Good morning, everybody. Thank you for joining our Q1 results update for 2020. First of all, I hope everybody's well, safe and healthy during this difficult time. Joining me on the call today, I'm on slide two of our deck, is Tom Greenwood, our CFO, and Manjit Dhillon, who's the Head of our Investor Relations and Corporate Finance. Today we're going to cover on slide three, highlights that I'm going to take you all through, then hand over to Tom to take us through the financial results. As Jordan has said, there's plenty of time at the end for Q&A, we'll go through those right at the end. Moving on to slide five. Well, look, Q1 is business as usual as far as we're concerned. Our quarter is on track to what we expected, we are maintaining our full year 2020 outlook.
We've had a strong revenue growth of 9% in the quarter, against Q1 of 2019, coming in at $102 million. Correspondingly, our EBITDA has grown by 11%, coming in at $54 million. Our margin improved quarter-over-quarter by one percentage point to 53%. We delivered another quarter of growth that now equates to 21 consecutive quarters of growth for our business, and demonstrates the robustness of the business model, but also the robustness of the markets we operate in. The business has delivered in the quarter, portfolio free cash flow of $46 million, some 14% increase year-over-year. Regarding our operational dynamics in terms of tenancy growth and site growth, 4% year-over-year site growth, shy under 7,000 towers in total, and 8% year-over-year tenancy growth coming in at a little under 14,700 tenancies.
This gives us a tenancy ratio of 2.1 and maintains our trajectory in the medium to long-term horizon, 3-5-year horizon of achieving 2.3-2.5 tenancy ratio for our business. In terms of our resilience towards particularly the pandemic, we've got a couple of slides coming on during this deck. Look, it's as I said, it's business as usual. We're maintaining our performance and serving our customers as we've done in the past years, and we'll talk a little bit more detail on how we're doing that. M&A, our strategy continues to focus on expansion in our markets, but also into new markets. We're pursuing multi deals currently, and it's in line with our strategy, and we'll touch on that in a slide later on as well. Moving on to slide six. Well, just reinforcing 21 consecutive quarters of EBITDA growth.
This slide demonstrates the robustness that we've been operating under, and we believe we'll continue to operate under this. Our margin slightly decreased. This is just purely driven by some additional costs coming through as we're now a PLC. It was something we expected. It does represent a 39% CAGR growth in our EBITDA margin, and EBITDA since Q1 of 2015, more than doubling our margin over that time. Moving on to slide seven. Look, I've got a couple of slides on how we're operating under the COVID-19 environment. Our business is robust, and we've had minimal impact. First of all, looking at our staff and colleagues, we executed working from home offices very early, prior to lockdowns in the markets and took the right steps. This has meant that we've not seen any misses in our operational capability.
The nature of our field operations is an isolated model. Typical field engineer operates on his own. He has his car, his four-wheel drive truck. He has spares that he carries and equipment he carries, and he goes out to site on his own. It's a very isolated model. What's important is that all the governments in our markets have classified telecoms communication as an essential service. We've got the ability to move around the markets we operate in very easily, and we are one of the essential service categories that allow us to move freely. In terms of our revenue and existing liquidity, we still have close to $3 billion worth of contracted revenue at around seven years of contract life remaining. In our industry, we sign typically 10-15-year contracts, so still a long way to go on our contract life.
We serve Africa's large MNOs, the Big Five, as we call them. Over 80% of our revenue is with these guys, and they're robust and have healthy balance sheets and are continuing to operate, and actually, their demands have gone up, which I'll touch on shortly. Overall, in terms of cash and debt capacity, we have $230 million of financial resource to continue to pursue our M&A strategy and continue to drive the performance of our business. Customer rollouts under the current environment. Well, we've seen Q1 is in line with the tenancy growth that we've seen in the last three years. That actually, you could argue is fractionally better than what we've delivered in 2018 and 2019. The only potential challenge is supply chains for our customers, but we believe they're managing this well in terms of availability of equipment to put on new towers, active equipment.
From our side, our supply chain, we've been proactive in mobilizing the supply chain to make sure that we've bought early and ahead. During the course of 2020, we see no issues in making sure we can maintain our towers, but more importantly, facilitate building new towers for our customers when and as they need them. To the extent of fuel, consumables, et cetera, we've been proactively purchasing fuel in our markets. We have up to three months of fuel across our markets on an ongoing basis to ensure that we don't have any blips in servicing our business. In terms of the organization and our staff and the communication, look, one of the benefits of investing in digitized solutions that we have done over the last few years is that it's coming into its own play now.
We've been able to have our staff work from home because we've got cloud-based solutions that we can monitor and communicate, video conferencing, day-to-day monitoring of our assets hasn't changed, and we've been able to enact our business continuity plans that were already in place prior to this challenge, and they've worked well for us. Slide eight, really just going on further. If you look at our power time performance, it's just business as usual. We've been operating at close to 100%, well above the SLAs we have, Service Level Agreements with our customer. It's pleasing to see actually, that during April, we've seen a slight improvement in our performance in power delivery and uptime of our sites to our customers. Rollouts for our customers, as you'll see in the comments from Vodafone and Orange on this slide, there is increased investment from some of our customers.
