Earnings Call: H2 2019

Mar 12, 2020

Good morning, everybody, and welcome to our first public company results presentation. As Megan said, we've got time for questions towards the end of the presentation. But let me start by first saying our presentation is on our website, so you should be able to see the slides we're going to be talking to. Moving on to Slide two and introducing the team who's on the call from Helius' side. I'm Akash Pandya. I'm the CEO, and I've been with the business since 2000 August 2015. Tom Greenwood, our CFO, has been with the business since 2010 and CFO since September 2015. And manager, Dylan, who heads up our investor relations and corporate finance function, has been with the business for the last three or so years. Getting straight into the agenda of the call, Slide three, we're going to cover the highlights of our 2019 performance, and then Tom will take us through the financial results and finally, and A. And during our presentation, we will talk about COVID nineteen and how we are dealing with it as a business across our markets. So moving straight into the highlights and slide five. Well, look, let me firstly start off by saying that we're really pleased with the performance of 02/2019. The business has delivered what it set out to achieve, and it's in line with our expectations. We've delivered strong revenue growth of 9% year over year coming in at $388,000,000. And more importantly, our EBITDA has grown by a solid 16%. As you'd expect in a model like ours, we've leveraged our revenue to deliver a higher percentage growth in our adjusted EBITDA, that coming at two zero five million dollars for the full year of 'nineteen. More importantly, we've continued to expand our margin by some three percentage points, completing the year at 53%. And if you look at Q4 performance, we actually completed the quarter at 54%. So good momentum delivering continued margin expansion as you would expect again. In terms of delivering and driving cash flow generation for our business, our portfolio free cash flow grew by some 27% year over year, coming in just shy of a $170,000,000. And and that demonstrates the nature of the business model again and how robust it is in the markets we operate in. In terms of the operational dynamics, we delivered 3% site growth year over year. And more importantly, our tenancy growth's grown by some 8% to 14,600 tenancies overall. And our tenancy ratio has grown by 0.08%, coming in at just shy of 2.1x tenants per tower, 2.09 to be specific. South Africa, we've seen good progress made in that market. We've been now active effectively for nine months. We have a tower count or a site account of 118 sites. But more importantly, we're really pleased with the currency rate there. We're really getting a rapid growth in our tenancies wherever we put a tower up, demonstrating that we're finding good locations for our towers, and customers like those locations and are giving us a good rapid tenancy lease up. As you know, we listed in October 2019. We generated primary capital in that listing, and we'll talk a little bit about that. But we're excited about the opportunities that gives us to drive organic organic from oil and quality growth through acquisitions and expansion. Moving on to Slide 19. Look, there should be no surprise sorry, Slide six. There should be no surprise to the performance of this chart. We've gone from 19 consecutive quarters of growth to 20, and you see the dynamic of the business, and we see no change in this momentum going forward. We've now delivered 41% CAGR growth since 2015, more than doubling our margin to 54% in 2019. And our trajectory is to in the medium term, to be between 5560% in the medium term. And you can see that during the course of 2020, we're going to edge into that range, and we're excited about delivering what we say we will deliver. Moving on to Slide seven. Well, this slide really highlights South Africa's macro dynamics and the telecom drivers. So I'm not going to talk about the details. But in the bottom right hand corner, we talk about the performance of our tower business in South Africa. We've grown our towers by some ninefold. And more importantly, our tenancies have grown over 12x to coming at 1.8 at the end of last year. And we see this momentum continuing. We're excited about the growth potential. We've not changed our guidance over the next three years to have around 1,000 towers in South Africa, and we're also looking at some small M and A activity in SA to help our momentum in that market. Moving on to Slide eight. Well, look, this highlights our successful listing in October on the London premium listing on the $250,000,000 This is an important milestone. It represents the third chapter in our evolution of our business and is a transformational step in our view that allows us to really talk about our business and have ability to generate further equity capital to invest in acquisitions and expansion for our business. So we're very excited about the reception our business has had since we've listed above the current climate of the virus. Moving on to Slide nine. Why are we excited about listing and the primary we've raised? Well, it's given us horsepower to really drive the focus on our business development activity. As you know, in Africa today, there's 228,000 towers, and and that's grown by over 50% in terms of the volume of towers over the last five years. And we think that there's a similar growth in towers over the next five years, simply driven by the macro fundamentals of population under penetration and coverage requirement for the continent. If you look at the bottom left hand corner, the momentum of selling towers from M and Os going into the tower home sector has increased but significantly behind where the rest of the world is. And our view is that M and Os are going to continue to look to sell their tower assets to release value from their balance sheet to provide more resource in investing in technology, particularly consumer facing technology, and we really help that dynamic. And more importantly, generally, tower codes provide also lower cost solution to the Africa, we're very excited about the fact that there's not only 29,000 towers in the markets we operate in still owned by M and O, but there's over 130,000 towers in the gray areas on Slide nine that we're pursuing actively. We have a business development activity today that's tracking over 20 opportunities. We're interested in markets like Senegal, Morocco, Tunisia, Ethiopia, Egypt, Madagascar, Namibia, Botswana, Angola, etcetera, etcetera. And these, we believe, the next three year horizon, some of these markets will come to do a transaction, and we're already active in pursuing some of these. Moving on to Slide 10. Well, look, as I've mentioned