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Creating
a platform for
sustainable
growth
Who we are
Expanding
mobile
horizons
Helios Towers (HT) owns and operates telecommunications
towers and passive infrastructure in four high-growth
African markets.
Contents
Living our values
Integrity
pg.24
Living our values
Excellence
pg.28
Living our values
Partnership
pg.26
Overview
01 Key highlights
02 At a glance
06 History of Helios Towers
Strategic Report
08 Chairman’s statement
10 Chief Executive Officer’s statement
14 Chief Financial Officer’s statement
18 Business model
20 Key strengths and investment case
22 An overview of our markets and trends
24 Living our values
30 Operating review
36 Detailed financial review
41 Risk management
42 Risks related to the Group and
our business
44 Sustainability
Governance Report
46 Board of Directors
50 Executive team
52 Board committees
54 Directors’ report
55 Directors’ responsibilities statement
56 Glossary
Financial Statements
58 Independent auditor’s report
60 Consolidated Statement of
profit or loss and other comprehensive
income
61 Company Statement of profit or loss
and other comprehensive income
62 Consolidated Statement
of financial position
63 Company Statement of
financial position
64 Consolidated Statement
of changes in equity
65 Company Statement of changes
in equity
66 Consolidated Statement
of cash flows
67 Company Statement of cash flows
68 Notes to the Financial Statements
102 Officers and professional advisors
www.heliostowersafrica.com
345.0
282.5
Key highlights
Financial
Revenue US$m
2017
2016
+22%
Adjusted EBITDA(1) US$m
2017
2016
+39%
Adjusted EBITDA margin(1) %
2017
2016
105.2
+5 percentage points
37%
(24.0)
Operating loss US$m
2017
2016
–31%
Operational
Total sites(1)
2017
2016
+1%
Total colocations(1)
2017
2016
+7%
Tenancy ratio(1)
2017
2016
+3%
(1) Please refer to pgs 56–57
146.0
42%
(34.9)
6,519
6,477
6,468
6,032
1.99x
1.93x
Financial highlights
• Revenue increased 22%
year-on-year. 80% of
revenue from investment
grade or near investment
grade customers
• Adjusted EBITDA up 39%
year-on-year with
Adjusted EBITDA margin
at 42%
• Operating loss decreased
31% year-on-year
• Cash and cash
equivalents of US$120
million at the end of the
period (31 December
2016: US$134 million)
For further information pgs 36-40
Operational highlights
• Tenancy ratio improved to
1.99x from 1.93x
• Total sites at 6,519, up 1%
year-on-year
• Total colocations at 6,468,
up 7% year-on-year
• Existing customers
increasing equipment on
sites driving amendment
revenues and tenancies
Helios Towers | Annual Report 2017 01
Strategic ReportOverviewGovernance ReportFinancial Statements At a glance
Our assets
We are the market leader, and sole independent player,
in three countries: Tanzania, Democratic Republic of
Congo (DRC) and Congo Brazzaville (Congo B). We also
own a growing portfolio in Ghana, with a particular
strength in high-traffic urban areas.
Sole independent owner /
operator in Tanzania, DRC,
and Congo Brazzaville with
greater than 49% market
share1, and leading operator
in Ghana.
Focus on driving operational
excellence and margin growth.
Continue to look at acquisitions
that fit strategically and
deliver value.
Sites
6,519
Tenants
12,987
Tenancy ratio
1.99x
(1) By number of marketable towers
02 Helios Towers | Annual Report 2017
Key assets today
1
1
DRC
1.84x
Tenancy ratio
1,819
Sites
3,347
Tenants
1
Tanzania
2.12x
Tenancy ratio
3,491
Sites
7,392
Tenants
Ghana
2.09x
Tenancy ratio
825
Sites
1,723
Tenants
1
1
Congo B
1.37x
Tenancy ratio
384
Sites
525
Tenants
Overview Our customers
Our core business is to provide mobile network operators (MNOs) with tower site space,
power and related services for their active network equipment. As our markets have little
or no fixed line voice or data infrastructure, the services we provide are essential for
the development of communities.
We promote sharing of infrastructure through
colocating multiple MNOs on each tower site.
This consolidation of assets not only delivers
maximum cost benefits to our customers but
also reduces the environmental impact for the
local populations we serve. In addition, we
construct new assets including ‘build-to-suit’
(BTS) towers, and localised small cell and
in-building solutions. These are located in
high-potential areas where our customers are
looking to expand, due to the continued growth
of mobile voice and data communications
across our markets.
Africa’s Big-Five MNOs
Contracted
revenues
80%
• Airtel
• Vodacom
• Tigo
• Orange
• MTN
Revenue by customers
2%
80%
Africa’s high-growth challengers
18%
Africa’s Big-Five MNOs
Africa’s high-growth challengers
Other operators
Contracted
revenues
18%
• Viettel
• Africell
Other operators
Contracted
revenues
2%
• Smile
• Simbanet
• Orioncom
• TTCL
• Zantel
• and 24
others
Helios Towers | Annual Report 2017 03
Strategic ReportOverviewGovernance ReportFinancial Statements At a glance
What we do
Our principal business lies in building, acquiring
and operating telecommunications towers that
are capable of accommodating and powering
the needs of multiple tenants.
These tenants are typically large MNOs and other
telecommunications providers who in turn provide wireless
voice and data services, primarily to end-consumers and
businesses.
We also offer comprehensive tower-related operational
services, including site selection, site preparation,
maintenance, security and power management. We provide
space on our tower sites under a combination of master lease
agreements (MLAs), which provide the commercial terms
that govern the provision of tower space, and individual site
agreements (ISAs), which act as an appendix to the relevant
MLA and include site-specific information. We also enter into
ground lease agreements with property owners to host our
sites on their land.
Our tower site portfolio consists mainly of four-legged, heavy
duty ground-based towers, typically ranging in height from
35 to 70 metres. Subject to environmental permits and impact
assessments, we may also be able to build higher towers
when circumstances require. These include towers in valley
locations, or those that are required to deliver a greater range
of transmission.
Active/passive equipment
In diagram 1 (top, next page), the equipment on the tower and
the outdoor cabinet are owned and maintained by Tenant A,
anchor tenant, while HT owns and maintains the passive
infrastructure. This includes the tower’s diesel generator,
battery backup system, site monitoring system and, if
applicable, hybrid and solar technology.
Colocation tenants
In diagram 2 (centre, next page), Tenant B is a ‘colocation’
tenant and shares the passive infrastructure (which we
provide) with Tenant A, an existing tenant on the tower.
Colocations sit at the heart of our business model as they
allow us to grow revenue and improve operating margins
without significant additional capital expenditure.
Existing tenants adding more equipment
In diagram 3 (bottom, next page), the additional equipment
added by Tenant B attracts further charges, in line with
contracted menu pricing. We call this additional income
‘amendment revenue’.
Total sites
+1%
2017: 6,519
2016: 6,477
Total colocations
+7%
2017: 6,468
2016: 6,032
04 Helios Towers | Annual Report 2017
Overview Tenant A
equipment
Tenant A
outdoor
cabinet
Generator
Batteries
& rectifier
Fence
National grid
power
Solar panels
Tenant B
outdoor
cabinet
Tenant B
equipment
Additional
Tenant B equipment
Helios Towers | Annual Report 2017 05
Strategic ReportOverviewGovernance ReportFinancial Statements History of Helios Towers
Helios Towers was formed
in December 2009
with the vision of becoming a major
infrastructure player in the burgeoning
mobile markets of Africa. We have grown
through purchasing tower networks from
MNOs and by building our own towers to
serve the rapidly ascending growth curve
of subscribers and technologies.
Our story began in Ghana in 2010, where we pioneered the
acquisition of tower infrastructure in Africa, in a transaction
with Millicom that gave us an opening fleet of 831 towers.
These were rapidly followed in 2011 by a further 1,721 towers
acquired in Tanzania and DRC. The next year, 2012, saw us
construct our first build-to-suit towers (259 sites, in Tanzania).
We entered our fourth country, Congo Brazzaville, in 2015
with the acquisition of 393 sites from Airtel.
Over seven years we have made seven acquisitions totalling
more than 4,900 towers, constructed over 1,600 towers,
and added almost 13,000 tenancies.
7 acquisitions
>1,600 BTS towers
completed in
7 years
adding
>4,900 towers
delivered
and added almost
13,000 tenants
2,974
297
14
(47)
2,710
2,710
259
13
(79)
2,517
4,656
496
1,186
2,974
2,517
1,721
(35)
831
831
831
2010
Closed
Ghana
transaction
(Millicom)
2011
Closed DRC and
Tanzania
transactions
(Millicom)
2012
HT begins
construction
of BTS in
Tanzania
2013
Construction
of additional
BTS in
Tanzania
2014
Closed
Tanzania
transaction
(Vodacom)
Existing towers
Consolidations
Site asset purchases
New build (BTS)
Total towers
06 Helios Towers | Annual Report 2017
Overview Quality joins quantity
Committed investors
We are also proud that our cohort of founding investors – HIP,
Soros, RIT, Albright and IFC – have not only been with us since
day one, but have increased their commitments to the
business. Together with resources, they bring deep
knowledge and experience of Africa.
The shared purpose and vision of management and
shareholders positions the business to thrive in Africa’s
exciting and under-penetrated mobile markets.
6,519
126
22
(106)
6,477
At its inception, the Group’s strategy was to build up
a significant numerical presence of infrastructure assets.
With critical mass established, a fresh management team
came into post in May 2015, led by our CEO Kash Pandya,
with an executive team comprising internal promotions and
external specialist hires. The focus now moved to business
excellence and integrating assets; while continuing to expand
our networks, the imperative of improving quality of service
and implementing efficiencies became the strategic priority.
By bringing Lean Six Sigma methodologies to bear, the
business has made considerable and rapid progress in both
quality and efficiency. A ‘One Team One Business’ approach
has also brought standardisation and business excellence
across the Group.
6,477
239
961
(147)
5,424
5,424
244
535
(11)
4,656
2015
Closed
Congo B
transaction
(Airtel)
2016
Closed
DRC
transaction
(Airtel)
2017
Closed
Tanzania
transaction
(Zantel)
Helios Towers | Annual Report 2017 07
Strategic ReportOverviewGovernance ReportFinancial Statements Chairman’s statement
A Company of its time
I had the great pleasure of being appointed Chairman
of Helios Towers on 1 January 2018, just as the
2017 reporting year had come to a close.