It's driven by more volume of traffic that we're seeing from our customers. Some of the full-year trading updates from Vodafone, Orange, Airtel this week, for example, have all talked about increase in data volume and voice traffic. This is all putting positive strain on the infrastructure, which means more equipment for us, which means in time, more revenue and growth for us. Regarding the operational safety, we've enacted the normal PPE you'd expect a business like ours to put in the field to ensure we carry on protecting our staff. Moving on to slide nine, touching on our progress on ESG. Look, we've talked about our values. They've been ingrained in our business now since 2015.
We are one of the only company in Africa that's got four international ISO standards when it comes to behaving with integrity, focused on quality, and protecting the environment and our people. We've invested in capital to introduce green solutions into our portfolio. Part of our ESG focus is that we carried out a benchmarking exercise during the first few months of this year, and it's to compare ourselves to what the FTSE 250 companies are doing. It was pleasing to know, and the outcome of that benchmarking was that we are actually in the midpoint of what FTSE 250 companies are doing. We're not satisfied with that. We've set ourselves an objective to be in the top quartile over the next three to five years as part of our strategy, and we will be communicating our strategy on ESG in the next few weeks.
We've invested in resource into the business who can support as knowledgeable resource to bring an understanding of ESG and sustainability, and integrate that to our business strategy. Watch this space as we communicate that roadmap in the next few weeks. On slide 10, I'm moving on to really our focus on M&A and growth through acquisitions. This slide you've seen, we're just reiterating that there's 65,000 towers in Africa that are still owned by MNOs, and the gray countries that you see on the continent are countries with no independent towercos operating in them today. We're still very active. In some ways, I feel that the business development tracker has improved. We've got more opportunities on there than we had a few months ago.
We continue to pursue multiple transactions, and are hopeful and positive about bringing them to fruition over the next few months. Obviously, the COVID-19 issue has had a slight slowdown in our ability to travel and the ability to communicate with counterparties just because of the upheaval that the world's going through, but no change to our outlook on the opportunities to expand, et cetera. Our target and our objective still remains is to enter additional one, two, three countries over the next five years and add significant amount of towers through M&A into our portfolio. On that, I'm going to hand over to Tom, who's going to take us through the financials. Tom?
Thanks very much, Kash. Hello, everyone. Hope everyone's well. I'm on page 12. This really just summarizes some of the main KPIs, which I'll talk through on the next few pages. If we move on to page 13 to look at our revenue and EBITDA. We've had solid and steady growth continuing, with revenue growth of 9% year-on-year and 2% quarter-on-quarter. Likewise, EBITDA growth of 11% and 1% respectively, through those periods. Our margin year-on-year has stepped up slightly 1 percentage point and slightly down quarter-on-quarter from Q4, from 54% to 53%. In fact, that's a 0.5% movement. That's predominantly because of some additional TLC-related costs coming through to our business.
Still very much reiterating guidance for the full year 2020, which was to be between the 55%-60% range that we'd set ourselves for the medium term and just coming into the bottom of that range. If we move on to page 14. A page that is very consistent with previous quarterly updates. Our customer base, FX mix, and OpCo split is largely unchanged from 2019, with 86% of our Q1 revenue coming from Africa's Big Five mobile operators, 59% of our revenue being hard currency, which translates to about 65% at EBITDA level. Moving on now to slide 15. We see the continued upward growth on our tenancies. Year-over-year, last 12 months, we've added 1,077 tenancies across our portfolio, which is in the range of our 1,000-1,500 guidance for annual.
That, of course, is our guidance for FY 2020, which we're reiterating today. In Q1, we added 86 tenancies. Traditionally, Q1 is our quietest quarter for tenancy increase, and that's because the big mobile operators are typically either finishing or just starting their budget cycles at this point. If you compare the Q1s of the last few years, it's very much in line, in fact, slightly ahead. In 2019, we had 51, and in 2018, 76. We do usually see an uptick in tenancy growth through the year, which is our expectation again now, based on a pretty robust pipeline that we have ahead of us. Moving on to slide 16, and a look at our month growth profit per tower and our OpEx. Our gross profit per tower has stepped up 10% year on year.
This demonstrating the continued operational leverage of our platform, essentially adding new tenancy to our platform, which delivers significant bottom line flow through. The OpEx is up slightly in the quarter, as we've seen a slight increase in sites and a slight increase in power costs, and we're still 33% of revenue being maintained there. If we look at slide 17 now, our CapEx. Again, we're reiterating our CapEx guidance for the year, which is $110 million on an organic basis, with the $30 million earmarked for some small end market acquisitions, which are near term, one of which actually is very imminent and potentially in the next few days. Our CapEx as of Q1 was $11 million, so relatively low compared to the full year guidance. That's simply timing on quarter-on-quarter. Again, no change to the CapEx guidance for the full year.