already, we have some great growth opportunities for our future strategy. We have three legs to the the growth strategy that we pursue. The organic growth represents some 19,000 points of service required in our five markets. And this is independent research showing 19,000 points of service required to facilitate the growth in subscribers and the growth in coverage that's needed driven by also technology upgrades. So for example, some of our biggest markets are in the last twenty four months have only just issued four gs licensees. And four gs licensees means transformation in terms of day care consumption for some of our markets. And also bear in mind that today, we only have 14,600 tenancies on our towers. So adding another 19,000 points of service shows what organic growth is ahead of us. The second leg of our growth strategy is, of course, the acquisition side. And I've already talked to these numbers, but we're very excited about the growth potential through M and A and geographic expansion, particularly with our further capacity now through primary equity we've raised as well as the debt capacity we have in our business. And the third leg of our growth strategy is around technology offering to the to our customers in the markets we operate in. And this is through more densification of towers, through fiber backhauling from tower to fiber ring as well as data centers. And we've already demonstrated, for example, that we can manage a small set of edge data centers in South Africa as a capability that we've developed already. We have a small pilot in small cell technology in Ghana that we're running for our customers there. And we're looking to leverage that in the coming months and years as our markets evolve into these technology offerings. Moving on to Slide 11. This just speaks to our sustainability and ESG strategy and the steps we've taken. Now look, let's just acknowledge that the tower sharing model in itself really supports the sustainability of a business like ours, and our business really model speaks to this. Our infrastructure actually also helps small communities and economies in the markets we operate to flourish by accessing data, by accessing the world to be able to drive economic growth. We are one of the few, if not the only African business today in our view that has four international standards, ISO standards independently accrediting us on quality, on health and safety, on environmental standards that we apply to our business. And like late last year, we achieved our standard for anti bribery practices in our business to demonstrate that we're really delivering high standard of ethics in our business. And so we're very, very excited about the steps going forward. And so much so, we've actually added, as part of our bonus criteria for management and the organization, the ESG standards that we're pursuing for our business going forward from 2020 onwards. Now on that note, I'm going to hand over to Tom, who's going take us through our financials. Tom? Thanks very much, Kesh. Hi, everyone. I'm on Slide 13. And I really just wanted to set the scene here in terms of our continued delivery of steady, robust and continuous growth over the last few years. Since 2016, we've almost doubled our EBITDA. And of course, year on year 'eighteen to 'nineteen, we've increased it 16% with a continuous growth of the margin through that time. And this trend is absolutely what Cash, myself and the rest of the team have absolute focus on to deliver for the next few years as well. And based on our path before us in terms of organic and inorganic growth, that's absolutely within our reach in our view. Moving on to Page 14. I went well on this. This really explains in the next few slides, but all very much our main KPIs moving in the right direction quarter on quarter, year on year growth across all the main operational and financial KPIs, and we see this continuing. Moving on to Page 15. If we look at our financial key indicators, our revenue is up 11% quarter on the quarter year over year and 3% from Q3 to Q4. Similar trend in our EBITDA. And of course, our margin keeps edging up, hitting 54 in Q4. And of course, we have given guidance that we expect to be in the 55% to 60% range in the medium term. And clearly, we're knocking on the door of that right now. Moving on to Page 16. And again, our revenue breakdown by customer FX and country has been very stable and consistent over the past few years and no change here really as of now. Our customers are still the big five mobile operators in Africa with Airtel, MTN, Orange, TIGO and Vodafone making up the vast majority of our revenues. Our FX is still majority hard currency, and our country mix is still largely dominated by Tanzania DRC. But with now South Africa on that chart and growing and Ghana and Congo and Brazil making up the mix. Moving on now to Page 17. Again, just demonstrating the consistent steady growth of sites and tenants over the past year and past quarter, finishing the year at just below 14,600 tenants. And this equates to a tenancy ratio of 2.9, stepping up from sorry, 2.09, stepping up from 2.01 a year ago. Tenancy ratio in this business clearly being a big margin driver and value enhancer there. Moving now on to Page 18. Here, we demonstrate the operational leverage of this business. We've demonstrated consistent reduction in site OpEx, as you can see on the top left chart, taking our site OpEx as a percentage of revenue from 46% in Q1 'seventeen down to 33% in Q4 'nineteen. So a very strong trend there. And you can see on the top right hand side how this is helping to drive the monthly cash flow per tower, which just in the last year has increased 11%. This being a combination of adding the tenancy to the tower, which, of course, means an 80% to 90% flow through to the bottom line for the new revenue, plus continued efficiencies on the OpEx of these sites that we run. Moving on to Page 19 now. Again, just looking at our EBITDA split by hard currency and country and really consistent story here. Our EBITDA is majority hard currency based, 65% to be precise in hard currency, predominantly in U. Dollars. Now even the local currency component of 35% is in some way quite like dollarized because of the escalation mechanisms for CPI and for power prices that we have attached to these contracts. So overall, a very robust earnings stream in hard currency. Moving on to Page 20 now. We look at our CapEx. Our CapEx is a very tightly controlled model, very much focused on growth. We have fairly minimal nondiscretionary CapEx each year being maintenance and corporate CapEx. And you can see from the charts for FY 'eighteen and FY 'nineteen, these are in the sort of mid to low single double digit ranges. We reiterate similar guidance for 2020. For maintenance and corporate