So the fact I was not yet part of the story you will read in
these pages means that I can share with you some objective
impressions of the business. I think they illustrate why I feel
privileged and excited to take on this important role.
Helios Towers is very much a company of its time. In a
business climate where consolidation and efficient use of
resources have never been so important, HT’s core offering
equips mobile network operators to achieve precisely
those aims. In turn, our service delivers competitive
advantages that feed through to end-consumers, and
accelerates the rollout of wireless technology – an
urgently needed resource in developing countries.
HT’s proposition to network operators also delivers
environmental benefits, enabling fewer towers to
do more work. This reduces visual impact, lowers
emissions and improves reliability of their networks.
It is an efficient and innovative business model, and our rate
of growth, reputation and impressive market leadership are
eloquent tributes to HT’s strategy, technology and quality.
I am an engineer and my career has been focused on
creating and developing products and services for
diverse requirements, including iconic programmes
such as Crossrail, HS2, the London Olympics, the ITER
nuclear fusion project and the Eurofighter Typhoon.
I understand how well-executed infrastructure programmes
can add significant economic and social value to nations
and societies. This is what we’re delivering at HT, and
in territories where there is vast capacity for market
growth. HT has the team, the resources and first-mover
advantage, and I am looking forward to helping the
business realise its full potential in 2018 and beyond.
Allan Cook CBE
Chairman, Helios Towers
Allan Cook, Chairman
I am delighted and excited to be appointed
as Chairman of Helios Towers, and I look
forward to working with the executive
team in continuing to deliver the Group’s
growth strategy. The strength and vision
of the management team positions Helios
Towers well for further growth, and I
welcome the opportunity to make a
significant contribution to the business.
08 Helios Towers | Annual Report 2017
Strategic Report Helios Towers | Annual Report 2017 09
Strategic ReportGovernance ReportFinancial StatementsOverview Chief Executive Officer’s statement
Powering the growth
of African mobile
Helios Towers is an expert enabler; our infrastructure is
playing a key role in the rollout of mobile telecommunications
in Africa. Mobile network operators and other telecoms
services use our network of towers to carry voice and data
services to their end-users of consumers and businesses.
We operate in under-penetrated markets that are not only
profitable now, but have years of growth ahead of them.
In three of our four markets – Tanzania, the DRC and
Congo Brazzaville – we are the market leader, owning and
operating more towers and related passive infrastructure
than any competitor. In the fourth, Ghana, we are a leading
player with particular strength in the lucrative urban areas.
Performance overview
Helios Towers traded strongly in the year, delivering robust
Revenue growth of 22% to US$345.0 million, Adjusted
EBITDA growth of 39% to US$146.0 million, and improvement
in our operating loss to US$24.0 million from US$34.9 million
in 2016. The Group has delivered good organic growth, driven
by new tenancies and improved operational efficiencies, as
well as an encouraging contribution from acquisitions.
The business remains well positioned in all its key markets:
• Tanzania has recorded a solid performance with Revenue
growth of 15% to US$141.2 million and Adjusted EBITDA
growth of 30% to US$66.8 million
• DRC has delivered Revenue growth of 37% to
US$140.2 million and Adjusted EBITDA growth of 43%
to US$66.5 million
• Congo Brazzaville has recorded a Revenue decline of 1%
to US$23.4 million and Adjusted EBITDA decline of 11% to
US$9.8 million
• Ghana has delivered solid organic Revenue growth of 17%
to US$40.1 million and Adjusted EBITDA growth
of 61% to US$17.8 million
Creating confidence through performance
In March 2017, we successfully issued a US$600 million
bond (please see the Operating Review, page 30). Among
other things, this enabled us to invest in further growth
opportunities including, in July, the purchase of all unique
sites in the mainland tower portfolio of Zanzibar Telecom PLC
(Zantel). The transaction marked our seventh purchase in as
many years, and reinforced our leading position in Tanzania.
Kash Pandya, CEO
We can look back on 2017 with a great
deal of satisfaction. It was a year when the
results of the transformation programme
we put in place in late 2015 started to flow
through. By focusing on top line and, as
importantly, bottom line growth, we saw
tangible improvements across every key
metric in 2017.
Revenue
+22%
2017: US$345.0m
2016: US$282.5m
10 Helios Towers | Annual Report 2017
Strategic Report Adjusted EBITDA
+39%
2017: US$146.0m
2016: US$105.2m
Our core strategic pillars
Our six core strategic pillars focus on our goal of
exceeding customer expectations.
Growing with
our customers
Building partnerships
Business
excellence
Continuous
improvement across
the business
The Zantel deal followed our largest-ever tower network
purchase, agreed with Airtel in the DRC in 2016, and both
have brought volumes that enhance our ability to offer the
compelling benefits of colocations.
We have also made a long-term investment in our
platform, upgrading sites both for future growth and to
reduce opex. By removing capital intensity in future years,
this will free up resources for new growth projects.
This quality of infrastructure is matched by the calibre of our
customers. Some 80% of our contracted revenues are derived
from Africa’s Big-Five MNOs; 18% are from high-growth
challenger brands; and 2% comes from a pool of over 20
other operators. Our five largest customers have something
in common: they are all investment or near-investment grade
MNOs, and have committed to long-term contracts of 10-15
years. So when we talk about top line growth, it is growth built
on firm foundations and with minimal counterparty risk.
Supply chain
optimisation
Driving efficiencies
across the
supply chain
Business
digitalisation
Providing advanced
technological
solutions
Revenue by country
41.0%
11.6%
6.8%
Our people
Recruitment and
development of our
employees
Our company
values
Integrity, Partnership,
Excellence
40.6%
Tanzania
DRC
Congo B
Ghana
Helios Towers | Annual Report 2017 11
Strategic ReportGovernance ReportFinancial StatementsOverview Chief Executive Officer’s statement (continued)
Our Business Excellence Programme
continues to enhance our product
performance and positions us to deliver
long-term growth and future value for
both our shareholders and bondholders.
Improvement in downtime
+80%
against service levels of two years ago
2017: 4.1 minutes per tower per week
2015: 20.1 minutes per tower per week
Improving, measurably
I am a passionate believer in the value of Lean Six Sigma, the
methodology of harnessing the power of teams to drive up
performance by systematically removing waste and reducing
variation. I encountered it first as a graduate trainee in a major
automotive brand, and we have harnessed it to improve
efficiency in every part of our business. Indeed, we are also
extending it to our wider business ecosystem, actively
investing in our maintenance partners to enhance their
own ways of working.
The most critical component of our offering is the reliable
uptime of our towers. Operators look to us to maximise their
revenues with a reliable, uninterrupted traffic flow of voice
and data, and to protect and enhance their brands.
Through integrating Lean Six Sigma processes into our
business excellence programmes we have focused on the root
causes of service interruption, and put in place pre-emptive
processes and upgrades to manage down risks before they
can become issues. As a result, in 2017 we achieved an
average uptime of 99.96% across our towers, an improvement
of 16 minutes per tower per week against service levels of
two years ago.
With contracts linked to our performance, this delivers not
only satisfied customers but significant improvements to
our bottom line. Additionally, we have also realised valuable
efficiencies in our purchasing, energy, office space, payroll
and other cost centres. In turn, these are helping us to offer
highly competitive propositions to network operators, and
enabling low-cost access to our extensive national networks.
Long-term growth in vibrant economies
Our four territories are exciting places to be. In terms of the
maturity of the mobile sector, these markets are akin to the
development of mobile in the UK and US a decade ago. We
see at least 10-15 years of solid growth to come. This sector
also sits inside vibrant and burgeoning economies; the IMF
projects GDP growth across our four markets of 4.9%(1) by
2022, compared with an average of 3.5% across Sub-Saharan
Africa (SSA) and just 1.7% for the G7.
(1) Weighted average by HT Revenue
12 Helios Towers | Annual Report 2017
Strategic Report Real GDP Growth CAGR
(2016-2022E)
HT markets 4.9%
SSA
3.5%
G7
1.7%
We are also serving a rapidly growing population, expected
to rise by 19% to 206 million people by 2023. A significant
majority (71%) are under 30 years old, tech-savvy, mobile-
hungry, and who drive data usage with social media and
streaming. Our customers will be looking to us to support this
growth for years to come with expanded resources, locations
and expertise.
It is also good to report that we operate in a supportive
regulatory environment. Our model of colocation means
that an MNO can share our towers at a saving of some 35%
compared with building and operating their own. In turn,
this means they can offer very competitive tariffs to their
customers, and new competitors are being encouraged by
low costs and rapid speed to market. Colocation also means
more technology concentrated onto fewer masts, better
environmental outcomes and lower emissions.
Powering forward
As we move into 2018, we take forward a business that is
robust, lean and focused, and well positioned to continue
delivering for our customers, employees, investors and
communities. Our agenda remains clear and focused: to
deliver more of the same. We will continue to mine the
considerable potential for growth, in markets that are not only
under-penetrated but that have a rich future of enhanced
services and technologies to come.
We will deliver further efficiencies that play straight to the
bottom line; consider fresh acquisitions, both in our respective
countries and in wider emerging markets; and support our
customers with a ‘real estate of power’ that is the backbone
of their networks.
I thank those loyal customers, and our fantastic and
resourceful teams out in the field, as we continue on this
exciting journey.
Kash Pandya
Chief Executive Officer
Lean Six Sigma
Case story #1
Creating a partnership with our partners
The opportunity
In Tanzania, Helios Towers had worked with maintenance
partner Pivotech for six years, but in a traditional instruct-
and-execute, customer/supplier way.
Operational planning was disjointed and cumbersome, and
often resulted in multiple visits to sites for straightforward
tasks and deliveries. Also, there was no real platform for
Pivotech to feed back ideas based on the wealth of
experience they were gaining out in the field.
The Six Sigma solution
Together, we formed a ‘One Team One Business’ partnership,
overhauling the current way of working and injecting lean
thinking into every aspect of planning and site maintenance.
We moved our Zonal Operation Managers into Pivotech’s
offices on a permanent basis, removing barriers to joined-up
working, and enabling fast quotations, approvals and
same-day analysis of site issues.
We also introduced a target of 1SVM – one site visit per
month – to reduce the waste, costs and time caused by
multiple visits, aided by preventative maintenance and
better planning.
Helios Towers also invested in selected Pivotech employees
to undergo Lean Six Sigma Orange Belt training.
