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. 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 Helios Towers' side. I'm Kash Pandya, I'm the CEO, and I've been with the business since middle of August 2015. Tom Greenwood, our CFO, has been with the business since 2010 and CFO since September 2015. Manjit Dhillon, 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.
Then Tom will take us through the financial results, and finally, Q&A. During our presentation, we will talk about COVID-19 and how we are dealing with it as a business across our markets. Moving straight into the highlights and slide five. Look, let me firstly start off by saying that we're really pleased with the performance of 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 million. More importantly, our EBITDA has grown by a solid 16%. As you'd expect in a model like ours, we've leveraged the revenue to deliver a higher percentage growth in our adjusted EBITDA, coming at $205 million for the full year of 2019.
More importantly, we've continued to expand our margin by some three percentage points, completing the year at 53%. If you look at Q4 performance, we actually completed the quarter at 54%. 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 of free cash flow grew by some 27% year-over-year, coming in just shy of $170 million. 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've delivered a 3% site growth year-over-year, and more importantly, our tenancy growth's grown by some 8% to 14,600 tenancies overall. Our tenancy ratio has grown by 0.08%, coming in at just shy of 2.1 times 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 count of 118 sites. More importantly, we're really pleased with the tenancy ratio 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 the middle of October 2019. We generated primary capital in that listing, and we'll talk a little bit about that. We're excited about the opportunities that gives us to drive organic, but more importantly, 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. You see the dynamic of the business, and we see no change in this momentum going forward. We've now delivered 41% kind of growth since Q1 of 2015, more than doubling our margin to 54% in Q4 of 2019. Our trajectory is, in the medium term, to be between 55% and 60% margin range in the medium term. 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. This slide really highlights South Africa's macro dynamics and the telecom drivers.
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 12 times to coming at 1.8 at the end of last year. 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. We're also looking at some small M&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 last year on the London premium listing on the 250. This is an important milestone.
It represents the third 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. We're very excited about the reception our business has had since we've listed, bar the current climate of the virus. Moving on to slide nine. Why are we excited about listing and the primary we've raised? 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 that's grown by over 50% in terms of the volume of towers over the last five years. 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 MNOs going into the TowerCo sector has increased, significantly behind where the rest of the world is. Our view is that MNOs 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. More importantly, generally, TowerCos provide also a lower cost solution to the consumer, and we provide a better service as has been proven time after time when TowerCos take on towers in Africa, particularly with our focus on infrastructure and power management.
Of the 165,000 towers in Africa, we're very excited about the fact that there's not only 29,000 towers in the markets we operate in are still owned by MNO, 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, et cetera. These, we believe in 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. As I've mentioned already, we have some great growth opportunities for our future strategy. We have three legs to the growth strategy that we pursue. The organic growth represents some 19,000 points of service required in our five markets.
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. For example, some of our biggest markets, in the last 24 months, have only just issued 4G licenses. 4G licenses means transformation in terms of data consumption for some of our markets. Also bear in mind that today we only have 14,600 tenancies on our towers. 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&A and geographic expansion, particularly with our further capacity now through the primary equity we've raised as well as the debt capacity we have in our business.
The third leg of our growth strategy is around technology offering to our customers in the markets we operate in. This is through more densification of towers, through fiber backhauling from tower to fiber ring, as well as data centers. 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 power-sharing model in itself really supports the sustainability of a business like ours. Our business 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 the environmental standards that we apply to our business. 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. We're very excited about the steps going forward.
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. On that note, I'm going to hand over to Tom, who's going to take us through our financials. Tom?
Thanks very much, Kash. Hey, everyone. I'm on slide 13. 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. Of course, year on year, 2018 to 2019, we've increased it 16% with the continuous growth of the margin through that time. This trend is absolutely what Kash, myself, and the rest of the team have absolute focus on to deliver for the next few years as well. 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 won't dwell on this.
It's really explained in the next few slides, but all very much our main KPI is 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. Here we look at our financial key indicators. Our revenue's up 11% 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. Of course, we have given guidance that we expect to be in the 55%-60% range in the medium term. Clearly, we're knocking on the door of that right now. Moving on to page 16.