CapEx, we guide to 20,000,000 to 25,000,000 And then the large remaining section of our CapEx is very much discretionary based and driving growth. So from an organic base case point of view, we guide to a total of $110,000,000 of CapEx for this year, so very much in line with analyst expectations. We're also drawing out here potential additional $30,000,000 for in market bolt on acquisitions. And we do this because these are acquisitions that we're in reasonably advanced talks on. And we thought it would be useful for everyone to pull this out at this point to say that there could be an extra $30,000,000 of acquisition CapEx coming through that we will tell you about as and when these deals are signed, but they're reasonably advanced now. So we potentially expect some news on that in the coming months. If we now move to Page 21. Again, our financial debt is very similar to what you've seen before. The leverage as a continued trend downward trend, clearly driven by EBITDA growth. You'll also note that because of the 1.25% equity primary that we raised in the IPO, our cash balance at year end is relatively high. And therefore, our net leverage at year end was 2.9%, which is below our stated target. Our stated target still is maintained at 3.5% to 4.5%, which is how we think about funding the business going forward. You'll also note that we are monitoring the market for potential to refinance our capital structure in terms of the bond and the term loan that we have outstanding. And we may do that should a market window present itself. We could also raise an additional term loan of $200,000,000 to be used for expansion purposes. But again, it's always maintaining the net leverage target of between 3.5% to 4.5 Looking now at Page 22, our cash flow. We've had continued good growth in terms of our portfolio free cash flow, stepping up to $169,000,000 for 2019, which equates to a cash conversion of 82%. So a good solid trend in cash conversion growth. And we would expect this portfolio free cash flow to grow broadly in line with EBITDA going forward, EBITDA growth going forward. We also draw out the working capital in this chart. Working capital in our business is fairly lumpy. And you can see over the past few years, there's been inflows and outflows from that. The 2019 outflow, as demonstrated by the net receivables chart, has been driven really purely by the large mobile operators paying us after the quarter end. And we mentioned this on the Q3 call. There wasn't really much change between the end of Q3 and the end of Q4 as demonstrated here by the chart. So it is a matter of the large mobile operators paying us a bit later than reporting date versus a bit before reporting date as they did at the 2018. So that's where the swing is there. Now moving on to a recent or current topic on Page 23. We, like all businesses, are monitoring the coronavirus situation and Board level and through the executive management team and all through the business. And I've put on here a summary of some of our risk assessment of it. And look, overall, as a business, being a utility like business with long term contracts and long term cash flow, our business is generally quite resilient to something like this. And but we're monitoring it. And first and foremost, our people who are monitoring it, we have the facility for people to work from home and things like that if needed. But as yet, minimal disruption currently and minimal expected. Our existing revenue and earnings streams obviously are underpinned by long term non cancelable contracts. And so that is maintained, So no or minimal impact expected there. Customer rollout is something we're monitoring. Obviously, our customers in order to rollout new tenancies with us require active mobile equipment, some of which may be sourced from China, some of which may be sourced from elsewhere. So we're monitoring that. There's a potential implication for us, however, would just be simply a bit of slower rollout later this year if that were to cause delays. However, in the grand scheme of things, we're not expecting too much impact from that. In terms of our own supply chain, we're obviously monitoring that. There is minimal to zero impact on that currently. We have suppliers which are based in different parts of the world, including China, but Europe, South Africa, etcetera, as well. And actually, even the ones that are based out of China, we've had minimal disruption from so far. And we also keep a lot of consignment stock in countries. So we're very adequately sourced in terms of having equipment on hand in market. So overall, resilient business model. And I guess also, we operate in an industry, the telecoms industry, which is very much mission critical and probably used more in times like these. So often you see the mobile operators have increased revenues in months such as these. So we feel fairly good and fairly resilient in the current situation. Moving now to Page 24. And we are here effectively reaffirming the guidance that we provided last year in terms of our 2020 financial year. So through all the key drivers of our business, tenancies, lease rates, operating expenses, SG and A, EBITDA margin and CapEx, You can see the right hand column where we're basically reaffirming what we said last year in terms of how we expect these to be forecast in 2020. We also highlight there at the bottom, as I mentioned before, the potential $30,000,000 increase for bolt on acquisitions, which may come through in the coming months. And as and when they do, we will obviously tell you about them. So overall, the business is very robust and continuing its momentum of growth from 2019. And with that, I will hand back to Cash for the financials. Thanks, Rob. So I'm on slide 25 now, and this is the last slide before we move to questions. So, look, just to reaffirm our investment thesis, we operate in some strategically positioned markets that are very, very attractive growth opportunities. And and not only do we have a lot of growth ahead of us going forward, but we as a business and an organization have demonstrated the delivery of growth consistently over the last 20 consecutive quarters. I've talked about strong organic growth opportunities from 19,000 points of service required, but also m and a activity is very exciting for us. And we've demonstrated that we've got financial capacity to do it, and more importantly, the opportunities are there ahead of us, and we expect to deliver on that on on those opportunities. Our contractual position demonstrates that we have highly visible revenue streams with strong contractual protection against FX movements and cost inflation protection. And that's why we consistently deliver 65% of our EBITDA in hard currency, for example. And finally, the business year over year has