Helios Towers today announced transactions with Airtel Africa for the acquisition and roll-out of over 2.5k tower sites in four new African markets. Initially, Helios Towers will acquire 2.2k tower sites in Madagascar, Malawi, Chad, and Gabon. Additionally, the transaction includes a build-to-suit (BTS) program of 315 tower sites, over the next three years, with an investment of ~$40m.

Transaction Overview – Helios Towers and Airtel Africa

Overall, the transaction with Airtel Africa delivers Helios Towers, in aggregate, $89m of annualized revenue and $27m of Adjusted EBITDA, in the first full-year of ownership. Additionally, further growth will occur from the build-to-suit (BTS) program of 315 towers, as well as colocation lease-up.

Helios Towers Presence in Africa
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Helios Towers will finance the Airtel Africa transaction through its existing cash and debt facilities.

Madagascar and Malawi – Transaction #1

In Madagascar and Malawi, Helios Towers is acquiring a total of 1.2k towers, with closing around Q4 2021. Helios Towers will pay Airtel Africa upfront consideration of $108m, which represents an enterprise value of $124m, including capitalized ground leases.

Financially, these towers will produce revenues of $38m and Adjusted EBITDA of $13m in the first full-year of ownership. Therefore, the transaction equates to a multiple of 9.5x EBITDA, on the initial $124m enterprise value.

Additionally, the transaction includes a build-to-suit (BTS) program of 195 tower sites over the next three years with an investment of $24m. Indeed, this equates to a cost to build each tower of $123k.

As part of the build-to-suit (BTS) program, Helios Towers will make an additional payment to Airtel Africa in the form of deferred consideration of $11m. Therefore, Helios Towers will pay Airtel Africa total consideration of $119m for the Madagascar and Malawi transaction.

Madagascar – Transaction Details

In Madagascar, Helios Towers is acquiring 494 tower sites, with a 1.3x tenancy ratio. Additionally, in Madagascar, Helios Towers will develop a further 135 tower sites through a build-to-suit (BTS) program. Overall, the acquired sites (excluding BTS) in Madagascar will generate revenue of $15m and EBITDA of $5m in Year 1.

Malawi – Transaction Details

In Malawi, Helios Towers is acquiring 735 tower sites, with a 1.4x tenancy ratio. Additionally, in Malawi, Helios Towers will develop a further 60 tower sites through a build-to-suit (BTS) program. Overall, the acquired sites (excluding BTS) in Malawi will generate revenue of $23m and EBITDA of $8m in Year 1.

Chad and Gabon – Transaction #2

In Chad and Gabon, Helios Towers is acquiring a total of 1.0k towers, with closing around Q1 2022. Additionally, the transaction includes a build-to-suit (BTS) program of 120 tower sites.

Currently, the Chad and Gabon deal is under an exclusive Memorandum of Understanding (MoU) and has not reached definitive documentation. Therefore, Helios Towers will disclose consideration details for Chad and Gabon upon signing of the acquisition agreements in each market.

Chad – Transaction Details

In Chad, Helios Towers is acquiring 539 tower sites, with a 1.2x tenancy ratio. Additionally, in Chad, Helios Towers will develop a further 60 tower sites through a build-to-suit (BTS) program. Overall, the acquired sites (excluding BTS) in Chad will generate revenue of $29m and EBITDA of $7m in Year 1.

Gabon – Transaction Details

In Gabon, Helios Towers is acquiring 459 tower sites, with a 1.0x tenancy ratio. Additionally, in Gabon, Helios Towers will develop a further 60 tower sites through a build-to-suit (BTS) program. Overall, the acquired sites (excluding BTS) in Gabon will generate revenue of $22m and EBITDA of $7m in Year 1.

Anchor Tenant for Helios Towers – Airtel Africa

Helios Towers and Airtel Africa will sign a long-term Master Service Agreement (MSA) in each market, for an initial period of 12 years. Importantly, the Madagascar and Malawi transaction involves U.S. dollar-linked revenues, and the Chad and Gabon deal uses Euro-pegged currencies.

Overall, the acquisition of Airtel Africa’s towers increases Helios Towers’ future contracted sales (i.e., backlog) by $1.1bn, to $4.6bn. Additionally, the deal extends the average remaining term of Helios Towers’ contracted revenues to 8 years.

Transaction Rationale – Helios Towers

Upon completion of the Airtel Africa transaction, Helios Towers will become the largest independent towers infrastructure company in each of Malawi, Chad, and Gabon. Notably, Towerco of Madagascar (TOM) will remain the largest towers owner in Madagascar, with 1.2k tower sites.

Helios Towers Africa Markets and Sites
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By adding Madagascar, Malawi, Chad, and Gabon, Helios Towers’ geographic presence increases from 6 to 10 markets. Additionally, the company’s total tower site count increases to 11.5k towers, pro forma for the completion and BTS of the Free Senegal acquisition.

Markets Overview – Madagascar, Malawi, Chad, and Gabon

Helios Towers is adding four markets which are forecast to deliver strong compound annual growth rates (CAGRs) in GDP of 4% to 6%, over the next five years. Indeed, Madagascar, Malawi, Chad, and Gabon all have young, growing, and increasingly urbanized populations supporting this growth.

Strong economic and demographic dynamics in these countries will continue to drive increasing demand for mobile communications. Consequently, the digital infrastructure requirements to support mobile communications will grow in tandem.

Adam Simmons is the Founder & CEO of Dgtl Infra. He started his career with an S&P 500-listed big box retailer, in an operations management role. Adam's entrepreneurial "itch" led him to start a 5G-driven company, focused on innovative retail solutions using augmented reality and shoppable videos, which was eventually sold to an advertising and consulting group. After, realizing the potential of 5G, Adam shifted his efforts towards investing in the "building blocks" of 5G - known as digital infrastructure, completing a number of strategic investments, buying cellular towers, data centers and fiber networks.

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