Again, our revenue breakdown by customer, FX, and country has been very stable and consistent over the past few years, 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, our country mix is still largely dominated by Tanzania, DRC, with now South Africa on that chart and growing, Ghana and Congo, Brazzaville 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. This equates to a tenancy ratio of 2.9, stepping up from 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 2017 down to 33% in Q4 2019. A very strong trend there. 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 tenancies to the tower, which of course means an 80%-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.
Just looking at our EBITDA split by hard currency and country. Really a consistent story here. Our EBITDA is majority hard currency based, 65% to be precise in hard currency, predominantly that's dollars. Even the local currency component of the 35% is in some way quasi-dollarized because of the escalation mechanisms for CPI and for power prices that we have attached to these contracts. 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 non-discretionary CapEx each year, being maintenance and corporate CapEx. You can see from the charts for FY 2018 and FY 2019, these are in the mid to low double-digit ranges. We reiterate similar guidance for 2020.
For maintenance and corporate CapEx, we guide to $20 million-$25 million. The large remaining section of our CapEx is very much discretionary based and driving growth. From an organic base case point of view, we guide to a total of $110 million of CapEx for this year, very much in line with analyst expectations. We're also drawing out here a potential additional $30 million for in-market bolt-on acquisitions. 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 say that there could be an extra $30 million of our acquisition CapEx coming through that we will tell you about as and when these deals are signed, but they're reasonably advanced now. 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, the continued downward trends, clearly driven by EBITDA growth. You'll also note that because of the $125 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 3.5-4.5, 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. We may do that should a market window present itself. We could also raise an additional term loan of $200 million to be used for expansion purposes.
Again, it's always maintaining the net leverage target of between 3.5-4.5. 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 million for 2019, which equates to a cash conversion of 82%. A good, solid trend in cash conversion growth. 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. 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.
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. 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 end of 2018. That's what the swing is there. Moving on to a recent or current topic on page 23. We, like all businesses, are monitoring the coronavirus situation, at board level and through the executive management team and all through the business. I've put on here a summary of some of our risk assessment of it. Look, overall as a business, being a utility-like business with long-term contracts and long-term cash flows, our business is generally quite resilient to something like this. We're monitoring it.
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. As yet, minimal disruption currently, and minimal expected. Our existing revenue and earnings streams obviously are underpinned by long-term non-cancellable contracts. That is maintained. No or minimal impact expected there. Our customer rollout is something we're monitoring. Obviously, our customers, in order to roll out new tenancies with us, require active mobile equipment, some of which may be sourced from China, some of which may be sourced from elsewhere. We're monitoring that. The potential implication for us, however, would just be simply a bit of slower rollout later this year if that were to cause delays. 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, Europe, South Africa, et cetera as well. Actually, even the ones that are based out of China, we've had minimal disruption from so far. 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. Overall, a resilient business model. 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. Often you see the mobile operators have increased revenues in months such as these. We feel fairly good and fairly resilient in the current situation. Moving now to page 24.
We are here effectively reaffirming the guidance that we provided last year in terms of our 2020 financial year. Through all the key drivers of our business, tenancies, lease rates, operating expenses, SG&A, EBITDA margin, and CapEx. You can see the right-hand column, 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 million increase for bolt-on acquisitions, which may come through in the coming months. As and when they do, we will obviously tell you about them. Overall, the business is very robust and continuing its momentum of growth from 2019. With that, I will hand back to Kash for the final notes.
Great. Thanks, Tom. I'm on slide 25 now, and this is the last slide before we move to questions. Look, just to reaffirm our investment thesis, we operate in some strategically positioned markets that are very, very attractive growth opportunities. 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 the strong organic growth opportunities from the 19,000 points of service acquired, but also M&A activity is very exciting for us and we've demonstrated that we've got the financial capacity to do it, and more importantly, the opportunities are there ahead of us and we expect to deliver 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. That's why we consistently deliver 65% of our EBITDA in hard currency, for example. Finally, the business year-over-year has demonstrated strong cash flow generation. In 2019, we delivered 27% year-over increase in portfolio free cash flow. On that point, I'm going to hand over to Megan, who's our conference coordinator, to help with managing the questions. Over to you, Megan.
