HELIOS TOWERS PLC (HTWS) — Investment Research Note

Executive summary

Helios Towers is a leading independent mobile tower operator with ~14,750 sites across nine African and Middle Eastern markets, leasing space to blue-chip MNOs under 10–15 year contracts with CPI/power escalators. FY25 marked the tenth consecutive year of Adjusted EBITDA growth (+12% YoY to $471m) with tenancy ratio hitting the 2.2x target one year ahead of plan, net leverage falling from 4.0x to 3.4x, and free cash flow more than tripling to $66m 2026-03 FY25 results. The single most important point for valuation today is that the business has crossed into its "cash-compounding sweet-spot": IMPACT 2030 targets >9% EBITDA CAGR, >$1.3bn cumulative recurring FCF and >$400m shareholder distributions by 2030.

Fair value estimate

Methodology: blended EV/EBITDA multiple on FY26 guided EBITDA + cross-check on recurring FCF yield.

• FY26 mid-point guidance: Adjusted EBITDA $517.5m, Recurring FCF $217.5m.
• Applying EM-tower peer range of 8.5–10.5x forward EV/EBITDA → EV of $4.40–5.43bn.
• Deduct net debt ($1,723m) and minority interest (~$36m) → equity value $2.64–3.67bn ≈ £1,970–2,740m at USD/GBP 1.34.
• Cross-check: at FY26 mid RFCF $217.5m (~£162m), a 6.5–8.0% yield implies £2,025–2,495m equity value.
• Blended equity range £2,000m – £2,700m, midpoint ~£2,350m.

Per-share fair value range: 195p – 260p (midpoint ~225p) vs. current 199.6p.

• Implied market cap range: £2,000m – £2,700m vs current £2,061m.
• Absolute upside to midpoint: ~+13%; range spans –2% to +30%.

Sector context

• ICB Telecommunications — a somewhat unusual telco sub-segment (passive infrastructure REIT-like model rather than services).
• Growth/leverage profile is above typical telco peers (EBITDA CAGR ~9%+ vs. flat-to-low-single-digit for European incumbents) but leverage (3.4x) is above most listed towercos ex-EM.
• Peers: IHS Holdings (IHS) — closest peer, African-EM towerco; Cellnex Telecom — European scaled peer, lower risk; American Tower / Crown Castle / SBA Communications — developed-market benchmarks trading 15–22x EBITDA.

Investment thesis

1. Cash-compounding inflection is real and measurable. RFCF grew 40% to $208m in FY25 and free cash flow tripled to $66m as maintenance/lease/interest costs stay largely fixed while tenancies scale 2026-03 FY25 results. Mgmt guides to >$1.3bn cumulative RFCF over 2026-30 with initial $75m buyback + $25m dividend already launched.
2. Structural, hard-currency-underpinned demand. 71% of FY25 EBITDA is hard-currency (dollarised/pegged markets or USD-linked contracts), plus embedded CPI/power escalators; $5.3bn of contracted revenue with 6.6-yr avg remaining life and 70% from investment-grade customers provides visibility 2026-03 FY25 results.
3. Balance-sheet inflection and rating tailwind. Net leverage down 0.6x YoY to 3.4x, Moody's upgrade to Ba3 in Feb 2026 (following S&P/Fitch upgrades to BB– in 2025), cost of debt held flat at 7.1% despite rising rates, and $120m convertible tendered below par eliminating 41m potentially dilutive shares 2026-03 FY25 results.

Key risks

1. Customer concentration and EM sovereign/tax risk. Top four MNO customers = 72.3% of FY25 revenue (Airtel Africa alone 27.9%); ~$104m of contingent tax liabilities across Tanzania, DRC and Congo Brazzaville disclosed but not provided 2026-03 FY25 results, Note 27.
2. Leverage still above towerco peers and FX exposure on ~29% non-hard-currency EBITDA. Malawi entered hyperinflation accounting in 2025; DRC/Malawi/Madagascar currencies carry devaluation risk that compresses reported metrics.
3. Technology substitution and pricing pressure. Long-dated risk that satellite (LEO) networks, active infrastructure sharing or MNO in-house build-back reduces tower demand — acknowledged as principal risk #7 in the annual report 2026-03 FY25 results.

Operating leverage

Cost structure is highly fixed: site & warehouse depreciation ($134.6m), non-power opex ($94m), interest ($154m) and lease payments ($46m) scale far more slowly than revenue. Contribution margin on incremental colocations is very high — the 55% Group EBITDA margin masks segment margins of 74% (MENA/Oman) and 68% (E&W Africa), reflecting what accretive colocations look like. Amendment colocations grew 44% YoY (2,929 → 4,222), essentially incremental gross margin at 90%+ contribution. Modelling a 15% revenue upside vs guidance ($130m extra) at 70% incremental EBITDA contribution would add ~$90m EBITDA — roughly +18% to guided EBITDA and disproportionately larger to FCF given fixed interest/lease. That said, this is asset-heavy rather than capital-light — ROIC of 13.5% is respectable but not software-like. Score reflects genuine leverage tempered by capex intensity 2026-03 FY25 results.

Value-trap signals

None identified. Revenue and EBITDA growing consistently, leverage decreasing, credit ratings rising, shareholder returns just initiated. The main "cheap-for-a-reason" argument is EM/geopolitical/tax discount, which is real but reflected in the 8-10x multiple assumed.

Earnings vs. expectations

• FY25 results (Mar-26): "performance ahead of expectations", +12% EBITDA vs 2024, hit 2.2x tenancy target one year early → beat.
• H1 2024 results (Aug-24): "2024 guidance tightened upwards" across tenancy, EBITDA, RFCF and capex → beat.
• H1 2023 results (Aug-23): "2023 guidance tightened upwards" on all metrics → beat.
• FY22 results (Mar-23): "in line with expectations" → met.

Pattern: consistent modest beats and upward guidance revisions over three years, with a clear track record of hitting or exceeding multi-year strategic targets ahead of plan. Points to a management team that guides conservatively.

Conviction

3 (moderate).

• Anchors: clean and well-disclosed contracted revenue and cash-flow framework; consistent track-record of meeting/beating guidance; multi-year strategic plan quantified with capital allocation targets.
• Limits: wide fair-value range reflecting sensitivity to EM cost-of-capital assumptions and tenancy-ratio trajectory in newly acquired/underlease markets (Oman, Senegal, Madagascar, Malawi); embedded derivatives and hyperinflation accounting create noise in statutory earnings.