demonstrated strong cash flow generation. And in 2019, we delivered 27% year over year increase in portfolio free cash flow. So on that point, I'm going to hand over to Megan, who's our conference coordinator, to help with managing the question. Over to you, Megan. Thank you, Kash. Our first question today comes from Giles Thorne of Jefferies. Giles, your line is open. Thank you. I have three questions, please, guys. First one, just to explore a bit on the risk from any supply chain disruption. You mentioned that you carry inventory locally to support any additional rule out in the event that well, you carry inventory. So it'd be useful to know how long that inventory would actually last? So how many sites or how much of your organic expansion CapEx could you deploy before supply chain disruption became a problem? Secondly, very excited to hear all the news around capital deployment, around M and A. Almost by definition, many of these situations are going to be M and O selling assets for the first time ever. That's always a pivot in industrial policy for an MNO, which always brings certain nerves and questions. It'd be useful to get a feeling for how hard your negotiations are on getting MNO comfortable with not earning assets or not? And then lastly, look, it's rather a silly question to probe around the idea of a buyback given you only just issued equity a few months ago. But given your share price has traded well below the IPO price for seemingly no justifiable reasons. To understand a bit more around your capital allocation going forward, Tom, what's your thinking on doing any kind of buyback here with your fair capital? That was it. Thank you. Great. Thanks, John. Let me take the first two, and then Tom will talk about the third element of your question. So look, supply chain disruption, our strategy some three, four years ago when we started launching as a new management team focused on supply chain development significantly. And that's led us to make sure that we've got consignment stock in country, inventory within our own system as well as inventory in the pipeline. And so typically, we have depending on what the product is, whether it's generators or steel, etcetera, we have a pipeline that's able to, you know, have inventory between three and six months. So we're not concerned about the impact of the virus. We have we've got in house, in country inventory and consignment stock that we can leverage, and we can facilitate the future growth, but more importantly, also maintaining our service levels, etcetera, going forward. And that's also demonstrated in the way we've reduced our OpEx cost year over year, quarter over quarter in the efficiency drivers, all led by our Lean Six Sigma strategy that we launched back in 2016. So moving on to the second part, M and A activity. Look, these are sensitive subjects, but we are very acutely aware of the dynamics of MNO's pressure and what's happening around the world with MNO looking at selling or consolidating their tower assets into tower clothes, etcetera. And Africa is no different. And so we are actively in conversations with some of our customers and in new markets I mentioned some of these markets already during the presentation. But difficult to go into details about that. Tom, on the third one? Yes. So look, on the equity buyback point, clearly, day by day, it's a good question. It's certainly looking more attractive. We're having some high level conversations on it the other day, actually. So I think it's not anything I'm going to confirm at this call, but it is an option for capital deployment. And it's, I guess, looking more and more attractive by the day, well, I guess, for us, but also probably for a lot of other companies out there. So I think it's watch this space on that. And we will apply our normal sort of investment criteria to it if we believe ultimately that is the best option we have in terms of generating value for our shareholders, that's what we'll do. But we are aware that this is a long term business. There's a huge amount of potential M and A out there, Cash has described. And we probably we wouldn't want to make a sort of quick short term decision and then find ourselves wishing that we had more cash in six months' time to do a very attractive acquisition, which ultimately is going to be the long term driver of value in our business over the coming years, right, in terms of country expansion, portfolio diversification, etcetera. So let's monitor and see, but those are the sorts of questions we'll be asking ourselves. Very good. Thank you, Tom. That's clear. Just a very quick follow-up, please, on the first question. Assuming you didn't have a three to six month cushion and supply chain risk limited your ability to do any kind of investment CapEx in 2020, based on, I guess, ultimately escalators alone, what type of level of growth do you think revenue and EBITDA you could deliver in 2020? Yes. I think on that, the I mean, the three to six months is effectively what we have in our warehouse. We also have consignment stock from our suppliers in market, and that's part of our contractual setup with our suppliers. So there's additional stock available. There's also other suppliers in our markets, which provide all the key equipment such as power generators, etcetera. That may mean that we pay a little bit more on unit price to get it, but in the grand scheme of things fairly minimal. And that's because by the way, we have set pricing structures for volume with our key suppliers. There's also other mitigating ways we can operate in terms of generators and things like that. Generators can be refurbished. We have generator refurbishing and battery refurbishing stations in each key of our main warehouse in each market. And this effectively extends the life of generators for another sort of good set of years, probably another five years or so in total expenses. So there's a whole bunch of things that we can do in order to increase our supply chain base, not just simply sort of what we have in the warehouse today. Just to give you a kind of anecdote, on the slide I went through, I mentioned our own supply chain and we get some goods out of China and we get others from Europe and South Africa, for example. Really, the extent to date of delays that we have seen in our entire group supply chain is we buy rectifiers from a couple of manufacturers in China. They've had their factories closed for three or four weeks, and that's it. So we're already getting rectifiers from another supplier in Europe now plus we have a whole bunch of them in market. So it's a very minute section of our suppliers, just to give you a kind of feel of our current experience. That's great. Thanks, guys. Next question today comes from Simon Cowles of Barclays. Simon, your line is