Thank you, Kash. As a reminder everyone, that is star followed by one to ask a question on your telephone keypads. If you have joined us via the web, please click the flag icon at the bottom of your screen. Our first question today comes from Giles Thorne of Jefferies. Giles, your line is open.
Thank you. I had three questions for you 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 rollout. Well, you carry inventory. It'd be useful to know how long that inventory would actually last, how many cycles 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&A. Almost by definition, many of these situations are going to be MNOs 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 MNOs comfortable with not owning assets or not. 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. 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, Giles. Let me take the first two, Tom will talk about the third element of your question. 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, 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. Typically, we have, depending on what the product is, whether it's generators or steel, et cetera, we have a pipeline that's able to have inventory between three and six months. We're not concerned about the impact of the virus. We've got in-house, in-country inventory and consignment stock that we can leverage, and we can facilitate the future growth. More importantly, also maintaining our service levels, et cetera, going forward.
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. Moving on to the second part, M&A activity. Look, these are sensitive subjects, but we are very acutely aware of the dynamics of MNOs pressure and what's happening around the world with MNOs looking at selling or consolidating their tower assets into TowerCos, et cetera. Africa is no different. We are actively in conversations with some of our customers, and in new markets on entry. I mentioned some of these markets already during the presentation. Difficult to go into details about that. Tom, on the third one?
It's a good question. It's certainly looking more attractive. We were having some high-level conversations on it the other day actually. I think it's not anything I'm going to confirm on this call, but it is an option for capital deployment. 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. 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 it's the best option we have in terms of generating value for our shareholders, then that's what we'll do. We are aware that this is a long-term business. There's a huge amount of potential M&A out there as Kash has described.
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, in terms of country expansion, portfolios diversification, et cetera. Let's monitor and see, but those are the sorts of questions we'll be asking ourselves.
Very good. Thank you, Tom. Just a very quick follow-up, please, on the first question. Assuming that 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?
Yeah, I think on that, the three to six months is effectively what we have in our warehouse. We also have consignment stock from our suppliers in market. That's part of our contractual set up with our suppliers. There's additional stock available. There's also other suppliers in our markets which provide all the key equipment such as power generators, et cetera. That may mean that we pay a little bit more on unit price to get it. In the grand scheme of things, fairly minimal. 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.
This effectively extends the life of generators for another good set of years, probably another five years or so in terms of expenditure. There's a whole bunch of things that we can do in order to increase our supply chain base, not just simply what we have in the warehouse today. Just to give you an anecdote, and on the slide I went through, I mentioned our own supply chain, and some goods out of China, and we get others from Europe and South Africa, for example. 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.
We're already getting rectifiers from another supplier in Europe now, plus we have a whole bunch of them in market. It's a very minute section of our supply, just to give you a kind of feel of our current experience.
That's great. Thanks guys.
Our next question today.
[Thanks, Giles].
Our next question today comes from Simon Coles of Barclays. Simon, your line is open.
Morning, guys. Thanks for taking the questions. Just on tenancy ratio growth, it looks like you've seen a bit of an acceleration in 4Q, I guess the positive thing, that's in your three biggest markets as well. I was just wondering if you can provide a bit more color around what's driving that. Is it to do with some of the 4G licenses you mentioned have been issued, should we expect this to be the run rates for the next couple of quarters, obviously COVID-19 dependent? Just on back to M&A, on the $30 million 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 MNOs that haven't maybe previously sold towers, and so therefore it could lead to further bigger deals in the future? Thank you.
Yeah, let me tackle the first part. Look, our tenancy ratio, it's in line with our expectations. As I mentioned earlier, 4G licenses were issued in two of our biggest markets, Tanzania and DRC, in the last 24 months. People are taking up more capacity from us because of these technology rollouts, as well as expanding geographic coverage.
Historic trends delivers anything between 0.05 to 0.1 growth per year, 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, that's just because people are tidying up when they've acquired new portfolios. When there's a rollout also, there's a potential slowdown initially, before the tenancies come active. We're encouraged by the trend of 2019 and we don't see any change going forward.