In fact, we've accelerated the purchasing of CapEx items at the end of Q1 and early Q2 so that our CapEx is ready and in market, ready for deployment based on the pipeline that we see in front of us today from our customers. Moving on now to slide 18. Again, our debt position, not much has changed here since our last update for FY 2019. Our leverage continues to be below our target range. Our leverage is at 3.0 on a net leverage basis. At the moment, our target range continues to be 3.5 to 4.5. We do have funds available for the expansion path that we've described and would expect to deploy some of that in the coming months. If we look now at slide 19, again, a look at our cash flow.
Cash conversion for portfolio free cash flow continues to be very strong and demonstrate growth, reaching 85% in Q1. That is almost a 30% increase since 2017. A significant increase in cash conversion. Our net working capital, which is the other call-out on this page, is minus $35 million for the quarter. This principally represents investment in CapEx and OpEx for our business as described in terms of the business resilience earlier. This is the forward purchasing, an investment for growth that we've done to ensure our business is resilient through this year and also ready for growth as it comes through the pipeline. Our net customer receivables have gone up a bit in the month, $9 million, as you can see on the chart there.
This was solely some of the large Big Five MNOs paying us after the March 31st date, which of course, for some of them was their year-end. In fact, that has turned around through April. If we were to show this chart today, it would be a $17 million reduction on this position. All the cash coming in effectively. With that, I will pass back to Kash for the summary on page 26.
Thanks, Tom. This is the last slide before Q&A. Look, summarize Q1 is in line with our expectations. The business is operating robustly during the COVID crisis and business as usual as far as we're concerned. Organic and inorganic pipeline continues to be robust for us and we are on track to deliver between 1,000 and 1,500 tenancies this year, which is the guidance we've given, and we're maintaining 2020 guidance. On that note, I'm going to hand back to our conference coordinator, Jordan, who can help with the questions. Jordan, over to you.
Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star followed by one on your telephone keypad now. If you change your mind, please press star followed by two, and when preparing to ask your question, please ensure your phone is unmuted locally. Our first question comes from Giles Thorne of Jefferies. Giles, please go ahead.
Thank you. My first question is coming back to the matter of how the coronavirus has impacted wireless traffic. Yeah. To your point, Kash, yes, some of your customers have evidently benefited from a massive pickup in traffic. I wanted to explore how that could or couldn't come through in accelerated network investments this year or early into next year. In particular, I was surprised to see that Airtel Africa, as an example, actually kept their March 2021 CapEx guidance unchanged, i.e., there's no ostensible pickup in network investment by Airtel Africa. It would be useful to hear exactly what your customers are telling you at this point in time when you speak to them about any changes to immediate investment plans. Hopefully, that all makes sense.
Yeah.
Related to that. Sorry. Let me get the three out and then I'll hand back if that's all right, Kash.
Yeah.
Related to that, Airtel Tanzania was awarded some more 1,800 MHz in February. Do you think that is something that they're about to imminently deploy? Actually, could this be a catalyst for them to maybe finally sell their towers in that market? The final question was on Millicom, again, under this same kind of umbrella theme. Millicom Tanzania, well, Tanzania is Millicom's last African market. My reading of the body language from Millicom remains that they are pretty ambivalent to the region. Is this going to be a structural impediment to growth for your Tanzanian business? Are they just going to sit on their hands and not invest in that particular operation? Thanks, Kash.
Thanks, Giles. Thank you for those questions. First of all, what we're hearing from the customers, certainly our pipeline for tenancies, co-locations, et cetera, seems robust over the last few months. We've had inquiries about additional equipment, et cetera. I cannot go into specifics. At this stage, we're not saying anything about being above our guidance. Our range of adding tenancies between 1,000 and 1,500 is fairly large, and we'll absorb whatever additional capacity increases they need within that range as far as we're concerned. We're actively working with our customers. The good thing from our side is we're ready to do what they need across all our markets. We've got the capacity in terms of equipment to build towers, but also to add more tenancies on existing towers. Customers' plans change.
It's the beginning of the new budget cycle for some of our customers from the 1st of April. We'll hear more during the next three months on their rollout plans for their next 12 months, which is slightly out of sync to our budget year, effectively. On Airtel Tanzania, first of all, they own their own portfolio, as you quite rightly pointed out. They've got more spectrum that they've got. It is an entity with the government there in Tanzania. As they upgrade their network, we should see some improvement in our equipment on our towers where they already have tenancies on, and we're watchful. On the towers that they're selling. We know that portfolio very well. We've looked at it before.
Currently, our view is that while the towers equate to some 1,300 towers owned by Airtel, for us, there are about 700 towers that are unique because we are a close proximity to those towers. We'll see what happens with that asset sale. It has been in the public domain. I won't comment any more on that point. Regarding Millicom, look, it's not a secret that they've been looking at marketing that business. It's their last hold, effectively, in Africa as a wholly owned entity. I think this crisis may have slowed down that sale process potentially for a few months, but they were preparing to sell their assets.