open. Good morning, guys. Thanks for taking the questions. Just on tenancy ratio growth. So it looks like you've seen a bit of an acceleration in 4Q. And I guess the positive thing, that's in your three biggest markets as well. So I just wondering if you can provide a bit more color around what's driving that. Is it to do with some of the four gs licenses you mentioned have been issued? And should we expect this to be the run rate for the next couple of quarters, obviously, COVID-nineteen dependent? And just on back to M and A, on the CHF 30,000,000 for deals this year, how should we picture that? Is it extension of deals from operators that you've already done transactions with? Or is it sort of small introductory deals with M and Os that haven't maybe previously sold towers and so therefore, it could lead to further bigger deals in the future? Yes. Let me tackle the first part. So look, our currency ratio, it's in line with our expectations. And as I mentioned earlier, four gs licenses were issued in two of our biggest market plans in the end of the last twenty four months. And people are taking up more capacity from us because of these technology rollouts as well as expanding geographic coverage. And it's as we expected, and we're not going to give you future guidance, but this business, if you look at our historic trends, delivers anything between 0.05 to 0.01, so 0.1 growth per year. And that's within the spectrum of rollout depending on what the customers are doing. Sometimes, for example, historically, when there's been a consolidation, there's been a slowdown in tenancies in the last three years. We've had that in a couple of markets, but that's just because people are tidying up when they've acquired new portfolios. And And then when there's a rollout also, there's a potential slowdown initially before the currencies come active. But we're encouraged by the trend of 2019, and we don't see any change going forward. Yes. And Simon, on your second point about the M and A, the answer is yes. It's really with mobile operators who are current big customers of ours. And in fact, most of whom we've actually done acquisitions from in the past. There's one which is actually the acquisition of a small business. However, virtually all the customers on the sites are already customers of ours, Big five mobile operators. So it's largely similar customer base to what we have already. Very clear. Thanks so much, guys. Thanks, Hans. Our next question comes from Cesar Tyron of Bank of America Securities. Cesar, your line is open. Yes. Hi, everyone. Thanks for the call and the opportunity to ask questions. I have three questions, if that's okay. The first one is, can you please share some of the countries in which you're planning to deploy capital? And if South Africa is one of them, I mean additional capital obviously? Second, is there anything you can say on any refinancing plans that you might have? And third, can you please remind us of any covenants you have on your debt? Thank you so much. Thanks, Cesar. Let me take again the first part of the question. So look, again, difficult to give you specifics, but I did quote a number of markets that we're interested in and have people actively involved in. And South Africa, of course, we entered in Q2 last year with a SA Tower deal that we closed in May. And of course, we're pursuing opportunities in South Africa organically but also through M and A, yes. Yes, absolutely. And in terms of refinancing, Cesar, yes, we're monitoring the market. But clearly, the market movements in the last few weeks haven't been conducive to do it. But look, as a business, we're ready and we're monitoring for adequate window. And if we did, it would be a sort of straight refinancing of our existing debt, which is a $600,000,000 bond and $75,000,000 term loan. And we've just sold all of that up into new notes. And then raise a separate term loan for probably $200,000,000 which would be there to be deployed in the expansion opportunities. So all very much still with a focus on maintaining our leverage of 3.5% to 4.5%, which is our target range in terms of thinking about new acquisition funding. So yes, that's how we're thinking about it right now. And in terms of covenants, well, our bond, which is our main financing instrument, that just has incurrence covenants, which plus baskets. So we're currently below the leverage incurrence covenant, which is four times. There are fairly substantial baskets on top of that for things like acquisitions and stuff if we need it. And our term loan has some covenants in terms of leverage, but they're way, way higher than where we are. So we're sort of nowhere near them right now. Our next question today comes from John Cardus of Numis Securities. John, your line is open. Thank you. Good morning to you. I've got two questions, please. And both of them have to do with hard currency pegging. So about 79%, you said, of your revenue directly or indirectly is pegged to hard currency. That number becomes 66% at the EBITDA level. Maybe Tom, you can help us think of what the equivalent percentage would be for equity free cash flow. So things like so EBITDA less CapEx, less all the leases, interest and tax, that would be great. Please, if you can help me think about that and work out what the equivalent percentage is. And then secondly, kindly in your release, you talk that you talk about by 2025, I think it is, you want to be in eight countries and have something like 12,000 sites. Given what's ahead of you, what's in front of you just now, and of course, we don't know what your priorities are vis a vis the markets that you want to expand in. What do you think will happen to the percentage of your revenue under that scenario or your, quite frankly, free cash flow that's likely to be pegged to hard currency when you are in those eight markets with 12,000 towers? Yes, absolutely. So let me just take the first one. So from an FX perspective, yes, just to reiterate the numbers, the EBITDA is 65% half currency and revenue around 59 percent, as you say. The when you look through the leases and taxes, etcetera, the EBITDA percentage is broadly maintained. So if you look at it from a portfolio free cash flow position, which is after maintenance CapEx, etcetera, that would be roughly 65% as well. So that's that's how to think about that, I think. I mean in terms of growth CapEx, that can swing depending on which countries the growth is happening in, etcetera, etcetera. But from a portfolio free cash flow, which is really the core cash flow earnings of the business, that would be similar to the EBITDA. And from a country perspective and 12,000 towers, I mean, look, this is very much our vision for the next five years. Based on what's laid before us, we think this is eminently possible and within