Yeah. Simon, on your second point about the M&A, the answer is yes, it's really with mobile operators who are current big customers of ours. In fact, most of whom we've actually done acquisitions from in the past. There's one which was actually the acquisition of a small business. However, virtually all the customers on the sites are already customers of ours and big five mobile operators. It's largely similar customer base to what we have already.
Very clear. Thanks so much, guys.
Thanks, Simon.
Thanks, Simon.
Our next question comes from Cesar Tiron 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? 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. 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. South Africa, of course, we entered in Q2 last year, with a SA Towers deal that we closed in May. Of course, we're pursuing opportunities in South Africa organically, but also through M&A. Yeah.
Absolutely. In terms of refinancing, Cesar, we're monitoring the market. Clearly the market movements in the last few weeks haven't been conducive to do it. Look, as a business, we're ready and we're monitoring for an adequate window. If we do it would be a straight refinancing of our existing debt, which is a $600 million bond and $75 million term loan. We've just sold all of that up into new notes and raise a separate term loan for probably $200 million, which would be there to be deployed in the expansion of opportunities. All very much still with a focus on maintaining our leverage of 3.5-4.5, which is our target range, in terms of thinking about new acquisition funding. That's how we're thinking about it right now.
In terms of covenants, well, our bond, which is our main financing instrument, that just has incurred covenants, which are plat baskets. We're currently below the leverage incurred covenant, which is 4 times there. It's fairly substantial baskets on top of that for things like acquisitions and stuff if we need it. Our term loan has some covenants in terms of leverage, but they're way higher than where we are. We're nowhere near them right now.
Thanks, Tom. Very helpful. Thank you.
Thanks so much, Cesar.
Our next question today comes from John Karidis of Numis Securities. John, your line is open.
Thank you. Good morning to you. I've got two questions, please. Both of them have to do with hard currency pegging. 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. 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. Secondly, kindly in your release, 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-à-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?
Yeah. Absolutely. Let me just take the first one. From an FX perspective, just to reiterate the numbers, the EBITDA is 65% hard currency, and revenue around 59%, as you say. When you look through the leases and taxes, et cetera, the EBITDA percentage is broadly maintained. If you look at it from a portfolio free cash flow position, which is after maintenance, CapEx, et cetera, that would be roughly 65% as well. That's how to think about that, I think. In terms of growth CapEx, that can swing depending on which countries the growth's happening in, et cetera. From a portfolio free cash flow, which is really the core cash flow earnings of the business, that would be similar to the EBITDA. From a country perspective and 12,000 towers, this is very much our vision for the next five years.
Based on what's led before us, we think this is eminently possible and within our reach. I think in this business, short-term volatility in the market because the business is so long-term, because these assets last for a lifetime, because these contracts are so long, I think buyers and sellers tend to look beyond the next few weeks or even months in terms of volatility. 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&A and organic means. The question of currency on that. Currency is always a negotiating point in a tower deal. Our aim is to maintain currency mix at current levels. We'll need to see how that goes throughout.
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. I think based on knowledge of how these contracts work, in some markets you have mixed currency contracts, part dollar, part local currency. In other countries, you have all dollar contracts. 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.
Just to add to the expansion and growth side of things. Again, I just point to this organization's ability to deliver the past performance. We've done nine M&A transactions in nine years. We've acquired close to 5,000 of the 7,000 towers we have today. We've got an ability to drive that growth. We've got the financial resources based on past acquisition costs to acquire between 2,000 and 3,000 towers. Organically, all the 5,000 towers we've set 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 1,000 and 1,500 tenancies per year. Roughly 20%, 25% of those tenancies would be in the form of new towers.
Quickly you get to adding roughly 2,000-2,500 of towers by organic growth and 2,000-3,000 towers through M&A growth over the next five years. 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. In DRC, which is really a dollarized economy, virtually all are in dollars. In other markets, it's a mix. Tanzania, Ghana, similar to our revenue, we have some revenue in dollars there. The majority local currency. The majority of ground leases in both those markets is local currency. A few in dollars here and there. 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, John.