Yes, they may not invest as much as they should if it was a long-term commitment, but certainly we are still getting inquiries from Tigo in Tanzania, that's the brand name, on tenancies and expansion, etcetera, because they need to maintain their market share. What's good from our perspective is that we don't believe it will be a merger, because the market share would be unfair, whoever buys from within, i.e. Airtel or Vodacom or Viettel in that market. We believe that there'll be a new player that will come in, whether it's MTN, Orange or someone else, to take that MNO, and that will encourage more investment when that happens. We've learned from acquisitions or takeovers, as well as mergers in other markets over the last few years, that there's growth when that happens in the markets.
Just as a follow-up, the coronavirus, obviously you've spoken to stimulating network investment. It would be interesting to see if it's stimulating any kind of addition to the top of the M&A funnel, if that makes sense. Are MNOs in the region being prompted by the virus to change industrial policy and outsource and sell and lease back? What's happening at the top of the M&A funnel in response to the virus?
Look, we do think that, and this is not just for the virus, but we think that there will be pressure on CapEx, et cetera, which will ultimately continue to feed the pipeline for tower sales, in our view. For example, MTN, I think this morning or yesterday, announced that they've got a CapEx constraint, and that all leads to releasing value from the balance sheet, in our view, which will happen over the coming years. There is 165,000 towers still owned by MNOs in the continent. As they outsource that aspect of their business, and it's proven that independent tower companies do the job better than MNOs in running passive infrastructure. We've certainly experienced that when we've taken on tower portfolios, and I think there'll be more and more of this that will occur in the continent.
Over to you.
Thanks, Giles.
Our next question comes from Cesar Tiron of Bank of America. Cesar, please go ahead.
Yes, hi. Thanks for the call, and thanks for the opportunity to ask questions. The first one, can you please discuss about your confidence that tenancies will gradually increase throughout the year? That's the first thing. Second question would be on the scope for the refinancing of your bond. The third one, if you can give probably a little bit more insight on M&A plans for this year. Thank you so much.
Yeah. Well, let me take the first part, then I'll let Tom talk about the bond, then we'll come back to also M&A. Look, as we've said, we're pretty robust in continuing to grow our tenancies. Our pipeline in terms of inquiries for tenancies on existing towers, build-to-suits, et cetera, is healthy and positive at this time of the year. Our guidance is, we'll be within that range of 1,000-1,500 tenancies added this year. Look, if you just look at the last 12 months, we've added 0.07 tenancy growth to our portfolio. We don't see any change to that. Our guidance has always been that we will add between 0.05 to 0.1 tenancies per year. That takes us to our target of around 2.3 to 2.5 in the five-year horizon, and we're on track for that.
If you look at our history, we've been within that range, and confident of delivering on that. Tom, refi?
Yeah. No, absolutely. We're monitoring the market for refi. We're ready to do it should a window occur. As I think people have seen, the EM bond market has moved quite a lot in the past couple of months. Our bond is currently trading at around par. We believe that based on our business strength, that we should refi at better than that level. We are monitoring. We're in no super rush to do so. We're doing what we can control, which is be ready this end should a window occur. I guess watch this space, and we'll be monitoring the market for any opportunity. On the M&A, Kash, do you want to do the M&A?
Yeah. On the M&A, as I said again, we've got a number of different opportunities from small to medium-size and large opportunities we're tracking. Actually, there has been a slight uptake on the opportunities. We've had a few more things we're engaged with that we had in January, for example. We're still confident of the acquisition pipeline. In the short term, as you'd expect with the virus pandemic, that there's been a slight slowdown. If I said anything different, you would believe me. There has been. It's quite simple because people are not able to travel. People are working from home. Some of the government bodies that we engaged with in some of the markets obviously are not as available, et cetera. It's a slowdown, but nothing's changed in the opportunity tracker that we're working hard on.
It's not detracted our team that we have internally. We've got a dedicated business development team under the leadership of Alex Lee, and that continues to be the focus of that team.
Thank you so much, Kash and Tom. Thank you.
Thanks, Cesar.
Thanks.
Our next question comes from Simon Coles of Barclays. Simon, please go ahead.
Morning, guys. Simon from Barclays. Thanks for taking the question. I was just wondering, with COVID-19 and obviously the increasing importance of connectivity, are you seeing any increased pressure or discussion from governments and regulators to sort of force operators to increase their coverage? Linked to that, I guess there's going to be areas where operators will see it as uneconomical for them to do that, but the government will still want coverage. Is that an opportunity for you guys? Are you maybe even potentially in discussion to build towers in some of these areas already? I think we've seen similar situations happening in other markets in Africa. I'm just wondering if you're seeing anything there. Thank you.
Thanks, Simon. Appreciate your question. Yes, absolutely regarding the current situation with the virus, as I mentioned, telecoms is essential services in our markets because there's no other fixed-line infrastructure that people can rely on. Actually, the regulators are focused today on quality of service and availability of service and expansion. Let me just, on the expansion, for example, rural locations, a lot of our governments and regulators have funds that encourage the facilitation of antennas and services from our customers into these small communities, and we're part of that solution. For example, in Tanzania, we build rural sites. We have a rural solution that's a lower cost solution designed for one tenant services, maybe two, but less equipment, et cetera.