Results
• Preventative maintenance has led to a major reduction
in special call-outs to sites, by around 81%
• A significant reduction in site visits, from c.3,500 to 1,000
per month across the network maintained by Pivotech
• By working together under the same roof, the joint
operational team has been exceptionally effective in
working through some 7,000 historic backlog issues,
and continue to target further improvements
• Road mileage driven for site visits has been reduced by
around 250,000 km over 12 months, with direct benefits
in terms of time, cost, emissions and exposure to road risk.
Helios Towers | Annual Report 2017 13
Strategic ReportGovernance ReportFinancial StatementsOverview Chief Financial Officer’s statement
A significant year of top
line growth and bottom
line efficiencies
Group performance
In 2017, Revenues grew by 22% from US$282.5 million to
US$345.0 million. Adjusted EBITDA increased by 39%
to US$146.0 million and Operating loss decreased by
31% to US$24.0 million. Loss before tax decreased by 9%
to US$104.2 million.
Revenue growth
In 2017, we continued to support our customers’ rapid
coverage, capacity and technology expansion needs. We saw
strong growth from our three primary organic products of
colocation, amendment, and build-to-suit, which accounted for
over half of our year-on-year revenue growth. The remainder of
the growth was from a full year of revenue on the DRC Airtel
tower network purchase, which we completed in July 2016 and
had fully integrated into our portfolio by the start of 2017.
During the year we drove operational leverage on our
established platform with the colocation and amendment
offerings, benefiting from our previous capital upgrade
programme on acquired sites. The investment programme
has seen us invest around US$170 million since the Company’s
inception in sites we acquired from mobile operators.
Adjusted EBITDA margin growth
39.3%
38.4%
31.5
31.7
40.1%
33.3
40.2%
34.6
46.1%
41.2
42.3%
37.0
US$ millions
35.0%
35.0%
20.8
21.2
Q1’16
Q2’16
Q3’16
Q4’16
Q1’17
Q2’17
Q3’17
Q4’17
Looking back over the last two years, we have consistently
delivered strong quarter-on-quarter growth in each quarter.
Revenues increased by 1% quarter-on-quarter in Q4’17.
Adjusted EBITDA grew by 5% in Q1’17, 4% in Q2’17, 7% in Q3’17
and 11% in Q4’17 with an improving Adjusted EBITDA margin
profile. This demonstrates the strength of the organic and
operational leverage of our business. We see this growth
momentum continuing.
Tom Greenwood, CFO
Helios Towers grew in every quarter of
2017, improving our margin by delivering
on the dual fronts of top line growth and
operational efficiencies.
Following the success of our US$600
million bond in March 2017, we deployed
our balance sheet efficiently through the
year, both on capital projects and in the
buy-out of our last remaining minority
holding in Tanzania.
In summary, we closed 2017 with growth
ahead of plan, and did this with lower-
than-planned capital investment,
delivering improved return on capital
for shareholders.
14 Helios Towers | Annual Report 2017
Strategic Report Adjusted EBITDA margin
+5 percentage points
2017: 42%
2016: 37%
To our customers, we are essentially a location and power
company that enables MNOs to provide communications.
As such, the biggest single expense we face is the fuel to
power our towers.
During the year we made good progress in exploring
efficiencies to drive down our fuel overhead, through
deploying alternative sources of power. In 2017, we deployed
249 sites with new solar-powered technology, rolled out
375 grid connections where there is an available and reliable
grid supply, and rolled out hybrid solutions to a further
331 sites. Most of these initiatives were coming online in
the second half of the year and the rollouts will continue
into 2018. This supports our exceptional customer service
focus and differentiates us in the market, as the vast
majority of our sites are ready to take additional tenancies
immediately with minimal capital investment required.
Overall, our top line growth and opex savings have driven a
steady increase in our Adjusted EBITDA margin. In Q4’17,
this stood at 46% compared with 35% in Q1’16.
Liquidity and net debt position
Following the issuance of our maiden US$600 million
corporate bond, the Group has sufficient liquidity to fund its
usual business activities. The Group also has access to a
US$60 million RCF facility, which is currently undrawn.
At 31 December 2017, the Group’s net debt position was
US$595.2 million.
Dividend
Given the growth and investment opportunities, the Directors
recommend that no dividends be paid for the year ended
31 December 2017.
Corporate bond issue well received
In March 2017, we achieved a milestone in our journey to date
by issuing a maiden US$600 million corporate bond. We also
received our first credit ratings – a B2 corporate family rating
(CFR) by Moody’s Investors Service and a preliminary B
long-term corporate credit rating by S&P.
The bond’s success was a significant endorsement of the
business’ strong fundamentals, track record and leading
position in high-growth markets.
It allowed us to refinance the debt of all four operating
companies into a single, simple capital structure, and
provided resources to fund fresh opportunities.
The proceeds also enabled us to bring the HT Group
into our full control, with the acquisition of Vodacom’s
minority shareholding in our Tanzanian business. This
productive partnership came about when we acquired
Vodacom’s tower network in February 2014, with the
transaction paid largely in Helios Towers Tanzania Limited
(HTT) shares. Vodacom’s intention was always to monetise
their interest at a suitable juncture and this was completed in
October 2017.
Strategic outlook
In September 2017, we announced that the Company
and its shareholders were considering strategic options
for the business in order to drive its long-term growth.
Following the successful bond issue in March 2017, one
possibility may be to seek a listing on the London Stock
Exchange. As we enter 2018, the position remains
under review.
Helios Towers | Annual Report 2017 15
Strategic ReportGovernance ReportFinancial StatementsOverview Chief Financial Officer’s statement (continued)
Outlook 2018
Our main financial focus remains the same in 2018: margin
expansion through continuing to drive the organic growth of
our business, adding more colocation, amendment and
build-to-suit tenancies while also delivering even deeper levels
of efficiencies through further power projects and operational
improvements.
We will also consider further accretive bolt-on acquisitions,
but only those that represent a strong complementary fit and
a compelling business case.
All revenue streams made increasing contributions in 2017 and
we are well positioned to benefit from the increasing needs of
MNOs as they roll out further. And there is significant
expansion to come in all our markets: only 39% of people
across our four markets have a mobile phone today, and less
than half of them have a smart phone. With a forecast
47 million new subscribers coming online in the next six years,
and 12 times growth in 4G subscriptions expected over the
same period, the need for reliable telecoms infrastructure has
never been greater.
Tom Greenwood
Chief Financial Officer
Material recent developments
Vodacom
Buy-out
in Tanzania
• US$58.5 million option for Vodacom’s shares
Tanzania
listing
Business
Excellence
Updated
colocation
KPI
• Buy-out completed in October 2017
following Fair Competition Commission (FCC)
and Tanzanian Communications Regulatory
Authority (TCRA) approval
• Recent Tanzanian law for network facilities
licenses (incl. HTT) requires 25% listing of
shares locally
• 1 February 2017, HTT interim prospectus
submitted
• Undertaking capital reorganisation before
submitting revised draft prospectus for
approval
• Operational improvement programme
continues to be rolled out with rationalisation
of maintenance partners, digitisation, office
space reduction, improvement in towers per
headcount
• Growing trend of operators increasing the
amount of equipment on towers due to
technological upgrades which is in excess of
the standard space and power allowances
• Amendment revenue has become a larger
driver of growth for the business and we
have updated our KPIs to reflect this
16 Helios Towers | Annual Report 2017
Strategic Report Helios Towers | Annual Report 2017 17
Helios Towers | Annual Report 2017 17
Strategic ReportGovernance ReportFinancial StatementsOverview Business model
We own and operate a fleet of 6,519 towers and other
passive infrastructure in Africa, and offer a variety
of models to suit our customers’ requirements. Our
main customers are the Big-Five African MNOs and
high-growth challengers.
We leverage our expertise
to create a platform for growth
We own and operate towers and other
critical infrastructure
Business excellence
Our Lean Six Sigma approach is driving operational
efficiencies and improving customer service across
our business and developing our employees as Orange/
Black belts.
Relationships with customers and suppliers
We have strong relationships with our diversified and high
quality customer base and our suppliers based on trust and
aim to use our high value product offering to improve
operational performance and develop partnerships.
Financial
Our financial model of long-term contracted revenues
which are structurally hedged against adverse currency
movements leads to stable and visible cash flows.
Management team
We have a solid track record of operating in Africa and
an experienced management team with over 100 years’
collective experience in emerging markets tower and
power.
Colocation
Build-to-suit
Amendment
revenue
High value
operational
offering
Long-term,
high quality
contracts
Stable and
visible cash
flows
Expand our
offering
Underpinned by our values: Integrity, Partnership, Excellence
18 Helios Towers | Annual Report 2017
Strategic Report Colocation: We lease space and provide services on
our towers to multiple tenants, allowing us to share
maintenance and service costs and reduce our
environmental impact. Our current tenancy ratio is
1.99x per tower and we expect this to grow further.
Build-to-suit: We also build towers specific to a
customer’s requirements. This includes strategic site
selection, site acquisition and development, construction
and equipment installation. We build sites in the right
locations, which are designed to address needs of
multiple operators using our in-house proprietary
mapping tool.
Amendment revenue: As technology evolves, our
existing tenants commonly need to buy more space to
put additional equipment on our towers. The tenants are
charged for additional space and power usage. This is a
growing opportunity for the Group.
High value operational offering: We operate the towers
for our customers, ensuring they have fast access to
national networks and limited power downtime.
Long-term, high quality contracts: We negotiate
long-term contracts with robust, sustainable lease rates.
This provides our customers with security and us with
long-term visibility on revenues.
Stable and visible cash flows: Our cash flows are
protected from power and price inflation.
and develop a sustainable,
long-term business
For society
We contribute to building sustainable, local
economies that enable businesses and individuals
to connect and grow.
For employees
We provide employment and training opportunities
for local people, with us and our partners.
For the environment
We reduce environmental impacts through
our strategies of targeted site selection and
colocation and our use of cleaner power
sources (solar, hybrid, battery).
Expand our offering: Leveraging our existing
platform to expand into new markets and complementary
infrastructure.
For shareholders
We offer financial returns and significant opportunities
for future growth.
Underpinned by our values: Integrity, Partnership, Excellence
For further information pgs 24–29
Helios Towers | Annual Report 2017 19
Strategic ReportGovernance ReportFinancial StatementsOverview Key strengths and investment case
Helios Towers has a strong
platform for profitable
growth, with leading
positions in high-growth
markets
We are supported by our extensive asset base, a pioneering
excellence and innovation programme, deep and long-term
client relationships, high barriers to entry and a favourable
regulatory environment.
