Episode Transcript
Gokul: Hello and welcome to London Stock Exchange's Be Inspired CEO series. My name is Gokul and I'm joined here today by Tom Greenwood, Chief Executive of Helios Towers, a London listed telecom infrastructure company. Well, with that, welcome Tom.
Tom: Great to be here, and thanks very much for having me.
Gokul: Thank you, Tom. By way of background, Helios Towers is a telecom infrastructure company with operations right across Africa and more recently in the Middle East. The company went public in October 2019 on London Stock Exchange's premium segment within the Main Market. Its inaugural market cap was £1.15 billion. Today it enjoys a firm positioning within our FTSE 250 index and a market cap of £1.3 billion.
Tom: Yeah, no, absolutely. Great to be here. And it's been a really interesting journey we've been on since becoming listed. And as you mentioned, we listed in October, 2019. That was off the back of almost a decade of operations as a private company. We were formed in 2010 by a small club of private equity investors who saw an opportunity to provide telecoms infrastructure services across Africa at the time. We were successful in expanding the business into a number of markets over the years. And by the time we got to our listing in 2019, we were operating 7,000 telecom towers across five markets in Africa, all very high growth markets. And Africa is a place driven by huge population growth, underpenetrated telecom sector, and obviously huge growth that comes with that.
And a big infrastructure gap to fill, which is the part that we're very proud to play on. Subsequent to listing, the business has been on a real expansion path both geographically and from a scale point of view. And actually being a public company listed on the London Stock Exchange has really supported us in that through a number of large capital raisings that we've done during that time, which has allowed us to be able to invest in new markets and grow the size of the business, effectively doubling our footprint and doubling in size in the last 18 months to two years. Going from five markets to 10 markets, 7,000 towers to 14,000 towers, increasing our customer base, increasing the ultimate end subscriber numbers that we serve, and really driving geographic diversification of our business, which was a key part of our IPO story and a key part of our strategy that we set out at the time of IPO. As I mentioned, being listed on the London Stock Exchange has very much helped with that. When we did our initial public offering, we did partial secondary and partial primary. So, some of our original investors got some monetization. But also stayed in quite considerably because they believe in the long-term growth of the business. We also raised some primary on the day one of listing as well. And then subsequent to that, we've done a number of different capital raises as well. We've done our first convertibles, which was a very attractive product. We've done more bonds, refinanced our bonds, and we've raised some more primary as well, all of which has contributed to the growth I've mentioned.
Gokul: In fact, I wanted to come onto that. When we look at the transactions you've done since IPO, you've been an absolute poster child for how a public, or how an IPO and therefore a publicly listed company, can diversify funding sources. And, you know, the capital markets nerd in me kind of couldn't help but smile at, you know, the IPO was a mix of primary and secondary. Then there was a series of secondaries, which was mainly the shareholders selling down their equity stakes, then an upsized high yield bond, I'd love to talk to you a bit about that. How was the rating process for that? That, you know, rating processes for bonds out of the continent, often quite challenging to some respect, but you got a very large upsize deal done at 750 million and then it doesn't stop there. An equity primary, and then of course the convertible bond. So I'd love to get a little bit of color around that. Was a lot of that driven by you as COO prior to chief executive or how did that come together?
Tom: Yeah, look, the funding is always driven by the requirements of the business growth. So about two years ago, shortly after listing, we were very focused on, as well as continuing to drive the great organic growth and great operational performance of our existing businesses, we were very focused on potential geographic diversification and large scale expansion, initially through acquisitions of tower networks in new markets through sell and leaseback transactions with mobile operators, which is typically how this sort of business model works. And so in doing that, we were fortunate enough that there were a number of opportunities at the time which we pursued and we were successful in signing these acquisitions. And along with that comes a funding need.