In our view and what we hear on the ground is that this pandemic is going to accelerate the rollout over time because these communities need connectivity during these difficult times to access medical services through the internet, for example, et cetera. Perversely, this is going to increase the focus of coverage, which means more activity for independent tower companies as well as our customers.
Great. Thanks very much.
Our next question comes from John Karidis of Numis. John, please go ahead.
Thank you. Good morning to you. Just for good order first, can I just check that it's still the case that about 65% of the EBITDA during the quarter was in hard currency? Secondly, last year, revenue growth accelerated during the course of 2019. Should we expect the same to happen this year?
Tom, I'll let you take that.
Hey, John. Yeah. Yeah. Short answer, yeah, 65% hard currency. There's been no major change there and 59% at revenue level as well. Yeah, very consistent with previous years. On the revenue one, yeah, usually Q1 is the quieter quarter when it comes to adding tenancies. The mobile operators are either just getting their budget signed off or just starting their budget season. That's typically what we see, very similar to previous years, with a ramp up expected in following quarters. That's certainly what the pipeline tells us today.
Okay. Thank you, Tom. If I may, given that consensus is forecasting 10% revenue growth in the year and you delivered nine in the first quarter, do you think that the risk to consensus estimates therefore is quite clearly on the upside?
I wouldn't want to go and start talking about upside. I think clearly Q1 is very close to the full year consensus, and we know that Q1 is generally a slower quarter. I think we feel fairly good about the full year, but I wouldn't want to start talking about upside.
Fair enough. Thank you, both.
Thanks, John.
All right, John. See you.
Our next question comes from Simrin Sandhu of SCB. Simrin, please go ahead.
Hi. Thank you very much for the presentation. Couple of questions from me, please, regarding liquidity. I noticed the CapEx guidance is unchanged from your prior call, but just I'm curious as to how you're thinking about prioritizing cash conservation and maybe keeping a liquidity buffer on the books versus executing on your growth plans in light of the fairly uncertain broader macro environment we're in. Maybe if you could also comment on how much of the $110 million in CapEx is committed. Secondly, on the cash, could you please tell us how much of the cash balance is contained in USD versus local currency, and also whether there have been any recent issues in extracting cash from your subsidiaries? Thanks.
Yeah. No, absolutely. Thanks for the question. Look, first of all, on the CapEx, we are reiterating our guidance on the CapEx. That is based on seeing the pipeline ahead of us. A large amount of our CapEx is linked to customer roll-ups, of course, and some of it we've earmarked for the smaller market acquisitions, which are near term, some of which are actually pretty imminent. While not all of that is essentially committed today as such, it's very much within our sights in terms of pipeline.
As we mentioned earlier, we have been forward purchasing CapEx at the end of Q1 and into Q2 for the remainder of the year to ensure that we have all the equipment required in country, in the event that there could be supply chain delays later in the year, which by the way, we haven't seen really at all yet in any material way whatsoever. We're doing that from a prudence point of view. From a funding point of view, our organic business plan is self-funding. The earnings of the business through the rest of the year effectively pays for that CapEx. In terms of our cash balance and available debt to draw, we have, at the end of Q1, $146 million of cash in the bank and over $100 million worth of debt lines available to draw. We are liquid.
We do have good amounts of available funding should that be required for expansion plans. From a leverage point of view, as I mentioned, we're at 3.0x leverage, which is below our stated target levels of three and a half to four and a half. This is effectively because we have a high cash balance on the balance sheet today, some of which will be deployed on these near-term acquisitions that we have in the pipeline. In terms of cash there, we do always look to keep a healthy balance of cash across the group. Nearly all of our cash is in US dollar at group treasury level. Of the $146 at Q1 end, something in the region of 80%-90% would be in US dollar with effectively small floats in each OpCo. That's how we operate.
We do monthly streaming of cash in dollars through our shareholder loan structure across the group. Each month, our OpCos send up US dollars from the markets to our group treasury in Mauritius. That continues. That's partly leading to us being able to keep small floats in our OpCos, which is our ongoing strategy around cash management and de-risking the business. Does that cover your question?
Great. Thank you. That's very helpful.
Thanks so much.
Our next question comes from James Congdon of Quest. James, please go ahead.
Hi there, thank you, guys. My first question about the bond refi, Tom, you've already covered off. My second question is around your cash flow statements. I see that there's a $37 million outflow due to change of control taxes from around the IPO time. I just wondered if there's any more of these kind of similar transactions to come out or kind of adjustments to make going forward. Thanks.
Yeah, absolutely. That's very much in line with the structure that we set out at IPO, and that was funded through an escrow account from the pre-IPO shareholders, which had been drawn at year end. If you look on our December 31st balance sheet, there's $220 million of cash, but $37 million of that was restricted cash. That was the cash that had just been drawn from the escrow pre-year end. Settlement of that for the tax authority was post year end. It's slightly confusing the fact that it's straddled a period end, which is why we had the restricted cash on balance sheet at year end, and then that's come out of our bank accounts this quarter, which is why you see it coming out of the cash flow statement this quarter.