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. 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. How does that, assuming we see $30, $40 oil for the medium term, how does it change the economics of going solar on your sites, and whether that will change decisions in the medium term? Just one other follow-up on your tenancy expectations. The 1,000-1,500 tenancies, could you 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.
Hey, Jonathan. Thanks for the questions. First off, oil price. We've seen the market obviously move massively in the past few weeks. 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. Our P&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 and Congo, 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.
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. 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 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 for South Africa is to have 1,000 sites there over the three-year period from when we set up there. That hasn't changed. I guess in the very short term, in terms of reporting at year-end, the site count in South Africa was slightly lower than expected, but the tenancy ratio was a bit higher than expected. I guess things even out over time. Yeah, no change to our three-year outlook there. We are in South Africa, you mentioned the acquisitions, we're looking at actually a number in South Africa, some very small, which effectively can be thought of just as organic growth and some potentially fairly larger.
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 more specific guidance at that point. I would say in terms of the $30 million acquisition CapEx amount that we highlighted as a potential increment for this year, in terms of the impact on the P&L, we would just guide to say, "Don't change your P&L estimates for this year based on those acquisitions." Just 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. Don't change your P&L assumptions for this year based on that $30 million.
We would give you additional guidance through the year, as and when any of these get signed, in terms of the future.
Great, thanks. Just following up then to cover my earlier question on the economics of going solar, relative to lower oil prices. Has it changed any kind of CapEx allocation to that? My understanding was that if you went solar, you'd keep the value of whatever the oil price gain, or, the gain in value is on account of not having to purchase diesel would be.
Yeah
the return on that solar.
Yeah. Look, well, we have a ongoing program of environmentally friendly, and cost-savings solutions. Our thesis on solar application hasn't changed. We will continue. In three and five years. To be honest, we deploy in places where it's very difficult to get diesel fuel there. Therefore, for example, some parts of the DRC, diesel fuel is almost two times, if not more than two times, the cost of a liter of fuel than in Tanzania, for example. In these circumstances, we'll always make the investment in solar. We also think that the price of oil is a short-term issue today. The reality is it will bounce back in time. Our thesis hasn't changed. We will invest where it makes sense in the business.
Great. Thank you.
Great.
Our next question today comes from Rahul Bhat of JP Morgan. Rahul, your line is open.
Hi, guys. Thank you for the presentation. I just have a few questions. Can I probably start with the impact of the Ghanaian cedi? Can you explain if that had any impact on your EBITDA generation in the fourth quarter? I know, Tom, you went through this before, but can you give any guidance on the actual EBITDA contribution from the Ghanaian cedi and the Tanzanian shilling to your EBITDA revenues? As in, this is excluding the power side that, like you said, is straight passed through. What is the exact, if you can, EBITDA and revenue impact from these local currencies? 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 you have any leverage in mind? As in, 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.
Yeah. No, absolutely. I think your first question, Rahul, was in relation to the Ghanaian cedi, right? Ghana is a good part of our business. It's relatively small, something like 10% of our business. It has limited impact on our group as a whole. There's not really been much impact there coming through in the Q4 numbers in terms of Ghanaian cedi in particular. 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 Ghanaian cedi and 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. The Tanzanian shilling is a larger part of our business.
Tanzania itself is a much larger part of our business than Ghana. 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. Of course, that's before any escalations kick in. That's effectively a sort of day one run rate movement, if you like, on the EBITDA. We have escalation mechanisms which kick in, particularly CPI and any power price movements, which are themselves quasi-dollar denominated, which kick in. To the extent the shilling say, were to devalue against the dollar, typically you see that come back through CPI. We've demonstrated that over the years, and that's only been our experience over the years. Yeah, that's the sensitivity that we've provided in the past, and that still stands today.
In terms of the 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. They are our primary focus as a business and management team in terms of delivering value for investors. That is very much our number one priority. A special dividend or share buyback or something like that could be considered in special circumstances. 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. 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.