I mean, we run telecom infrastructure, it's an asset-heavy business, and therefore a capital heavy business. You need capital in order to set the business up. And so through our diversified funding sources, in part made possible through the listing of our equity on the London Stock Exchange, we had the bond as well. That means we can do convertibles, etc. We were able to balance the needs of the business in terms of growth and in total our acquisitions come to over a billion dollars. So we had to find that much or a little bit more than that in terms of financing. And we've done that through a combination of equity debt and convertibles. Ultimately we're focused on maximizing the returns of our equity holders, that's absolutely paramount.
And so we aim first to raise debt, convertibles, and then equity, in that order. And I think that, one thing that we do focus very much on is our leverage. Again, we're fortunate that the business has been growing substantially in terms of revenues and ebitda, etc, since listing. We were able to upsize our bonds, we were able to raise some convertibles and then we were able to compliment that with some equity, primary on top, all keeping within our leverage targets and not over leveraging the business, but really maximizing the leverage available to us in the market to fully maximize equity returns. So, that's sort of how we think about it. And we're right in the middle now of really finalizing the expansion from five to ten markets.
Obviously that comes with a huge amount of new people coming on board in the new markets. Some new people at group as well. Because to run ten markets, you need a different group structure than you do with just five markets. It comes with bringing on board a lot of new maintenance partners, security partners, who are indirect employers of the company through our contractor network. And so we're doing a lot of work at the moment around embedding our culture in the new markets. This comes with a huge amount of training, both technical training but also culture related training as well. We want to make sure that our business excellence, our Lean Six Sigma foundation, our values of partnership integrity and excellence absolutely shine through in all of our markets from day one.
So we've got big plans in terms of new market set up, new market integration. We've got people who've worked in our existing business for many years going into the new markets to help set those up and take our culture and our processes and our ways of doing things there. So the business is in a really exciting place at the moment. We're in the midst of a huge transition, which is setting our enlarge platform up with more geographic diversification and really setting ourselves up for the next few years of growth, and serving a wider customer base in a wider number of markets. So it's an exciting time for the business.
Gokul: Thank you for that colour Tom, and taking us through that growth journey. Thanks to your IPO in October 2019, I think we had the youngest participant to a market open ceremony. I remember meeting your wife and your son, who was only two years old at the time, and I think you had come in and I think he had a navy blow blue stroller, if I'm not mistaken. I'd love to know more about yourself Tom in a personal capacity. Does he have a sibling? How are things going on that front?
Tom: Yeah, no, absolutely. Well, that, that was certainly a momentous day for the business, for myself personally, but also my family. Obviously my wife and son who was then two came down and he was actually lucky enough to get right to the front to touch the button. I think in most of the photos my face is blocked out because he's in front of me . So, we've got some good photos to embarrass him with when he's 18, not so sure. And maybe he'll do the same one day.
Gokul: Probably one of our final questions for this afternoon is just the kind of choice between public versus private. But as you see it, in your sector, you could have done a lot of what you've done staying private, you chose to go public. Where do you think it's benefited you, but also maybe where it's been a bit of a challenge to be public in the growth of the last two and a half years?
Tom: Yeah, no, absolutely. I mean, look, I think the journey we've been on in the last two and a half years has been one of significant expansion. I think that, you know, that has been made possible in part very much so by being public and just having the flexibility and the fluidity of the various capital markets. Equity debt, but also the convertible market, which we've been active in and which has provided a good bit of capital actually for us to deploy on the acquisitions and the new markets that we've announced. So I think that that's clearly a benefit. I think that being public has accelerated our ability to grow and geographically diversify, arguably a lot quicker than what it would have been if we were private. But clearly being public, there's a bit more admin to do, there's more public related compliance that you have to do, all the normal things about being a listed business. Right. But, you know, on balance, it's all worth it. Right?
Gokul: Yep. Absolutely. We think so. Well, thank you Tom. That was absolutely fascinating. We wish you and Helios Towers all the very best of success in the coming months and years. If you wish to know more and learn more, please visit www.londonstockexchange.com where we have further interviews and podcasts from the series. Thank you.