If that had happened within a quarter and not at a period end, then obviously you wouldn't have seen any of that. That I guess would have been less confusing. That's what's happened there. We have as per the IPO disclosure, there are certain change of control taxes due in our markets. The pre-IPO shareholders are funding that through an escrow account. To the extent there is more of that to pay, then that would be drawn from the escrow account that is currently sitting there, and come through the company and then out to the tax authority. If that happens again, straddling a period end, then you would see that, you would see some restricted cash on balance sheet at a period end, and then that would come out the following quarter. We can't exactly predict the timing of that.
That's all that is effectively.
Brilliant. That's very helpful. Thank you, Tom. Thank you, guys.
Okay. Cheers.
Our next question comes from Alexander Vengranovich of Renaissance Capital. Alexander, please go ahead.
Yes. Good morning . Two questions from my side. The first one, I'm trying to get some of the local color on Tanzania, how the coronavirus is spreading there. It looks like there's a lot of the sort of misleading information maybe about the actual spread of infection. Do you see any potential risks to your business going forward there if this spread of infection goes really viral and affects more of the normal population of the people? As far as I understand, there is no actual lockdown in the country right now. That's my first question. The second question is--
Sorry, Tom, are you able to hear the question clearly? I couldn't get all of that.
Can you hear me now?
Yeah, much, much better.
Much better.
Yeah, thanks.
Sorry, my mic was probably on low volume.
Would you repeat the question?
Yeah. I'm gonna repeat. My first question is on Tanzania and the actual spread of the coronavirus infection there. I'm just trying to get some local color from your side because it looks like there is a lot of the misleading information about the virus in the country. As far as I understand, there is no official lockdown, but looks like the infection goes really viral there. There is more and more people being infected unofficially. Just trying to understand where you see any significant risks there if this spread goes faster than was initially expected by the government.
Yeah. Let me take that before you go on to the second question. Look, Tanzania has been one of the countries who basically hasn't had a lockdown. People have been encouraged to operate as normal there. However, our customers and ourselves enacted a lockdown for our staff. Working from home, working remotely et cetera. We've taken all the standard precautions we've taken across the continent where we operate, to protect our staff, community, et cetera. It's business as usual for us in Tanzania. I can only quote official figures. My job's not to speculate. The official figures say there's a low infection rate, and low death rate, the fatality rate there.
In Tanzania. It's not affected our ability to deliver service and carry on running and growing our business in Tanzania. Yeah. That's all I can really say about that regarding Tanzania.
Okay. The second question is.
Just to give you a flavor, though, of our staff. Across the whole of our business, we've only had two individuals who have been affected by the virus, did go to the hospital for a couple of weeks. That was in DRC. Both members of our staff are out of hospital and recovering well back at home. Again, low impact on our business so far.
Good. The second question to Tom on working capital volatility again. In the first quarter, there was around $35 million net change, like a negative change in the working capital, mainly driven by, again, the increase on the big five MNO payment timings. Just trying to understand what sort of a volatility should we expect for net receivable days this year. Should we expect the number of the receivable days to grow further, or you think that the current level of the first quarter is more or less sustainable?
Yeah. Thanks, Alex. Yeah, if you look at our working capital on page 19, the majority of the $35 is actually us investing in early CapEx and OpEx. $16 on CapEx and $11 on OpEx. That's for the reasons I described earlier. In terms of the net customer receivables, yeah, it increased $9 million. That was solely due to some of the big customers paying us later, some of whom had year-ends on 31st of March. If we were to show these numbers for the end of April, it would be $17 million lower. The payments that were dragged out towards around the year-end very much were caught up, and more so through April. I think from a modeling perspective, I would just leave that flat through the year. That's probably the best estimate at this point.
Essentially, the money's coming in the door, just after the March 31st reporting date.
Okay. Thank you very much.
Thanks, Alexander.
Bye.
Our next question comes from Jonathan Kennedy-Good of Standard Bank. Jonathan, please go ahead.
Hi, Kash and Tom. Thanks for taking the question. Apologies if this might have been covered. I had to join the call a little late. The 1,000 to 1,500 tower tenancy growth for the year, is it possible to give us a little bit of color into where you see the majority of that growth coming from by regions? Looks to me like there's a bit of a head start for DRC so far this year. I'm just wondering whether that continue for the rest of the year, and then where you see highest ROIC and most attractive kind of return profile within the various operating regions. Just finally on Ghana, MTN seems to be showing very strong growth.
Just wondering how the whole ATC Eaton deal played out, how that's affected the market, and what you see the pipeline looking like there, given what looks to be very strong M&A growth and now the deal completed.
Yeah. Tom, do you want to take the first part, and then I'll talk about Ghana?