our reach. I think in this business, short term volatility in the market is because the business is so long term, because these assets last for a lifetime, because these contracts are so long. Think buyers and sellers tend to look beyond the next few weeks or even months in terms of volatility. So from a five year vision point of view, we see absolutely no change in our ability to deliver eight countries and 12,000 sites over that time, both through M and A and organic means. Now the question of currency on that, currency is always a negotiating point in a tower deal. And our aim is to maintain currency mix at current levels, but we'll need to see how that goes throughout. But I wouldn't be assuming any major change up or down in the currency mix at this point in time because quite simply that's what we'll be aiming for. And I think based on knowledge of how these contracts work and in some markets, have mixed currency contracts, part dollar, part local currency. In other countries, you have all dollar contracts. And in other countries, you may have more local currency contracts. I think it's a good mix, we'll probably be able to maintain reasonably in line with current earnings levels. And just I mean, just to add to the expansion and growth side of things. Again, I'd just point to this organization's ability to deliver the past performance. So we've done nine transactions, M and A transactions in nine years. We've acquired close to 5,000 of the 7,000 towers we have today. And so we've got an ability to drive that growth. We've got the financial resources based on past acquisition costs to acquire between 2,003 towers. Organically, all the 5,000 towers we sell ourselves that we want to add, We've got the organic capacity, as Tom mentioned earlier, that we see on an annual basis adding approximately between 2,500 tenancies per year. And roughly 20%, 25% of those tenancies would be in the form of new towers. So quickly, you get to adding roughly 2,000 to 2,500 of towers by organic growth and 2,000 to 3,000 towers through M and A growth over the next five years. So we think this is very much deliverable in terms of our goals going forward. Thank you. If I may, just a point of detail. Am I right in thinking that your ground leases are in local currency rather than hard? Again, it's a mixture. So DRC, which is really a dollarized economy, most well, virtually all are in dollars. In other markets, it's a mix. Tanzania, Garda. Similar to our revenue, we have some revenue in dollars there, but the majority is local currency. The majority of ground leases in both those markets is local currency, a few in dollars here and there. But so I think you can broadly assume a fairly consistent mix of currency at the ground lease level as well, which is partly why portfolio free cash flow percentage would be, again, not too dissimilar to the EBITDA percentage. That's great. Thanks very much. Thanks, Sean. Our next question today comes from Jonathan Kennedy Good of Standard Bank. Jonathan, your line is open. Good morning and thanks for the opportunity to ask questions. So a quick one on current oil prices. It's probably early on in the bear market, but just trying to understand whether there are any opportunities for margin expansion given lower oil prices and whether you pass all that through to your customers. And then how does that assuming we see $30.40 dollars oil for the medium term, I mean, how does it change the economics of going solar on your sites and whether that will change decisions in the medium term? And then just one other kind of follow-up on your tenancy expectations. The 1,000 to 1,500 tenancies, Could break that down into how much you expect in South Africa versus the rest? And whether that includes the I presume it doesn't include the bolt on acquisition? Yes. Jonathan, thanks for the questions. So first off, price, yes, we've seen the market obviously move massively over the past few weeks. I mean for us, because we have escalation mechanisms in our contract, we pass on movements in power prices in general, grid and diesel to our customers. So our P and L is largely hedged against it, whether it goes up or down. To give you a sense of detail here, in two of our markets, Tanzania and Ghana, they change fuel prices locally fairly regularly, fortnightly in Ghana and monthly in Tanzania. In our other markets, which use fuel, DRC in Congo and Brazzaville, the price changes are much rarer occasions. Typically, in Ghana and Tanzania, the price of fuel locally is driven by the price of oil arriving at port. So let's say these oil prices now take two to three months to feed into the local market by the time shipping containers are arriving there. That would arguably give us a little bit of lower OpEx for a very short term. And then at the next escalation date, which could be at the end of the next calendar quarter, we would pass on that to our customers. So I wouldn't be assuming any upside or downside really to our business from this from an EBITDA point of view because the revenue roughly tracks the OpEx in that sense. Obviously, from a top line point of view, if the revenue goes down, then you'd see a slower kind of nominal growth in revenue, but you'd equally see a lower growth in OpEx. And so EBITDA is effectively maintained from that perspective. In terms of the tenancy growth, again, for South Africa, we're not giving near term market by market forecast. I guess we're reiterating what we said last year, which is our target in South Africa is to have 1,000 sites there over the three year period from when we set up there. And so that hasn't changed, I guess, in the very short term in terms of reporting at year end. The cycle in South Africa was slightly lower than expected, but the 10Q ratio was a bit higher than expected. So I guess things even out over time. But yes, no change to our three year outlook there. And we are in South Africa, you mentioned the acquisitions where we're looking at actually a number in South Africa, very small, which effectively can be thought of just as sort of organic growth and some potentially fairly larger. So there's a bit of a mix out there in terms of deal size potential, but we'll update you through the year as and when any of these potential ones get signed and give you sort of guidance, more specific guidance at that point. I would say in terms of the $30,000,000 acquisition CapEx amount that we highlighted as potential increment for this year, In terms of the impact on the P and L, we would just guide to say don't change your P and L estimates for this year based on those acquisitions. It's simply because of the timing of closing acquisitions is a little bit unknown and probably would only have a short amount of time contribution to the FY 2020 financial year. So don't change your