Helios Towers' IPO paves the way for expanding and upgrading its services in Africa where demand is growing rapidly.
Helios Towers Plc, a leading independent telecommunications tower infrastructure company in Africa, raised $318 million in its October 14 initial public offering (IPO) on the London Stock Exchange (LSE). Approximately 25% of the company was floated.
The share was priced at US$1.48 each, giving it an equity value of US$1.5 billion and making it one of the largest IPOs by market capitalization to happen in London this year behind Airtel Africa PLC, Network International Holdings PLC, and Trainline PLC.
The cash is expected to be used to help build and buy new sites as well as potentially enter three new African markets according to Helios Towers CEO Kash Pandya.
Helios Towers initially planned to raise $125 million through the issuance of new shares, in addition to the sale of existing shares by shareholders among them the International Finance Corporation and telecom firms Millicom and Bharti Airtel. Other shareholders of the company include Helios Investment Partners, Quantum Strategic Partners, Albright Capital Management LLC and, RIT Capital Partners Plc.
Pandya remarked that the IPO "marked the start of the next exciting chapter in Helios Towers' story... I hope this signifies our commitment to spreading mobile infrastructure across Sub-Saharan Africa whilst also highlighting the compelling investment opportunity throughout the continent."
Established in 2009, the company pioneered the sale-leaseback model in Africa by buying towers held by single operators and providing services by utilizing the tower infrastructure to the seller and other operators. This allows wireless operators to outsource non-core tower-related activities, enabling them to instead focus their capital and managerial resources on providing higher quality services more cost-effectively.
Helios Towers has more than 6,800 mobile telecommunications towers spread across five African countries (South Africa, Democratic Republic of Congo, Ghana, Republic of Congo and Tanzania) which it rents to mobile phone providers such as Vodacom, MTN and Airtel. It plans to use some of the IPO proceeds to keep pace with fast-growing demand for mobile data in Africa, expand into new markets, build more towers and roll out fourth-generation (4G) mobile services.
In the financial year ending December 2018, the company made $356 million in revenues, an increase of 3% compared to US$345 million in 2017. For the six months ended June 2019, Helios reported adjusted earnings before interest, taxes, depreciation and amortization totaling US$399 million.
Merill Lynch International, Jefferies International Ltd and Standard Bank of South Africa Ltd acted as joint global-coordinators and joint bookrunners, while EFG Hermes UAE Ltd and Renaissance Securities Cyprus Ltd acted as joint book runners for the IPO. FTI Consulting acted as its financial PR.
Gokul Mani, Head of Primary Markets—Middle East, Africa & India, LSE—said the LSE “continues to be a strong partner to companies across the Middle East and Africa. Four of the five largest IPOs from the region this year have listed on our market. London’s capital markets offer deep liquid pools of capital, connecting issuers from the Middle East and Africa with long-term international investors, supporting dynamic companies, infrastructure development, and economic growth in the region.”
In total, 124 companies from the Middle East and Africa (MEA) region are listed in London and have risen over $35 billion in equity issues. There are also 242 active MEA bond issuers who raised nearly $143 billion. Of the top 10 IPOs on the LSE in 2019, four are from MEA region.
The UK-based company is a market leader in Tanzania, Democratic Republic of Congo and Congo Brazzaville. The company is also a leading operator in Ghana with a strong urban portfolio and established a presence in South Africa in 2019. Helios Towers employs nearly 400 people directly, but also supports over 7,000 contractor employees who are engaged in the maintenance and security of their tower network which number around 7,000 in the five countries it operates in.
Helios Towers first applied to list in London Stock Exchange and the main board of the Johannesburg Stock Exchange in April 2018; however, the float was cancelled despite Helios saying it met with considerable investor interest after investors got jittery with political risks in DRC and Tanzania.
U.K’s International Development Minister for Africa, Andrew Stephenson, noted that the IPO gives investors the chance to gain a foothold in Africa’s booming telecoms sector.
“This transaction highlights the significant potential that exists to invest in Africa’s growth story. And it demonstrates what can be achieved when we connect African companies with international capital,” he said. Adding, “I am delighted that today Helios Towers has now embarked on the next stage of its growth story, by listing on the London Stock Exchange.
“That is why the Department for International Development will continue to work with the private sector to boost infrastructure investment across Africa. Our ambition is to catalyse more of the £8 trillion of assets under management in the City of London into investments in emerging and frontier markets.”
Matthew Edwards, head of research for the Europe, the Middle East and Africa region at research firm TowerXchange, says there are 158,000 towers in Africa and “towercos” own 39.3% of them. By 2025, 52% of the Sub-Saharan population (some 600 people) are expected to be mobile phone service subscribers.