Yeah. Absolutely. Hey, Jonathan. Thanks for the questions. Yeah. The tenancies, we are very much affecting them across the group. I think as we look at the pipeline today, there's no one country that stands out particularly ahead of the rest or particularly below the rest. We would anticipate the broad country split to be maintained through this year on an organic basis. I think that's what to assume there. From a ROIC point of view, again, the numbers that we've shown previously in terms of build-to-suit, yields and things like that are maintained. To remind you of that, single tenant 9%, two tenant 19%, and three 32%, which is what we've shown in previous and pre-IPO materials. No major change there. There's not huge differences either between the markets on that.
Again, we wouldn't guide to model any particular big variance there in terms of yield or ROICs. I guess very much expecting the business as a whole to keep growing roughly with all markets on track with each other going forward.
Thanks.
On the Ghana point, Kash, do you want to take that one?
Look, MTN is the lead dominant player in Ghana. Over the past two, three years, we've been building towers. MTN have had a strategy to continue increasing coverage, and I think now they're probably up to 95%+ coverage of the geographies. Vodafone and AirtelTigo, obviously, are the challengers there, but still solid market share for those two operators. With that one, we can't go into detail, but we certainly have a good pipeline from all our customers in Ghana regarding upgrades and expansion. Clearly, AirtelTigo are focused on their strength or stronger position as a merged entity and a bigger market share to carry on investing and growing their market share there. We are obviously one of two towercos in that market, other than American Tower. We're active working with AirtelTigo, Voda, and MTN, all our customers in Ghana.
Great. No material change in what ATC is doing in Ghana, given the Eaton deal?
No. They're still obviously integrating that asset and doing what they need to do, but no change at all, no. In some ways, what we've, in our view, is that the erratic behavior of Eaton has disappeared. There's more structure as far as we're concerned, and our agility, we believe, will put us in a good place now in that market.
Thank you.
Our next question comes from Charles Cartledge of Sloane Robinson. Charles, your line is open. Charles, please go ahead. Our next question comes from Alex Ayoub of Waha Capital. Alex, please go ahead.
Hey, thank you very much. Thanks for the call and for these great results. I have two questions, actually. One is on the oil impact. I thought that low oil prices would have an impact on your EBITDA. I think when we went through the roadshow, I think a 10% decrease would have a two-and-a-half % decrease in EBITDA. Can you just tell us whether that's still the case or not, and why?
Hi, Alex. Hi there. Yeah. The oil impact. The movement of prices locally in our market is really the key factor here for our own P&L. The prices in the markets are not one-to-one elastic with global oil prices. When global oil prices move as much as they have done, that is by no means reflected in the pricing in local markets. We've seen some reduction of some fuel prices in the past few weeks as the global oil supply chain has been arriving at ports in our countries. I'd say there's been, depending on the region, anywhere between zero to 10% or 15% reduction in the price currently. That's just starting to feed in. I don't think we anticipate any major change to our business, either from an OpEx savings perspective or an overall P&L perspective as we move through the year.
We wouldn't guide to make any changes based on these movements that we've seen or are seeing sort of over the last few weeks. We'd just recommend leaving that out of modeling.
Okay. Got it. Just to understand how that works, ultimately, if this fuel price decreased by 10%, your revenues are going to be impacted. You would review your revenue on a quarterly basis with your clients, or is it on a monthly basis? How does this impact the price with your client? Is it monthly, quarterly?
Yeah.
Price reset.
It's either quarterly or annually.
Okay
price escalators are quarterly. There's a little time lag before that feeds in. We get a little bit of OpEx benefit arguably for a few weeks, and then some of that feeds through to our customers at the next escalation date, which for the contracts which are quarterly escalating now would be from the start of July.
Perfect.
Again, the impact is minimal. Yeah.
Perfect. Thanks so much. I have just two more questions. On the FX, you say 65% is in hard currency. Does it mean that you receive it in US dollar in this country, or you receive it in local currency, and you have to convert it? I'm just wondering how much are you exposed to convertibility risk on that 65%?
Absolutely. Of the 65, 40, under 65 roughly comes from DRC. DRC is a dollarized economy, everything there is in dollars. We get paid physical dollars in DRC. The balance of the remaining 25 comes from the spread across all of our other markets. In those markets, the contract allows either for settlement in dollars or in local currency at spot rate. In those markets where we do receive local currency, we sometimes do dollar swaps with the banks there if we need dollars. 40 out of the 60 comes from DRC, which is all dollars.
Perfect. Just next question is on the tax. How much tax should we expect going forward? I know it was a one-off, the $38 million, which was supposed to be paid at the end of the year related to your change of control with the IPO. Is there still a significant amount pending, or is it not much? Aside from that, how much tax roughly should we factor in for 2020 and going forward?