01Market leader in three out
of our four countries
Helios Towers is the market leader in Tanzania (63%
market share(1)), the Democratic Republic of the Congo
(63%) and Congo Brazzaville (49%). We are also the
sole independent owner/operator in those territories.
In our other market, Ghana, we enjoy a strong urban
presence, and with it excellent growth prospects
driven by higher voice and data usage.
By entering our markets early, we created a legacy
advantage of owning the most attractive sites in the
prime urban areas. We have built on that strength with
our skills in reliable power management and tower
planning/deployment, setting a high barrier to entry.
For further information pg 02
(1) By number of marketable towers
20 Helios Towers | Annual Report 2017
1
Strategic Report 02
Supported by a
positive macro
environment
Impressive GDP growth, rising living standards and a
markedly young and mobile population are combining to
create strong growth prospects for years to come.
In our markets, over 71% of the population is under 30.
This key target group is driving our customers’ need to
meet the demand for voice and, in particular, data
consumed through social media, streaming, mobile banking
and the myriad possibilities of the internet.
In addition, some 20 million more people are
expected to move into cities, where our network is strong.
Helios Towers is therefore well positioned to enjoy the
resulting growth in under-penetrated markets, and where
there is no fixed line alternative.
For further information pg 18
03
Good earnings visibility
Helios Towers operates long-term contracts with typical
durations of 10-15 years. In addition, these contracts are
hard-currency pegged (around 60% of our revenues are
USD/EUR-linked) with clear escalators to protect against
inflation and power price spikes.
This visibility is further strengthened by a diverse, high
quality customer base with no single customer reliance;
80%
of our revenues come from Africa’s Big-Five MNOs and
18%
from high-growth challengers.
04
Market-leading excellence
and innovation
Helios Towers has been a pioneer, bringing Lean Six Sigma
practices to the African market and generating measurable
and substantial benefits.
US$36 million
capex savings from
60 to 12
reduction in primary suppliers between 2015 and 2017
8.6 to 5.7
employees per 100 towers
85%
reduction in downtime
We have also generated significant savings through
our innovative use of solar, hybrid and grid connections,
with the future upside kept and a payback period of only
2-3 years. In 2017, this also avoided emissions of more
than 8,250 tonnes of CO2.
05
Well positioned for
future growth
Our four markets are projected to see growth of some
47 million new subscribers by 2023.
We stand ready to support that growth, building
in the right locations to serve the operators’ network
expansion plans. But even where MNOs choose not to
roll out coverage, we are well positioned to gain instead
from amendment revenue as they alter and increase
their tenancies.
Each market also offers the possibility of bolt-on
purchases, both in neighbouring African markets
and beyond, as well as the potential for us to
leverage our expertise in areas such as small cells,
fibre backhaul and data centres.
For further information pg 03
Helios Towers | Annual Report 2017 21
Strategic ReportGovernance ReportFinancial StatementsOverview
An overview of our markets and trends
Africa has clear and
compelling drivers that
are propelling its mobile
market forward
The combination of its physical vastness,
lack of fixed line infrastructure and a fast-
developing economy means that mobile
is much more than just a nice-to-have,
it’s a critical part of everyday life. This
need will become ever more acute: in
our markets of Tanzania, DRC, Congo
Brazzaville and Ghana alone, the
population is projected to grow by some
27 million people in the next five years.
That’s a greater increase than Western
Europe, the USA, South America or Russia.
Equally, it’s the quality of these markets
– not just the numbers – that interests us:
Driven by youth: In our four operating countries,
71% of the population is under the age of 30. These
are the users who adopt new technology, inspire operators to
innovate, and drive data usage.
Urbanisation: Markets’ populations are increasingly
relocating, with over
20 million people projected to move to
cities by 2022, driving demand for more connectivity and data.
The digital economy: from Twitter and WhatsApp
to online banking and Uber,
digital mobile increasingly
drives and serves how people lead their lives and make
economic choices.
Mobile-dominated internet access: For most end-users,
access to the online world depends on having a mobile.
The ‘highest’ penetration of fixed line telecoms in our markets
is in Ghana, at
3.2%.
22 Helios Towers | Annual Report 2017
Strategic Report Additional mobile subscribers
(2018-2023)
+47 million
Additional points of service
(2018-2023)
+12,200
The continuing and growing opportunity for
Helios Towers
Our four markets have reached a compelling stage in their
evolution. Mobile telephony is mature, proven and desirable,
and growth is accelerating. Yet these markets are still
under-penetrated: DRC stands at just 26% unique subscriber
penetration and even our highest market (Ghana, at 66%) has
years of subscriber growth to come (G7 countries: 85%).
By 2023, it is projected that 47 million more people will
become mobile subscribers in our four markets. And that
in turn will require a major investment in network rollout,
technologies and infrastructure to serve that demand.
Based on today’s levels of network traffic and quality of
service, telecoms consultancy Hardiman forecasts that our
markets will collectively need 12,200 additional points of
service by 2023.
The regulatory environment is playing to our strengths,
encouraging increased tower and infrastructure sharing, as
well as offering incentives for coverage rollout to rural and
poorer communities.
Helios Towers is uniquely placed to serve the growing
requirements of MNOs with tailored solutions, whether
through colocations, build-to-suit towers, or both.
Further opportunities for our business
Against this backdrop, it is clear that expansion is firmly on
our agenda. But how we approach this depends on market
factors, local dynamics, and commercial decisions on
newbuilds and/or acquisitions.
In our four markets, the MNOs still own around 3,500 towers
that they originally built. If they take the view that tower
ownership is not their core business, as many have before,
there may be acquisition opportunities there.
With increasing urbanisation and the projected surge in data
usage, we are also gearing up to support 4G and beyond.
This includes a current trial of small cell network technology.
In the future, there may also be opportunities to apply our core
competency of real estate and power to other applications that
deliver long-term contracted revenue. For example, we could
create and support data centres, providing customers with
secure space, power and the climate-controlled conditions that
servers require. Or more simply, we could provide power for
remote villages and businesses. In short, we could help power
Africa’s growth in any number of ways.
Mobile penetration by country
66%
53%
42%
26%
Tanzania
DRC
Congo B
Ghana
Helios Towers | Annual Report 2017 23
Strategic ReportGovernance ReportFinancial StatementsOverview Living our values
At HT we have three overarching values
– Integrity, Partnership and Excellence.
From the clear imperatives of our legal
responsibilities, to how we act towards
people, inside and outside the business,
our values guide and govern how we
behave each day.
Integrity
We subscribe to the tenet that integrity is
“doing the right thing when no one is looking”.
Our business has been built on integrity, which is our default
position in everything we do and say. We act with openness and
transparency, always seeking to do the right thing and never
compromising our standards for gain or advantage.
24 Helios Towers | Annual Report 2017
Strategic Report Integrity defines us as human beings
and how we interact with colleagues,
customers, our partner-suppliers and
communities. The Group is an equal
opportunities employer and we treat all
of our people fairly and with respect,
whether they are full time, part time
or temporary. We recruit, develop
and promote employees on merit,
regardless of gender, marital status,
race, ethnic origin, colour, nationality,
disability, religion, sexual orientation
or age.
Integrity also means complying with
every applicable law, and creating
an environment where everyone is
encouraged to speak up if something
isn’t right.
We publish our Values, and
Codes of Conduct for business
and suppliers, for all to see on
our website.
ppi217
Helios Towers | Annual Report 2017 25
Strategic ReportGovernance ReportFinancial StatementsOverview Living our values
Partnership
The most fruitful businesses tend to be built on
partnerships: where each party respects and benefits
from the other. At Helios Towers we therefore invest
in partnerships with each of our key stakeholders.
Suppliers
In many cases, our suppliers become an extension of our own
business; in certain cases we share offices and embed our
own people, breaking down silos and working in true
partnership. We have also streamlined the number of
suppliers we use, enabling us to focus better on each, invest in
them, and drive up standards to the benefit of us all.
26 Helios Towers | Annual Report 2017
Strategic Report Helios Towers | Annual Report 2017 27
Strategic ReportGovernance ReportFinancial StatementsOverviewOur own people We have an entrepreneurial culture that thrives through our people who feel they are partners in a common purpose. We value talent and seek to create not only jobs, but careers. We invest in our people through training focusing on skill development, and by offering competitive rewards.Occasionally, this includes mobilising suitable candidates within the Group’s companies, helping to retain talent we have developed while offering interesting new assignments in contrasting markets. In 2017, we won two awards from TowerXchange, for our Lean Six Sigma and people development programmes.Customers Unlike many, we enter into contracts of typically 10-15 years’ duration with our customers. So, unlike client/supplier models characterised by ad hoc transactions or projects, we form partnerships for the long haul. In turn, this means constantly anticipating our customers’ needs, not only now but in years ahead, and never ceasing to drive up service levels and efficiencies. We regard customers as business partners; our futures are interdependent and we are proud of the emphatically positive feedback they communicate to us. Living our values
Excellence
We never forget that we are in the service
industry and our constant goal is to be the
best that a customer could choose.
19
Black belts
51
Orange belts
28 Helios Towers | Annual Report 2017
28 Helios Towers | Annual Report 2017
Strategic ReportWhen our new management came on-board in 2015, excellence was enshrined as one of our values: it was time to match our ability to acquire and build towers with unrivalled service levels, price points and solution-led thinking for our customers. To accomplish this, we adopted Lean Six Sigma practices, recruiting ‘Black belts’ to bring a fundamental change in our culture through a systematic approach to achieving excellence. We have trained 19 Black belts and 51 Orange belts, located mainly on the ground in our operating companies. We have also provided Six Sigma training to
7 maintenance partners. We have actively
partnered with them, sharing their offices,
exchanging new concepts and ideas, and
moving our own team members into their
operations. By making them better businesses,
we’re improving our own.
The results have been rapid, exceeding even
the highest expectations of our customers.
In Tanzania, for example, we have reduced
average downtime at our towers from
21.9 minutes per
tower per week in
Q4 2015 to 1.5
minutes per tower
per week in Q4
2017.
This pursuit of excellence is also driving down
both the costs and environmental impacts of
the power we generate as well as reducing
service visits.
Lean Six Sigma
Case story #2
Creating a partnership with our partners
The opportunity
NEWL provides maintenance support for 965 of our sites in
Tanzania, and has worked with Helios towers for four years.
Site visits were high due to a lack of coordinated activity and to
issues not being fully closed out. There were instances of over-
resourcing in some areas, as well as a sense of ‘police & culprit’
rather than a joint effort, resulting in a lack of transparency.
