolio consists tower-related operational mainly of four-legged, heavy services, including site duty ground-based towers, selection, site preparation, typically ranging in height maintenance, security and from 35 to 70 metres. Subject power management. We provide to environmental permits space on our tower sites under and impact assessments, we 3 ADDITIONAL CUSTOMERS: a combination of master lease also build taller towers when STANDARD COLOCATION TENANT agreements (MLAs) or master circumstances require; such as tower services agreements valley locations, or where greater Additional (MTSAs), which provide the transmission range is required, tenant adds commercial terms that govern as with our communications their active the provision of tower space, backbone in DRC. equipment on and individual site agreements the HT tower (ISAs), which act as an appendix 2. ANCHOR TENANT and shares the to the relevant MLA/MTSA The initial active equipment tower space and include site-specific on the tower and the outdoor with the information. We also enter cabinet is owned and maintained anchor tenant into ground lease agreements by the anchor tenant, which is with property owners to host the first customer to occupy our sites on their land. each tower. 1. ACQUIRING AND BUILDING HT owns and maintains the TOWERS passive infrastructure. This 4 ADDITIONAL EQUIPMENT: We add to our tower site includes the tower’s diesel AMENDMENT COLOCATION TENANT portfolio through a mix of generator, battery backup Existing acquisitions and organic build- system, site monitoring customer to-suit (BTS) sites. We only system and, if applicable, on a site construct BTS sites following a hybrid and solar technology. (anchor tenant contracted anchor order from or standard colocation tenant) modifies or adds additional equipment on the tower For more information go to www.heliostowers.com 03 Helios Towers plc Overview Strategic Governance Financial Annual Report and Financial Statements 2019 Report Report Statements 3. STANDARD COLOCATION OUR ASSETS TENANTS New “colocation” tenants share 2019 Sites Tenants Tenancy Ratio the passive infrastructure (which we provide) with the anchor Tanzania 3,661 8,099 2.21x tenant. Colocations sit at the heart of our business model as DRC 1,850 3,828 2.07x they allow us to grow revenue and improve operating margins without significant additional Ghana 961 1,888 1.96x capital or operating expenditure. 4. AMENDMENT COLOCATION Congo B 384 568 1.48x TENANTS Amendment colocation tenants are existing customers (either South Africa 118 208 1.76x anchor or standard colocation tenant) adding or modifying equipment, taking up additional Congo B vertical space, wind load capacity Ghana and/or power consumption, which leads to additional revenue. Tanzania Sites ANCILLARY SERVICES HT is developing a range of incremental ancillary products 6,974 and services that form natural 2018: 6,745 extensions to the tower estate. In selected territories Tenancies we are already offering fibre DRC regeneration services, localised small cell and in-building 14,591 solutions, and data centre 2018: 13,549 services. All of these services offer potential to be rolled out Tenancy ratio further across the Group. 2.09x South Africa 2018: 2.01x Market Leader Contracted revenue Contracted revenues Africa’s Big 5 MNOs by customers $2,351M 1% 82% $2,872M • Airtel • Tigo • MTN • Vodacom • Orange Average remaining contract life Africa’s high-growth challengers 17% $486M 7. 2 years • Viettel • Africell Other operators $35M • TTCL • Cell C • and 12 others • DFA • NEPIC Africa's Big 5 MNOs Africa's high-growth challengers Other operators 04 Helios Towers plc Annual Report and Financial Statements 2019 Overview Our journey 2020: A NEW CHAPTER IN Acquisitions OUR STORY 9 in 10 years The Helios Towers story began in 2010 6,974 Sites 6,745 in Ghana, where we pioneered the 6,477 6,519 acquisition of tower infrastructure from MNOS in Africa. 5,424 4,656 This first deal with Millicom established the business with 831 towers. A year later we made further 2,974 2,710 acquisitions in Tanzania and DRC, 2,517 boosting our site count to over 2,500. In 2012, we supplemented these acquisitions with our first built-to- 831 suit investments, constructing 259 new towers; and in 2014 we added 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 another 1,149 towers through an acquisition from Vodacom Tanzania. In 2015 we entered our fourth market by acquiring 393 sites from Airtel in Congo Brazzaville. In these early years we focused on growth through acquisitions, building out networks and expanding into new geographies. The arrival of Kash Pandya corporate bond issuance in 2017. as CEO in 2015 marked the The process was also valuable beginning of a second chapter. in preparing for life as a public company. This included new While growth and expansion systems, processes and enhanced continued, Kash also drew on his external communications, as well as experience in power management to embracing the rigour and discipline focus on service uptime and quality, of institutional investor oversight. and on bringing the Company together It also enabled the business to under the banner of ‘One Team, One build a reputation in the financial Business’. Applying Lean Six Sigma markets for continued delivery. principles, we overhauled our processes and implemented uniform In October 2019, despite a turbulent systems.