Helios Towers to Invest $450 Million Of $1 Billion Raised for Expansion Into Sub-Saharan Africa

Telecom tower infrastructure company, Helios Towers, has announced its plan to invest $450 million from funds it just raised for expansion into more parts of Africa.

The funds will be pulled from $1 billion that the company just raised from the debt markets this week. With the funds, Helios Towers will be putting back to work the expansion plan it had before the Covid-19 pandemic.

In the expansion plan, Egypt, Madagascar, Ethiopia, and Morocco are target countries for the telecom infrastructures company. Morocco, Egypt, and Madagascar have some of Africa’s fastest internet speeds. Recent plans by the Ethiopian government to open its telecom industry to private investors have moved Ethiopia to the top of the priority list for Helios Towers.

Two new mobile licenses are up for auction and they come with a minority stake in the state monopoly. Ethiopia’s telecom sector is monopolized largely by Ethio Telecom, a state-owned telco. Ethio telecom controls to a large extent, fixed lines, broadband, and mobile telephones.

Privatisation of this sector will open up a need for infrastructure companies like Helios Tower and IHS Holdings Ltd. Bloomberg reports that this wave of expansion will create a need for about 10,000 new towers over the next 5 years.

“Ethiopia is a very big opportunity, and after a few months of being quiet, its government has requested new indications of interest from telecom operators. With that now back on the table, we are seeking a financing partner and working with mobile operators to be in a strong position to enter the market,” says Tom Greenwood, Helios Towers Chief Financial Officer

Helios Towers Market Expansion Plan

In October 2019, the company listed on the London Stock Exchange. It raised $364 million in the initial public offering a tad short of the $500 million target set for the company. With the fund, Helios’ plan was to expand into more of sub-Saharan Africa, build and buy new sites, as well as roll out 4th-generation mobile services.

The expansion plan is what is being revisited with the $1 billion funding that was just raised. Besides the $450 million for continent-wide expansion, most of the remnant of the fund will be used to refinance existing borrowings and the balance set aside for growth and expansion.

Meanwhile, Helios shares slumped 10% to 184 pence in London on Thursday, paring gains since the IPO to about 60%. The firm currently has 7,000 towers located in South Africa, Congo, Ghana, the Democratic Republic of the Congo, and Tanzania. Its plan is to increase the number by building more towers and buying from other towercos who want to sell to raise cash.

Besides Helios, American Tower Corp and IHS Holdings Ltd are two other firms leveraging the cheaper and faster internet speeds to make more inroads into Africa.

As Ethiopia presents a business opportunity for telcos and towercos, Helios Towers is not the only firm interested in the country. Kenya’s Safaricom is in talks to form a consortium to enable it to bid for one of the country’s telecoms licenses. Vodacom, and France’s Orange are two telcos who may join the bidding game for the licenses.