P and L assumptions this year based on that $30,000,000 But we would give you additional guidance for the year as and when any of these get signed in terms of future. Great. Thanks. Just following up to cover my earlier question on the economics of going solar relative to low oil prices. I mean, has it changed any kind of CapEx allocation to that? And my understanding was that if you went solar, you'd keep the value of whatever the oil price gain or I mean, the gain in value is on account of not having to purchase diesel would be the return on that furlough? Look, we have an ongoing program of sort of environmental friendly and cost saving solutions. Our thesis on solar application hasn't changed. We will continue to look at where it makes economic sense. And we look at paybacks between three and five years. And to be honest, we deploy in places where it's very difficult to get diesel fuel there. And therefore, for example, some parts of the DRC diesel fuel is almost 2x, if not more than 2x the cost of a liter of fuel than in Tanzania, for example. And in these circumstances, we'll always make the investment in solar. So and we also think that the price of oil is a short term issue today. And the reality is it will bounce back in time. But our thesis hasn't changed. We'll invest where it makes sense in the business. Our next question today comes from Rahul Bat of JPMorgan. Rahul, your line is open. Hi, guys. Thank you for the presentation. I just have a few questions. I probably start with the impact of the Ghanian SEDI? Do you think that had any could you explain if that had any impact on like EBITDA generation in the fourth quarter? And I know, Tom, you went through this before, but can you give any guidance on like the actual EBITDA contribution from the Ghanaian SEDI and the Tanzanian shilling to your EBITDA revenues? And then this is excluding the power side that, like you said, is straight path. So what is the exact like, if you can, EBITDA and revenue impact from these local currencies? And then also, I think earlier today, I saw a headline on potential special dividends sometime down the line. Could you help me think through how to think about dividends? How are you thinking about dividends? Do you think that should be linked to free cash flow generation of the firm or net profit generation? Would it would you have any leverage in mind? And would you say leverage has to be below three times, 3.5 times before you start paying a dividend? Can you give some clarity on that? Thank you. Yes. Absolutely. So I think your first question, Rahul, was in relation to the Ghana steady, right? Now Ghana is a good part of our business. It's relatively small, something like 10% of our business. So it has limited impact on our group as a whole. There's not really been much impact coming through in the Q4 numbers in terms of Ghana City in particular. So that's not really driving trends there from a group perspective. I think in what we have shown in the past in other materials and kind of to your second question on the impact on EBITDA from the Ghana study in the Tanzanian shilling, we have shown a sensitivity analysis, which sort of demonstrates what a 10% movement in one of these currencies would do for the group EBITDA. And the Tanzania shilling is a larger part of our business. Obviously, Tanzania itself is a much larger part of our business than Ghana. So the analysis that we've shown shows that for a 10% movement in the shilling, that would feed into a 2.5% movement in our group EBITDA. But of course, that's before any escalations kick in. So that's effectively a sort of day one run rate movement, if you like, on the EBITDA. And obviously, we have escalation mechanisms which kick in, CPI energy and power price movements, which are themselves quasi dollar denominated with which kick in. So to the extent the shilling, say, were to devalue against the dollar, typically, you see that come back through CPI. And we've demonstrated that over the years, and that has certainly been our experience over the years. So but yes, that's the sensitivity that we've provided in the past, and that still stands today. In terms of special dividend, look, I think in terms of dividends in general, we are in a period of growth. We are in a period of investment. We have a lot of highly attractive and value accretive investments in front of us. And they are our primary focus as a business and management team in terms of delivering value for investors. So that is very much our number one priority. A special dividend or share buyback or something like that could be considered in special circumstances, and we will monitor for that always with value creation being the main priority. In terms of general dividends going forward, we do aim to become a dividend paying company in the medium term And based on our current trajectory of portfolio free cash flow growth, that's certainly very much within our reach in the medium term. CapEx depending. So we'll need to assess at future dates what the potential for growth CapEx is, particularly in terms of large scale acquisitions, which can obviously be quite binary and make the total CapEx quite lumpy. But on a base case organic business plan basis, assuming our CapEx stays at levels similar to the organic plan for 2020 and maybe comes down a little bit over the next few years and assuming our portfolio free cash flow keeps growing in line with our expected EBITDA growth. And fairly soon, we are a potential dividend paying company, and that's what we would look to do. And your point on leverage, our leverage targets remain the same. We believe that our natural point for leverage is 3.5 to 4.5. And we would ensure that we target those levels whether it's a dividend or indeed whether it's deploying capital for acquisitions. So that's how we think about it. We back calculate everything to maintain our leverage ratios. Understood. Perfect. Thank you. Our next question today comes from Alexander Vengranovich of Renaissance Capital. Alexander, your line is open. Yes, hi. Just a quick question on your depreciation levels this year and going forward. So previously, you're talking about some gradual decline in organic depreciation. Is that still valid? Should we expect some year over year decline in your depreciation? And what sort of factors will impact that? Yes. Absolutely. So guidance we gave previously still stands. Our depreciation right now is kind of higher than the natural resting point of the variable higher than the current CapEx of the business. And ultimately, that should normalize to the same level. So I think when we do a tower acquisition, the assets get depreciated over an effective accelerated time period. And so over the next five years, as we see some of our earlier acquisitions roll off the depreciation