The Six Sigma solution
Working closely with NEWL, we implemented our ‘One Team One
Business’ approach, fundamentally shifting the culture to one of
a joint enterprise. This was reinforced by moving four HT staff into
NEWL’s offices, immediately boosting interaction and decision-
making. Our people also attend daily Visual (i.e. face to face)
Management meetings, where decisions, commitments and
results are given on the spot.
We also sponsored Six Sigma training for selected NEWL staff,
and introduced 1SVM (one site visit per month), enabled by the
close synchronisation of planning and resource from both
partners.
Results
• A major reduction in required site visits from 3.0 per month
to 1.2
• Significant attendant savings in time, mileage and opex,
particularly in fuel (reduction of fuel used on site visits
by 40%)
• A 90% reduction in downtime penalties payable to HT, and
therefore a significant improvement in rebates due to our
end customer
• The average downtime of sites maintained by NEWL
reduced by 54%
• Greater effectiveness of preventative maintenance, audited
jointly by HT and NEWL
• Safety: closer coordination between our respective SHEQ
departments, leading to cleaner, more environmentally
compliant sites, with safer working conditions.
Helios Towers | Annual Report 2017 29
Strategic ReportGovernance ReportFinancial StatementsOverview Operating review
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30 Helios Towers | Annual Report 2017
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Out of
370employees, we have:
19Black belts 51Orange belts
Helios Towers | Annual Report 2017 31
Strategic ReportGovernance ReportFinancial StatementsOverview
Operating review (continued)
We are driven by
our customers’
needs
In 2017, the main focus of the larger MNOs
was to rationalise costs.
For some, this meant holding back on coverage
rollout but, instead, investing in integrating new
acquisitions; for example, Orange onboarding its
Tigo assets in DRC, and Millicom integrating Zantel
in Tanzania.
In addition, it was exciting to see operators
beginning to invest in 4G, particularly in Tanzania.
This led to us gaining increased amendment
revenues as we accommodated more technology
on our towers.
The year showed the robust nature of our model.
Even when customers choose to invest in what
they have, rather than new geographic expansion,
we still benefit and grow.
Improvement in downtime
93%
Q4’17: 1.5 minutes per tower per week
Q4’15: 21.9 minutes per tower per week
32 Helios Towers | Annual Report 2017
Market reports
Tanzania
Key Highlights (US$ millions)
FY17
FY16
Revenue
Adjusted EBITDA
Operating Profit/(Loss)
Total Sites
Total Colocations
Tenancy Ratio
Market characteristics:
141.3
66.8
5.4
3,491
7,392
2.12x
122.3
51.3
(5.3)
3,465
7,163
2.07x
• The most competitive telecoms market in Africa
• Lowest cost per gigabyte of data
• Cost control is key, driving networks to share infrastructure
• A market slightly behind in data usage, but ahead in 4G:
all MNOs have licences due to regulatory influences
• Penetration high in cities but low in rural areas
• Strong urbanisation trends
• Competition demands that networks need to roll out
From a coverage perspective, a key driver of growth in
Tanzania has been the national rollout of Viettel, one of this
market’s ambitious challenger brands.
Among our established MNOs, 2017 was a year of rationalising
their cost base and upgrading their networks, which has driven
amendment revenue. This positions us well for densification
requirements as 4G triggers the need for more sites.
By tower count, Tanzania is our largest network with 3,491
towers. It is therefore particularly pleasing that we have been
delighting our customers with improvements in uptime. Our
quest has been to deliver Lean Six Sigma, which is measured as
downtime per tower of just two seconds per week. Our original
goal was to deliver this ambitious target within five years, but in
June 2017 we had already achieved it in one region. Our focus
now is to make this standard business as usual.
With downtime standing at 21.9 minutes per tower per week
in Q4’15, this demanded a fundamentally new approach to
how we maintain our sites. In Q4’17 we achieved an average
downtime of 1.5 minutes per tower per week across our
portfolio. This leap in reliability is a testament to
the culture and relationship we have created with our
maintenance partners. We share offices with them, have
brought in Six Sigma black belts, and we embed our own
people into their operations as coaches.
In turn, the dramatic reduction in problem-solving means that
we can focus on making every site more profitable, including
adopting smarter power solutions.
Strategic Report DRC
Key Highlights (US$ millions)
Revenue
Adjusted EBITDA
Operating Profit
Total Sites
Total Colocations
Tenancy Ratio
Market characteristics:
FY17
FY16
140.2
66.5
6.3
1,819
3,347
1.84x
102.2
46.7
2.8
1,832
3,179
1.74x
• An under-developed market, but with very strong demand
for telecoms
• Point of service subscribers at some of the highest levels,
driven by data
• Usage is driving demand for more towers and densification
In 2016, we successfully negotiated a contract with the newly
merged Orange and Tigo networks, and in 2017 we worked
closely with Orange to consolidate the two networks in a very
tight timeframe.
This resulted in Orange reducing their previous site network
by 300, by finding the more sustainable solution of colocating
their equipment on our towers. The task for us has been to
deliver one of the largest integrations seen in Africa, and
enable Orange to accelerate significant synergies while
maintaining their existing revenues with us.
The market has also seen other networks step up to compete
with Orange, resulting in more capacity growth on our
existing sites as well as the requirement for build-to-suit sites.
At the close of the year we also completed a major project to
add a communications backbone across the country, opening
up new areas for mobile.
Separately, we drew on our experience in Tanzania to
apply Six Sigma principles to achieving material service
improvements. This ongoing programme includes using
existing equipment more efficiently, and investing in solar
and hybrid technologies to ease our dependence on diesel.
Solar sites deployed
+249
2017: 299
2016: 50
Lean Six Sigma
Case story #3
Reducing site visits, costs and issues
The opportunity
In Tanzania, our maintenance partners were averaging
24,017 site visits per month, with 10,893 due to corrective
maintenance (CM). In total, they were driving 680,145 km
each year at a cost of US$115,000. Indeed, their teams were
spending more time driving than maintaining.
The Six Sigma solution
It was clear that our maintenance approach was itself in
need of a complete overhaul. Working with our partners,
we analysed data on the number of site visits and the cost
applied; we assessed the process, identified waste areas and
mitigated them; we scrutinised and streamlined the process;
and derived the continuous improvement control.
In a rapid turnaround programme, we designed a new
maintenance methodology (month 1), trialled it (month 2)
and rolled it out to every site (month 3). The impact was
felt immediately once the trial began, and translated into
significant efficiencies once the rollout was complete.
Results
In the period from December 2016 to September 2017:
• Site visits per month per site reduced from an average of
6.8 to just 2.7
• A case study in our northern zone (965 sites) saw distance
driven reduced from 150,291 km to 51,231 km, with major
cost, environmental and safety risk benefits
• Fuel outages per month decreased from 94 outages to 1
• Total distance driven to sites has been reduced, from
647,065 km to 388,995 km
• Corrective maintenance tasks – a key indicator of the
underlying condition of our sites – decreased from 10,893
to 3,005, with our technicians now spending more time on
preventative maintenance and less time on the road
Helios Towers | Annual Report 2017 33
Strategic ReportGovernance ReportFinancial StatementsOverview Operating review (continued)
Congo Brazzaville
Key Highlights (US$ millions)
Revenue
Adjusted EBITDA
Operating Loss
Total Sites
Total Colocations
Tenancy Ratio
Market characteristics:
FY17
FY16
23.4
9.8
(3.8)
384
525
1.37x
23.6
10.9
(0.4)
394
529
1.34x
• High mobile penetration
• Our smallest market, but data demand is increasing with
3G launches
• Our towers are well located to benefit from increasing
densification demand
In 2017, our focus was on achieving efficiencies, focusing on
both the level and sustainability of our cost base.
We also embarked on a programme to upgrade sites received
from Airtel, and have seen the impact of new technologies
driving increased revenue. Our customers have received
quality of service improvements, partly driven by a change in
our maintenance partners and a fruitful embedded
partnership with new suppliers.
Although this is a quieter market, with two main operators and
a smaller challenger, we continue to grow through site
upgrades and network expansions.
Lean Six Sigma
Case story #4
Reducing site grid disconnections
The opportunity
Diesel-fuelled power generation is much more expensive
than drawing power from the grid. However, at Helios Towers
Ghana, sites had been consuming unnecessary fuel because
they were being disconnected from the grid. This was caused
by maintenance partners failing to top up prepayment
meters and ensuring the grid supply. In turn, this was
impacting on the operational expenses for these sites.
The Six Sigma solution
We analysed the causes for the disconnections, and
measured payment times to understand if the process was
in control. We then mapped the current state of the process
to identify and evaluate waste, and prioritised the actions
needed.
The project took three months from defining the problem to
implementing the improvement.
Results
In the period from December 2016 to September 2017:
• 85,000 generator hours saved annually for 12 sites
• US$70,000 saved in fuel costs annually for 12 sites
Office space reduction
-38%
2017: 400m2
2016: 650m2
34 Helios Towers | Annual Report 2017
Strategic Report Ghana
Key Highlights (US$ millions)
FY17
FY16
Revenue
Adjusted EBITDA
Operating Profit
Total Sites
Total Colocations
Tenancy Ratio
Market characteristics:
40.1
17.8
9.2
825
1,723
2.09x
34.4
11.1
4.1
786
1,638
2.08x
• Our most developed market, with the highest GDP
• Good level of disposable income spent on mobile
• Higher smartphone penetration, driving demand for data
• Relatively high population
• Consumption putting pressure on networks – MNOs need
to densify, especially in urban areas
Our business delivered a pleasing performance in Ghana in
2017, through a combination of our winning build-to-suit
contracts, and by continuing to increase our share of
colocation business.
Amendment revenues also performed well, driven mainly by
the increasing momentum of 3G in the country. This positions
us well in the near future for 4G. Currently, only one operator
– MTN – has had the resources to gain a 4G licence, and the
regulator is expecting consolidation of other players to be
able to create a competitive 4G market. This augurs well for
us, with the possibility of several players looking for
infrastructure support as the mobile market matures.
4G also plays to our strength of having the best urban
presence in Ghana, which is due in no small part to our
process excellence in acquiring sites and gaining building
permits. It is in the cities that the data rollout will first happen,
and we are in pole position to serve it.