No, absolutely. From a corporation tax perspective, ignoring the change of control tax for a minute, because that's all funded through an escrow account from the pre-IPO shareholder. Just from a normal corporate income tax perspective, the blended rates across our markets is around 30%. However, as you know, we're in a tax loss position in most of our markets at the moment, meaning that we just pay a de minimis amount of tax in those markets. That will change over the next few years. As we guided at the IPO and reiterate today, we would see a gradual step up of tax to normalized levels of 30% of profits before tax over the next four year or so period. I think at IPO, we guided to the next five years, we would gradually step up to a normalized level of 30% profit before tax.
That's what to put in the model. From a change of control tax point of view, I can't really comment on exact timing and amounts of future amounts, but it's funded by the pre-IPO shareholders in an escrow account. Once it comes through our bank accounts, and obviously you see it on the cash flow statement as the money goes out the door, it's not a cost to the company as such. It's actually money in from the escrow and then money out immediately. It just so happens that when we did it around the year-end, it straddled the year-end period, and so you saw the inflow in one period and the outflow the next period. That's just a timing thing.
Very clear. Thanks so much. Sorry, last question on the M&A. Just trying to understand about the liquidity. You have around $160 million of cash on balance sheet. What's the minimum amount you'd be comfortable with keeping on balance sheet? Would you be comfortable with $30 million, $50 million of cash on balance sheet and using the remainder for acquisitions, or you think you need more or much less?
Yeah, I think around 50 or so is reasonable. Obviously, we've got a fair amount of surplus at the moment. Yeah, I think something around that level.
Got it. Still on the M&A, we're wondering, could it maybe make sense to do the refi first and then the M&A? M&A, you're likely to have a higher leverage, maybe the cost of debts would be higher. While it would be cheaper, I guess it really depends. I was wondering whether you had some thoughts around that timing of M&A before refi or vice versa.
Yeah. I think to some extent, we've got to be flexible on both those options. Partly because of the window of the bond market we don't control, but also the M&A is reliant on third parties as well, we don't exactly control timing of that. I think we've got to be as flexible as we can on it. The refi is principally to refinance existing debt. I'd say the acquisitions that we have in our very near term, which are the ones we've called out in our CapEx guidance, they're not reliant on the refi to happen before they do. I think we'll just have to play that one by ear and be ready for both M&A or the bond market, depending on when the window opens.
Great. That's very clear, and thank you so much for the details. Thanks.
Thanks, Alex.
No, I appreciate the question. Thanks, Alex.
Our next question comes from Moritz Baldsiefer of DEG. Moritz, please go ahead.
Hello?
Moritz, your line is open.
Hi, Moritz.
Yeah. Hello? Can you hear me?
Yeah.
Yes, we can hear you.
Hello. We can hear you clearly.
Our next question comes from Peter Bartlett of GML Capital. Peter, please go ahead.
Hello. Yes. Thank you. Can you hear me okay?
Yes.
I'm interested to know, following on from the previous question about the refi. I mean, your bonds have recovered to par. They did fall down quite sharply. I think they got into around 90-ish. Surely the right time to be refinancing is right now. I mean, given the global uncertainties, particularly in terms of what's happening in emerging markets. Surely, if you're talking about the opportunity to refinance, it is now.
Yeah. I think we're monitoring it. We're closely watching what the market does, both our bonds but also the wider market. I think that other EM bonds traded down more sharply than ours, but that also has recovered somewhat. I think we're monitoring it weekly, and we'll go at the right time for us. We're not in a super rush to do it, but we do want to take the window when it comes. I think we'll monitor for now and see how that goes.
To give you assurance, we are ready to do it off of our Q1 numbers when the right window occurs for us.
Can I just understand one thing? I mean, what does that mean? If the bond's trading at par, surely that is the right window.
Well, it means that we believe that our true cost of debt should be lower than that. That's what it means. The business is a resilient business, which is being demonstrated at this time. We will be watching developments to see where the market is moving to. I think we believe that it would be premature to just refi now at par, given we're not in a rush to do it. I think that's our view at the moment.
As a reminder, ladies and gentlemen, that's star followed by one on your telephone keypad or the flag icon, if you're joining online, to register a question. We have a question from Moritz Lang of DEG. Moritz, your line is open.
Yeah. Hello. Yeah. Thanks. Can you hear me now? I had some mute issues.
Yeah.
My question relates to the low regulatory developed environments of your host countries. I was wondering, with the heat maps rising in those countries and the budgetary deficits widening, do you expect any risks that both your clients and yourselves will be facing any claims from state authorities to cover up state deficits?
Well, first of all, we've been operating in these environments for a long time. We're used to being very rigorous around our tax management and so on. The regulators are very professional in the markets we operate in regarding telecoms. We pay fees, our customers pay license fees, et cetera. From our perspective, the business will continue as normal. We're used to rigorous tax audits and we've never had a problem in our 10 years of existing in these markets. We're confident that it'll be normal behavior. Tom, I don't know if you want to add something more to that.
No, thank you. That's fine.
That covers it. Yeah.
We have no further questions on the line, so I'll hand back.
That's great. Thanks, Jordan. Well, look, thank you very much, everybody, for your time and great questions, and we look forward to giving you a half year trading update sometime in August. Thank you. Bye-bye.
Ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.