cost line because the assets become fully depreciated, We see a normalization of depreciation levels down to sort of around 80,000,000 or so $85,000,000 which is consistent with our medium term CapEx expectations. And then thereafter, from a long term point of view, on a terminal growth basis, we see our depreciation CapEx being more down at the 40,000,000 to $50,000,000 level, but that's on a terminal growth basis. So yes, the guidance for that hasn't changed. Over the next five years, we'll be seeing some of the early asset acquisitions roll off the depreciation line. Our next question today comes from Charles Cartlidge of Sloane Robinson. Charles, your line is open. Thank you. Thank you very much for the call. Congratulations on the results. I have three questions. The first is any update on the Tanzanian regulator who, in your prospectus, was said to be looking at the industry and Helios? The second question relates to a prior question on the buyback. What's the free float requirement for Helios currently? And what was that what headroom would that allow you in terms of a buyback if you decided to do it? And thirdly, on the debt refinance, I'm sorry, I don't have a Bloomberg screen in front of me. So I don't know what your current debt yield. If you were to issue new debt, what that would yield? So what's the uplift in terms of interest savings? Thank you. Hi, Charles. How are you? Good to hear from you. Let me take the Tanzania regulator one, and Tom can take the other two parts. Yes, as we outlined in the prospectus in Tanzania, the regulator was doing a review. And that concluded, I think it was sometime in December. And the regulator came back and said they were happy with our proposition in Tanzania, and there was no action or any outcome of that. So as far as we're concerned now, that's closed off. And this was a review as part of a larger process that started back in 2018, if you recall, which involved the operators and then subsequently the infrastructure service providers as well. Then on the buyback, Charles, I think we could be somewhat constrained on that. I need to double check. I think the requirement is 25%. So at this point, there may be some constraint on that, need to monitor as we move forward as a business. Obviously, various lock ins come off effectively. But yes, that would be something to check. From a debt perspective, I mean, bonds for a while now have been in the technical trading zone because we're at a call date. And I haven't checked it today, but certainly where I've been for a while now. Look, in terms of the refinancing potential, clearly, a market like today, we wouldn't be launching. So talking about a price is really a little bit irrelevant on a day like today in the market. But in recent times, yields for these sorts of comparable companies have fairly attractive quite a lot lower than our current debt levels, in the region of 6% to 7% is where it's been the kind of range over the past few months. Obviously, there's been rate cuts in recent weeks as well. So that once this market stability well, sorry, once this market volatility moves to bit of stability, we'll have to monitor and see where things land. All right. Thanks. Our next question today comes from Jimmy Condon of Crest. Jimmy, your line is now open. Thank you and thanks, guys. It's a question for Tom, really, following on from what Charles was just saying. And that's I mean, clearly, the business has matured and generating a lot more cash flow than back in 2017 when you issued the bond at 9.8. I wonder, Tom, if you could just give us a steer of every kind of percent saving on that, what that kind of means for cost saves, cost saved and that's it's obviously important as well for cost of capital considerations for valuations later on. But what would a percent mean for savings? Yes, absolutely. So I guess including our we have a small term loan on top of the 600,000,000 bond, but I mean, you're looking at roughly $7,000,000 for every 100 bps roughly. So it's a significant potential savings really, yes. Good. Okay. Just wanted to check that. Thank you. Thanks. Our next question today comes from William Bevington of Jefferies. Tom, congratulations on some very strong results. Question is geography really. By 2025, obviously highlighted eight different countries or eight additional countries. Can you just talk a little bit about what are the sticking points by country or by MNO? I don't know how precise you can be in terms of negotiation. I'm really thinking of Europe is where this question comes from. Some MNOs in some countries are super keen to negotiate and do deals with an independent telco, and some are absolutely not. So I don't imagine there is a particular reticence or kickback to negotiating with doing deals with you. But was just curious as to, a, what in general, what the tipping points are And secondly, on those particular countries that you're to move into by 2025, any in particular more difficult to negotiate with others? And that was it really? Yes. Look, difficult to go into specific details, but we do have sort of a disciplined approach in what we like when we enter a new market or a transaction with an MNO in a particular market. So for example, if we were entering a new market, we'd typically like to have three or more MNOs operating there. That reduces then the risk of future consolidation and allows us confidence in the tenancy growth. It's one of the reasons why we've managed to deliver a tenancy growth over the last few years to where we are today. The other aspect is the volume of population, the penetration levels in terms of subscriber penetration, the usage of technology. And the fundamental is we don't like to be a bank to an MNO. So if an MNO wanted a very high value for their towers and they were happy to have an unsustainable lease rate on a monthly basis, that's typically not good for us. We don't like deals like that. And quite simply, that's just basically creating a problem down the road when the operating costs become unsustainable for the MNO, our lease costs become too high. And so we try to do transactions that are typically between 35% or higher percent lower than the total cost of ownership for an MNO. And that makes sure that we are always the most efficient solution for our customers and future customers in a new market. Hope that sort of helps. That's fine. Thank you. We have no further questions, so I'll hand back for any final remarks. That's great. Thanks, Megan. Well, look, thank you very much, everybody, for joining the call, and we look forward to meeting some of you on our conversations in the next few weeks. Whether they're face to face or by phone, we'll wait to see. And of course, during May, we'll be reporting on our Q1 performance. Thank you. Bye bye. Thanks, everyone.