GDP growth CAGR
(2016-2022E)
+6%
Lean Six Sigma
Case story #5
Improving the quality of solar installations
The opportunity
The importance of ‘right first time’ operation was highlighted
by the solar upgrade programme of our sites in DRC. In the
first tranche of 50 quality assurance (QA) checks on new
installations, just over half failed their inspection. On average,
this added four days to the delivery.
With a further roll out of 380 sites, of which 249 were
deployed in 2017, this failure rate would incur an estimated
US$184,000 to repeat the QA and remobilise resource to
sites, as well as a further US$37,000 in lost opex savings.
The Six Sigma solution
We established the reasons for non-compliance, and
identified the customers, suppliers, measures and
performance of the current process.
We evaluated the process to determine the causes for
underperformance, established the countermeasures to
address our concerns, and measured performance once
implementation was complete.
Time was critical here; in order to apply the improvements
we identified the next phase of solar installations.
Results
In the period from December 2016 to September 2017:
• The QA pass rate improved from 46% to 93%
• For the 380 solar sites to be installed in 2017 and beyond,
this equates to a saving of US$160,740 in costs that would
have been incurred to remobilise, with an additional
US$32,000 opex savings for delivering the sites on time
• The team is focused on driving up the 93% pass rate,
through their lessons-learned review
Helios Towers | Annual Report 2017 35
Strategic ReportGovernance ReportFinancial StatementsOverview Detailed financial review
Consolidated Statement of profit or loss
For the year ended 31 December 2017
Revenue
Cost of sales
Gross profit
Administrative expenses
Loss on disposal of property, plant and equipment
Operating loss
Investment income
Other gains and losses
Finance costs
Loss before tax
Tax expense
Loss for the year
Key metrics
2017
US$’000
Restated
(IFRS 16)
2016
US$’000
344,957
(275,651)
282,507
(235,867)
69,306
46,640
(91,261)
(2,018)
(77,741)
(3,761)
(23,973)
(34,862)
706
21,797
(102,757)
216
(6,682)
(73,268)
(104,227)
(114,596)
(3,207)
(1,514)
(107,434)
(116,110)
(US$millions)
2017
2016
2017
2016
2017
2016
2017
2016
2017
2016
Group
Tanzania
DRC
Congo Brazzaville
Ghana
Revenue
Gross margin(1)
Sites at beginning of year
Sites at year end
Tenancies at beginning
of year
Tenancies at year end
Tenancy ratio at year end
Adjusted EBITDA
Adjusted EBITDA margin
$345.0 $282.5
53.2%
5,424
6,477
55.8%
6,477
6,519
$141.3 $122.3
52.4%
3,428
3,465
55.5%
3,465
3,491
$140.2
55.2%
1,832
1,819
$102.2
54.5%
814
1,832
12,509 10,008
12,987 12,509
1.93x
$146.0 $105.2
37.2%
1.99x
42.3%
7,163
7,392
2.12x
$66.8
47.3%
6,389
7,163
2.07x
$51.3
41.9%
3,179
3,347
1.84x
$66.5
47.4%
1,643
3,179
1.74x
$46.7
45.7%
$23.4
61.2%
394
384
529
525
1.37x
$9.8
41.9%
$23.6
62.0%
393
394
512
529
1.34x
$10.9
46.2%
$40.1
55.8%
786
825
1,638
1,723
2.09x
$17.8
44.4%
$34.4
46.5%
789
786
1,464
1,638
2.08x
$11.1
32.3%
(1) Gross margin means gross profit add back site and warehouse depreciation divided by revenue.
Revenue
Revenue increased by 22% to US$345 million in the year ended 31 December, 2017 from US$283 million in the year ended
31 December, 2016. The increase in revenue was largely driven by colocation, amendment, and build-to-suit, which accounted
for over half of our year-to-year revenue growth. The remainder of the growth was from a full year of revenue on the DRC Airtel
tower network purchase, which we completed in July 2016 and had fully integrated into our portfolio by the start of 2017.
Increased revenue in Tanzania was primarily attributable to the increase in overall tenancies from 7,163 to 7,392 as of
31 December, 2016 to 31 December, 2017, a slight increase in number of total sites from 3,465 to 3,491, and an increasing
number of colocations. Increased revenue in DRC resulted primarily from additional rent and power charges for equipment
from the additional sites acquired from subsidiaries of Airtel in DRC. Revenue improved in Ghana as a result of an increase in
total tenancies from 1,638 as of 31 December, 2016 to 1,723 as of 31 December, 2017, and an increased tenancy ratio from 2.08x
as of 31 December, 2016 to 2.09x as of 31 December, 2017. Revenue decreased in Congo Brazzaville in the current year, as a
result of increased bonus SLA revenues in 2016.
36 Helios Towers | Annual Report 2017
Strategic Report Cost of sales
(US$’000s)
Power
Non-power
Site depreciation
Total cost of sales
Year Ended 31 December,
% of Revenue
% of Revenue
2017
93,756
58,679
123,216
275,651
2017
27.2%
17.0%
35.7%
79.9%
Restated
(IFRS 16)
2016
81,802
50,289
103,776
235,867
2016
29.0%
17.8%
36.7%
83.5%
The table below shows an analysis of the cost of sales on a country-by-country basis for the years ended 31 December, 2016
and 2017.
Tanzania
DRC
Congo Brazzaville
Ghana
(US$’000s)
Power
Non-power
Site depreciation
Total cost of sales
Year Ended 31 December,
Year Ended 31 December,
Year Ended 31 December,
Year Ended 31 December,
2017
2016
2017
2016
2017
2016
2017
2016
35,413
27,415
55,681
33,551
24,628
48,933
42,330
20,459
48,634
118,509
107,112
111,423
30,818
15,702
38,593
85,113
2,722
6,365
11,301
20,388
3,229
5,755
9,936
18,920
13,291
4,440
7,600
25,331
14,204
4,204
6,314
24,722
Cost of sales increased by 17% to US$275.7 million in the year ended 31 December, 2017 from US$235.9 million in the year
ended 31 December, 2016. The overall increase in cost of sales was primarily due to the increased costs associated with a larger
portfolio of towers, most prominently an increase in power usage and increased cost related to depreciation of our sites, mainly
in DRC. Site depreciation increased by 19% as a result of a higher asset base, principally due to the purchase of approximately
967 towers from a subsidiary of Airtel in DRC in July 2016.
Power costs comprise diesel and electricity costs. The Group’s costs increased in line with additional site numbers across the
Group. The increase in diesel costs primarily consisted of a US$10.6 million increase of consumption in DRC. The increased
diesel costs in DRC were attributable to increased consumption largely as a result of the expansion of the site portfolio
after the Airtel acquisition in July 2016 and decreased reliance on the electric grid. The decreased diesel costs in Ghana is
attributable to better grid availability and greater deployment of power management solutions. Electricity costs remained
relatively flat between the years, despite an increase in the number of sites across the Group with a significant portion of the
increase in cost attributable to local electricity price increases, mitigated through our power contract escalation provisions.
Non-power costs relate to maintenance and security costs, insurance and other costs. Non-power costs increased by 16.7%
for the year ended 31 December, 2017 compared to the year ended 31 December, 2016. The increase in non-power costs were
primarily a result of increase in the number of sites in DRC, while costs in Ghana remain relatively flat.
Administrative expenses
(US$’000s)
Other administrative costs
Depreciation and amortisation
Exceptional items
Total administrative expense
Year Ended 31 December,
% of Revenue
% of Revenue
2017
47,859
25,621
17,781
91,261
2017
13.9%
7.4%
5.2%
26.5%
Restated
(IFRS 16)
2016
46,330
25,679
5,732
77,741
2016
16.4%
9.1%
2.0%
27.5%
Helios Towers | Annual Report 2017 37
Strategic ReportGovernance ReportFinancial StatementsOverview
Detailed financial review (continued)
Administrative expenses (continued)
Administrative expenses increased by 17.4% to US$91.3 million in the year ended 31 December, 2017 from US$77.7 million in the
year ended 31 December, 2016.
The primary driver of the increase in administrative expense between the years was in relation to exceptional items, which are
discussed further in note 4.
Loss on disposal of property, plant and equipment
Loss on disposal of property, plant and equipment was US$2.0 million in the year ended 31 December, 2017, compared
to US$3.8 million during the year ended 31 December, 2016. Loss on disposal was primarily a result of site upgrades that
necessitated the replacement of older parts and equipment in Tanzania.
Other gains and losses
Other gains and losses recognised in the year ended 31 December, 2017 were US$21.8 million, compared to US$6.7 million in
the year ended 31 December, 2016. The primary reason is the gain on embedded derivative valuation of the bond. The other
loss during the year ended 31 December, 2016 represented a charge to our income statement as a result of Vodacom Tanzania’s
put option to exchange its shares in Helios Towers Tanzania for shares in the Company, which expired in October 2017.
Finance costs
Finance costs increased to US$102.8 million in the year ended 31 December, 2017 from US$73.3 million in the year ended
31 December, 2016. The table below shows an analysis of finance costs for the year ended 31 December, 2016 and 2017.
(US$’000s)
Foreign exchange difference
Interest costs
Interest costs on lease liabilities
Deferred loan cost amortisation
Finance costs
Year Ended 31 December,
2017
3,229
71,608
14,991
12,929
102,757
Restated
(IFRS 16)
2016
9,796
44,645
13,812
5,015
73,268
As reflected in the table above, the increase in finance costs between the years was primarily the result of interest for the
US$600 million 9.125% bond, accruing from March 2017. This is partially offset with a decrease in foreign exchange difference
from US$9.8 million during the year ended 31 December, 2016 to US$3.2 million during the year ended 31 December, 2017. This
primarily relates to the Tanzanian shilling, which depreciated against the US dollar by 5% during the year ended 31 December,
2016 while the Tanzanian shilling in 2017 was broadly stable depreciating by 2% during the year ended 31 December, 2017. The
decrease in 2017 was also due to the appreciation of the Central African Franc, which is pegged to the Euro.
Tax expense
Our tax expense was US$3.2 million in the year ended 31 December, 2017 as compared to US$1.5 million in the year ended
31 December, 2016. Our tax expense during each year is primarily due to an additional tax levied against certain entities in
Tanzania and DRC as stipulated by law in these jurisdictions and minimal corporation tax payments required where companies
are in a tax loss position.
Adjusted EBITDA
Adjusted EBITDA was US$146 million in the year ended 31 December, 2017 compared to US$105 million in the year ended
31 December, 2016. The increase in Adjusted EBITDA between years is primarily attributable to the changes in revenue, cost of
sales, and gross margin between years.