We'll need to assess at a future date 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. On a base case organic business plan basis. The organic plan for 2020 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, then fairly soon we are a potential dividend-paying company, and that's what we would look to do. 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. That's how we think about it.
We back-calculate everything to maintain our leverage ratios.
Understood. Perfect. Thank you.
Okay.
Our next question today comes from Alexander Zverkovich of Renaissance Capital. Alexander, your line is open.
Yes. Hi. Just a quick question on your depreciation levels this year and going forward. Previously, you were 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 other factors will impact that? Thank you.
Yeah, absolutely. The guidance we gave previously still stands. Our depreciation right now is higher than the natural resting point of the bill, or higher than the current CapEx of the business. Ultimately, that should normalize to the same level. I think when we do a tower acquisition, the assets get depreciated over an effective accelerated time period. 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 around $80 million or so, $85 million, which is consistent with our medium-term CapEx expectations. Thereafter, from a long-term point of view, on a terminal growth basis, we see our depreciation and CapEx being more down at the $40 million to $50 million level. That's on a terminal growth basis.
Yeah, 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.
Thank you.
Our next question today comes from Charles Cartledge 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 headroom would that allow you in terms of a buyback if you decided to do it? 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 is. If you were to issue new debt, what that would yield. What's the uplift in terms of interest saving? Thank you.
Hi, Charles. How are you? Good to hear from you. Let me take the Tanzanian regulator one, and Tom can take the other two parts. As we outlined there in the prospectus, in Tanzania, the regulator was doing a review, and that concluded, I think it was sometime in December. The regulator came back and said they were happy with our proposition in Tanzania, and there was no action or any outcome of that. As far as we're concerned now, that's closed off. 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. Yeah.
Yeah. On the buyback, Charles, I think we could be somewhat constrained on that. I'd need to double-check. I think that the requirement is 25%.
At this point, there may be some constraint on that, but we need to monitor as we move forward as a business. Obviously, various lock-ins have come off effectively. Yeah, that would be something to check. From a debt perspective, our bonds for a while now have been in the technical trading zone because we're at a call date. I haven't checked it today, but that's certainly where it's been for a while now. Look, in terms of the refinancing potential, clearly in a market like today, we wouldn't be launching. Talking about a price is really a little bit irrelevant on a day like today in the market. Recently, these sorts of comparable companies have been fairly attractive and quite a lot lower than our current debt levels.
In the region of 6%-7% is where has been the kind of range over the past few months. Obviously, there's been rate cuts in recent weeks as well.
Yeah.
Once this market volatility moves to a 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 open.
Thank you, thanks, guys. It's a question for Tom, really, following on from what Charles was just saying. That's, clearly the business has matured and generating a lot more cash flow than back in 2017 when you issued the bond at nine and one-eighth. I wonder if, Tom, if you could just give us a steer of every kind of % saving on that, what that kind of means for cost saved, and it's obviously important as well for cost of capital considerations for valuations later on. What would a % mean for savings?
Yeah, absolutely. I guess including we have a small term loan on top of the 600 bond, you're looking at roughly $7 million for every 100 basis points.
Okay
potential saving, really. Yeah.
Good. Okay. Just wanted to check that. Thank you.
Thanks.
Our next question today comes from William Beavington of Jefferies. William, your line is open.
Hi, Tom. Hi, Kash. Again, congratulations on some very strong results.
Thanks.
My question on geography, really. My question is on geography, really. By 2025, you 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 TowerCo, and some are absolutely not. I just wondered, I don't imagine there is a particular reticence or kickback to negotiating with or doing deals with you. I was just curious as to, A, in general, what the sticking points are, and secondly, on those particular countries that you're going to move into by 2025, are any in particular more difficult to negotiate than others?
That was it, really.
Yeah, 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. For example, if we were entering a new market, we 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. The fundamental is we don't like to be a bank to an MNO.
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. 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. We try to do transactions that are typically between 35% or higher lower than the total cost of ownership for an MNO. 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.
Yeah, that's fine. Thank you.
As a reminder, that is star followed by one to ask a question. 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. Of course, during May, we'll be reporting on our Q1 performance. Thank you. Bye-bye.
Thanks, everyone.