38 Helios Towers | Annual Report 2017
Strategic Report Contracted Revenue
The following tables provide our total contracted revenue by country and by key customer under agreements with our
customers as of 31 December, 2017 for each of the years from 2018 to 2023, with local currency amounts converted at the
applicable spot rate for US dollars on 31 December, 2017 held constant. Our contracted revenue calculation for each year
presented assumes: (i) no escalation in fee rates, (ii) no increases in sites or tenancies other than our committed colocations
described elsewhere in these financial statements, (iii) our customers do not utilise any cancellation allowances set forth in their
MLAs and (iv) our customers do not terminate MLAs early for any reason.
The following tables provide the Group’s contracted revenue from 2018 through 2023 on a country-by-country basis and an
illustration of our total contracted revenue attributable to our key customers:
(US$’000s)
Tanzania
DRC
Congo Brazzaville
Ghana
Total
(US$’000s)
Africa’s Big-Five MNOs
Other
Total
Year Ended 31 December,
2018
2019
2020
2021
2022
2023
147,044
140,355
24,373
38,821
149,099
141,546
24,373
39,429
151,387
152,294
23,194
38,966
150,648
151,859
16,954
36,721
149,440
150,004
16,949
27,293
143,673
149,085
16,941
12,784
350,593
354,447
365,841
356,182
343,686
322,483
Percentage
of Total
Committed
Revenues
80%
Total
Committed
Revenues
2,489,628
611,801
3,101,429
Liquidity and Capital Resources
We manage our financing structure and cash flow requirements based on our overall strategy and objectives, deploying
financial and other resources related to those objectives. We manage liquidity risk by maintaining adequate reserves and
banking facilities and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial
assets and liabilities. Funding decisions are made based upon a number of internal and external factors, including required
amounts and the timing of outflows, the internal and external availability of funds, the costs of financing and other strategic
objectives.
Our primary sources of liquidity have historically been cash from operations, borrowings under our debt facilities and equity
issuances. We have previously sought to finance the costs of developing and expanding our business mainly at the operating
level on a country-by-country basis.
Helios Towers | Annual Report 2017 39
Strategic ReportGovernance ReportFinancial StatementsOverview
Detailed financial review (continued)
Consolidated Statements of Cash Flow Data
(US$’000s)
Cash Flows from Operating Activities
Loss for the year before taxation
Net cash generated from operating activities
Net cash used in investing activities
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents, beginning of year
Foreign exchange on translation
Cash and cash equivalents, end of year
Year Ended 31 December,
Restated
(IFRS 16)
2016
2017
(104,227)
57,572
(169,615)
97,870
(14,173)
133,737
136
119,700
(114,596)
25,304
(295,847)
316,739
46,196
88,290
(749)
133,737
As at 31 December, 2017 we had US$119.7 million of cash and cash equivalents.
Net cash generated from operating activities increased from US$25.3 million during the year ended 31 December, 2016 to
US$57.6 million during the year ended 31 December, 2016. The increase in net cash generated from operating activities was
primarily driven by an improvement in operating loss, and lower cash outflows as a result of working capital changes, offset by
an increase in interest paid between the years.
Net cash used in investing activities decreased from US$295.8 million during the year ended 31 December, 2016 to
US$169.6 million during the year ended 31 December, 2017. The decrease in net cash used in investing activities between
the years was mainly the result of a lower volume of tower portfolio purchase activity as compared to 2016, which are primarily
relating to the Group’s portfolio acquisition from Airtel in DRC.
Net cash generated by financing activities decreased from US$316.7 million during the year ended 31 December, 2016 to
US$97.9 million during the year ended 31 December, 2017. The decrease in net cash generated by financing activities between
the years was primarily due to the US$184 million equity raise and increased borrowings under our secured term loan facilities
in 2016, subsequently cleared in 2017 in line with the issue of the bond in March 2017.
Capital expenditure
The following table shows our capital expenditures incurred by category during the years presented:
(US$millions)
Acquisition
Growth
Upgrade
Maintenance
Corporate
Total
Year Ended 31 December,
2017
18.7
77.8
52.0
19.8
2.4
% of
Total Capex
11.0%
45.6%
30.4%
11.6%
1.4%
170.7
100.0%
2016
164.5
56.7
26.8
29.6
3.2
280.8
% of
Total Capex
58.6%
20.2%
9.5%
10.6%
1.1%
100.0%
Following the announcement of the Zantel acquisition in July 2017, we have completed the acquisition of 101 sites which has
driven acquisition capital expenditure during 2017. Prior year acquisition capital expenditure was principally due to the DRC
Airtel acquisition. Upgrade capital expenditure has increased in 2017 due to continued investment, tower strengthening and
upgrade programme and the continued roll out of colocation tenants. Maintenance capital expenditure has decreased in 2017
however we continue to carry out periodic refurbishments and replace parts and equipments to keep our site in service.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements.
Indebtedness
As of 31 December, 2016 and 31 December, 2017, the Group’s outstanding loans and borrowings, excluding lease liabilities, were
US$401.1 million and US$598.4 million, respectively. For more details, see Note 20 in our consolidated financial statements for
the year ended 31 December, 2017. Third party loans were refinanced in March 2017, when the bond was issued.
Transition to new accounting standards
During the year, the Group transitioned to IFRS 15: Revenue from contracts with customers, and IFRS 16: Leases, on a fully
retrospective basis. There is no impact in relation to IFRS 15, largely due to service contracts which are already well aligned with
the performance obligation separation requirements of IFRS 15. IFRS 16 adoption has led to the restatement of comparative
figures previously reported. Further detail is provided in the Accounting Policies and in note 29.
40 Helios Towers | Annual Report 2017
Strategic Report Governance framework
Risk management
Group Executive Team
Board/Audit and Ethics Committee
1st line of defence
Own and manages risks and
implements/operates business controls
Risk appetite
2nd line of defence
Oversight of risk and control compliance
The Group defines risk appetite as the amount of risk that the
business is prepared to take in order to deliver safe, effective
working practices as well as maintaining and growing its
business. The Group dedicates resources and focus to
understanding and ensuring risk is identified, assessed,
managed and monitored. Controls and mitigating actions
are designed as appropriate to reflect the risk appetite in
each instance.
Who is responsible
• Compliance/oversight functions
Who is responsible
• Operational staff/management
3rd line of defence
Independent assurance
Risk Governance
Risk management is integral to the Group’s strategy and
to the achievement of its long-term goals. The Group’s
continued success as an organisation depends on its ability
Who is responsible
to identify and pursue the opportunities generated by its
• Internal Audit
business and the markets in which it operates.
Activity/controls
• Health, Safety & Quality Team
• Eniromental regulatory compliance
• Contolrs compliance monitoring
• Management/Board reporting and review
of KPI and financial performance
• Corporate policies and central
functions oversight
Activity/controls
The Board has overall responsibility for risk management,
• Approved Internal Audit plan
compliance and internal controls, and is supported by the
• Internal Audit reporting line to Audit
Audit and Ethics Committee (the “Committee”).
and Ethics Committee
• Regular internal Audit updates to Audit
The Committee, under delegation from the Board, monitors
and Ethics Committee
• External Audit planning and reporting to
the nature and extent of risk exposure against the Group’s risk
Board/Audit and Ethics Committee
appetite. The Committee is responsible for identifying, mitigating
and managing risk, as well as setting the risk appetite for the
business with advice from the Executive Team.
Activity/controls
• Policies and procedures
• Internal controls
• Planning, budgeting/forcasting processes
• Delegated authorities
• Business workflows/IT sytems controls
• Personal objectives and incentives
Governance framework
Board/Audit and Ethics Committee
Executive Team
1st line of defence
Owns and manages risks and
implements/operates business controls
2nd line of defence
Oversight of risk and control compliance
3rd line of defence
Independent assurance
Who is responsible
• Operational staff/management
Who is responsible
• Compliance/functional teams
Who is responsible
• Internal Audit
Activity/controls
• Policies and procedures
• Internal controls
• Planning, budgeting/forcasting processes
• Delegation of authority matrix
• Business workflows/IT sytems controls
• Personal objectives and incentives
Activity/controls
• SHEQ
• Regulatory compliance
• Management/Board reporting and review
of KPIs and financial performance
• Corporate policies and Group
functions oversight
Activity/controls
• Internal Audit Risk Assessment
• Approved Internal Audit plan
• Internal Audit reporting line to Audit
and Ethics Committee
Helios Towers | Annual Report 2017 41
Strategic ReportGovernance ReportFinancial StatementsOverview Risks related to the Group and our business
Principal business risks
Summarised below are the key risks, not in order of significance, identified which could
have a material impact on the Group. The principal risk summaries are therefore
supported by a more detailed risk management process.
Risk Description
Impacts
Risk Mitigation
1. Major quality failure or breach of contract
The Group’s reputation and profitability could be
damaged if the Group fails to meet its customers’ quality
standards, specifications or delivery schedules.
A substantial portion of our revenues are generated
from large customers, and the loss of any of these
customers would adversely affect the Group.
Many of the Group’s customer tower contracts contain
liquidated damage provisions, which may require the
Group to make unanticipated payments to its customers.
2. Non-compliance risk related to:
i) Health and safety
ii) Environmental laws
iii) Corruption
i) Health & Safety – there are health and safely risks
related to operating in the relevant jurisdictions that
could adversely affect the Group.
ii) Environmental laws – the Group could have liability
under environmental laws.
iii) The Group is exposed to the risk of corruption,
sanction law and other similar regulatory breaches.
Changes in these laws may require the Group to modify
its existing business practices, incur increased costs and
subject it to potential liabilities. The Group may face legal
penalties, financial loss, loss of materials, and reputation
loss if it fails to act in accordance with laws, regulations,
business and industry practices.
3. Economic and political instability
A slowdown in the growth of, or a reduction in demand
for, wireless communication services could adversely
affect the demand for communication sites and tower
space and could have a material adverse effect on the
Group’s financial condition and results of operations.
There are risks related to political instability, religious
ethnicity and regional tensions in each of the relevant
jurisdictions.
4. Significant exchange rate movements
Fluctuations or devaluations in local currencies in the
markets in which the Group operates could materially
and adversely affect the Group’s business, financial
condition and results of operations and that of the
financial position of its customers.
Reputational
• Strong project and operational delivery team
Financial
• Project scope is clearly defined at the outset and all
project plans are baselined to deliver the agreed
scope of work
• Contract & dispute management processes in place
• Customer retention plans in place
• Good customer relationships
• Long-term contracts with minimal termination rights
Compliance
• Enhanced Compliance Programme launched; training
Financial
Reputational
has been provided on the new programme
requirements
• Creation of policies and procedures which
incorporate regular monitoring, incident reporting
and report of breaches
• Code of Business Conduct
• Third Party Code of Conduct
• Bribery and anti corruption policy and procedures
are in place
Operational
• Market analysis and business intelligence
Financial
• Market share growth strategy
• Close monitoring of any potential risks that may
affect operations
• Contingency plans in place in the event of any
emergencies
Financial
• USD and EUR pegged contracts
• ”Natural” hedge of local currencies (revenue vs opex)
• Monthly review of exchange rate differences
42 Helios Towers | Annual Report 2017
Strategic Report Risk Description
Impacts
Risk Mitigation
5. Non-compliance with license requirements
The Group may not always operate with the required
approvals and licenses for some of its tower sites,
particularly where it is unclear whether a certain license
or permit is required or where there is a significant lead
time required for processing the application, and
therefore may be subject to reprimands, warnings and
fines, for non-compliance with the relevant licensing and
approval requirements.
6. Loss of key personnel
The Group’s business depends on key senior
management and highly skilled and technical
employees, and the departure of any such personnel, or
the failure to recruit and retain additional personnel,
could adversely affect the Group’s business, financial
condition, results of operation and prospects.
7. Technology risk
New technologies designed to enhance the efficiency of
wireless networks and potential active sharing of the
wireless spectrum could reduce the need for tower
based wireless services and could make the Group’s
tower leasing business less desirable to or necessary for
tenants and result in decreasing revenue. Examples of
such new technologies that may reduce the demand for
tower-based antenna space might include spectrally
efficient technologies which could potentially relieve
some network capacity problems, or complementary
voice over internet protocol access technologies that
could be used to offload a portion of subscriber traffic
away from the traditional tower-based networks, which
would reduce the need for telecommunications
operators to add more tower-based antenna equipment
at certain tower sites.
8. Failure to remain competitive
Competition in the telecommunications tower industry
may create pricing pressures that materially and
adversely affect the Group.
Operational
• Compliance registers maintained with any potential
non-conformities identified by relevant government
authority with a timetable for rectification
• Active participation in industry groups in place
• Active and ongoing engagement with relevant
regulatory authorities to ensure awareness of and
potential changes to requirements in advance
People
• Competitive and performance related remuneration
plans
• Talent and succession planning processes exist for
key roles
• Staff development/support plans
Strategic
• Strategic long term planning
• Business intelligence
• Exploring alternatives e.g. solar power technologies
• Continuously improving product offering to enable
adaptation to new wireless technologies
• Applying for new licenses to provision active
infrastructure services in certain markets
Financial
• Close KPI monitoring and benchmarking against
competitors and total cost of ownership (TCO) for
MNOs to run towers
• Fair pricing structure
• Constant review of competitors’ activities
• Strong tendering team to ensure high win/retention
rate
• Continuous capex investment ensures that the Group
has sufficient capacity
Helios Towers | Annual Report 2017 43
Strategic ReportGovernance ReportFinancial StatementsOverview Sustainability
At the heart of
Helios Towers’
strategy is a
determination to
build a genuinely
sustainable
business across
all its facets.
This means a business with a model
sufficiently robust to grow with the needs
of its customers; that treads as lightly as
possible in its environments; and that
meets its commitments to people, whether
through being an excellent employer or
acting as a sensitive neighbour in its
various communities.
44 Helios Towers | Annual Report 2017
Our proposition
Our proposition to customers is itself rooted in sustainability,
through the efficient use of resources. By enabling tenants to
share our towers, we are concentrating multiple technologies
and operations onto a single piece of infrastructure.
In turn, this will typically require only one power supply (and
therefore lower emissions), and single rather than duplicated
maintenance journeys to our tower locations, saving
thousands of road miles a year.
For some tenants, consolidating their infrastructure in this way
often means that their own towers can be taken down and
recycled. For our host landscapes, a single tower also means
a lesser visual impact.
Our people
Our business employs 370 people directly, but also supports
over 10,000 contractor employees who are engaged in the
maintenance and security of our tower network.
In the belief that operational decisions are better taken on the
ground, 2017 saw a deliberate move to give our local teams
greater autonomy and the tools, through training, to problem-
solve and make decisions.
Our rollout of the Lean Six Sigma programme; leadership
development training; project management upskilling; and
extending our training to maintenance partners, are all
designed to equip our local operating companies to perform
as never before. In the process, this is creating sustainable
local businesses with a fulfilling career environment that
inspires constant improvement.
Modern Slavery Act 2015
With regards to the Modern Slavery Act 2015, our policy and
statement of compliance is published on our website.
Strategic Report The year also saw an embedding programme of the HR
initiatives launched in 2016, including expanded role grading,
salary banding and performance management. This is
building a firm foundation on which to take the current and
future workforce forward.
Safety
No practical or commercial consideration is ever allowed to
override the imperative that every employee and contractor
should be safe. We aim to be a zero-harm company, and
regard every incident as avoidable.
Our principal safety risks are road traffic accidents, working
with electricity, working at height, and the manual handling
of heavy equipment. None of our employees are permitted
to work in any of these areas without dedicated training,
and refresher training is regularly held.
As well as measuring, and learning from, lagging indicators
such as lost time incidents (LTIs) and injuries needing
treatment, we place a heavy emphasis on leading indicators.
We encourage everyone to be our eyes and ears wherever
they’re working for us, and to report any near-miss incidents,
without blame or criticism, so that we can learn from them
and prevent them in the future.
We include both our employees and contractors in safety
reporting, to give a true reflection of safety in our business.
The environment
Helios Towers is essentially a power/real estate company
and, like any industrial power provider, our business causes
emissions that contribute to climate change. Principally, these
come from diesel consumption to power our generators.
We have made it a priority to find technical solutions and
innovations that will minimise our impact in this area. In 2017
we continued to roll out a programme to see where
technologies can improve on diesel-only power.
In 2017, we have installed solar powered technology in 249
sites; made 375 connections to power grids where available;
and created more than 331 hybrid (off-grid) solutions.
In 2017, these major environmental investments saved more
than 8,250 tonnes of CO2 emissions as well as delivering more
than US$3.3 million in fuel cost savings.
In addition, bringing Lean Six Sigma practices to maintenance
partners will reduce the frequency of service visits to our sites
and, in tandem, cut road miles driven. This delivers both
environmental and safety gains.
Helios Towers | Annual Report 2017 45
Strategic ReportGovernance ReportFinancial StatementsOverview Board of Directors
The Company’s Board of Directors (the ‘Board
of Directors’) consists of 13 members. Each
Director is elected for the term, if any, fixed by
the shareholder who appointed such Director
or until his earlier death, resignation,
disqualification or removal.
The shareholders shall have the right to remove any of their
respective Directors appointed pursuant to our shareholders’
agreement, with or without cause, by written notice to the
Company. The duties and authority of each member of the
Board of Directors are regulated by our Articles of Association
and shareholders’ agreement.
The Board of Directors is currently comprised of the following
directors:
Name
Allan Cook
Kash Pandya
David Karol Wassong
Waldemar Rafal Szlezak
Age
68
55
47
40
Temitope Olugbeminiyi Lawani
47
Richard Byrne
Simon Hilliard Poole
Vishma Dharshini Boyjonauth
Simon David Pitcher
Anja Blumert
Xavier Charles Rocoplan
Colin Curvey
Nelson Oliveira
60
51
38
45
40
43
46
55
Position
Non-Executive
Director and
Chairman
Director & Chief
Executive Officer
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
Non-Executive
Director
The business address of each of the members of the Board of
Directors is Level 3, Alexander House, 35 Cybercity, Ebene,
Mauritius.
The Board of Directors has strategic control and decision-
making authority over the business of the HT Group.
Allan Cook has been a director and chairman of the Company
since January 2018. Allan was a Non-Executive Director and
chairman of WS Atkins from September 2009 until 3 July
2017 when Atkins was acquired by SNC-Lavalin. He is a
chartered engineer with more than 40 years international
experience in the automotive, aerospace and defence
industries. He was Chief Executive of Cobham PLC until the
end of December 2009. Prior to this he held senior roles at
GEC-Marconi, BAE Systems and Hughes Aircraft. He was
Deputy Chairman Of Marshall of Cambridge (Holdings)
Limited until 31 December 2015 and is a member of the
operating executive board of J F Lehman & Company.
Allan is Industry co-chair of the Defence Growth Partnership
(DGP). Until August 2016 he was the lead Non-Executive
Member of the Department for Business, Innovation and
Skills (BIS.) He was Chairman of the UK Trade & Investment’s
Advanced Engineering Sector Advisory Board until October
2013, and chairman of FINMECCANICA UK Ltd and
chairman of Selex ES until the end of December 2014. Until
31 March 2017 he was also chairman of SEMTA – the Sector
Skills Council for Science, Engineering and Manufacturing
Technologies. He is past President of the Aerospace and
Defence Industries Association of Europe (ASD) and past
president of the Society of British Aerospace and Defence
Companies (SBAC). He is a Fellow of the Royal Academy
of Engineering where he was Vice President and served as
a trustee for the Academy until September 2017. He also
chairs the Academy’s employer-focused Diversity Leadership
Group. Allan became a Fellow of the China 48 Group Club
in December 2015. He was awarded a CBE in the Queen’s
New Year’s Honours list in 2008, and received an honorary
Doctorate in Science from Cranfield University in 2016.
Kash Pandya has been a Director of the Company
since August 2015. Kash arrived as Chief Executive
Officer of Helios Towers following eight years with
Aggreko plc, where he sat on the Board, running
the European Business for three years. He was also
Managing Director of Aggreko International for five years,
overseeing a doubling of their international business.
He began his career with an engineering apprenticeship,
and went on to complete a Bachelor’s degree in
Technology Engineering and a Master’s in Manufacturing.
In 1989, he started at Jaguar before moving to roles
within General Electric, Caradon and then APW,
where he led all operations outside the United States.
In 2004, he became the CEO of Johnston Group,
leaving the business on its sale to Ennstone plc.
46 Helios Towers | Annual Report 2017
Governance Report David Karol Wassong has been a Director of the Company
since January 2010. Mr. Wassong is a Managing Director and
Co-Head of Strategic Investments Group at Soros Fund
Management LLC. Mr. Wassong joined Soros Fund in 1998. He
has been a Partner at TowerBrook Capital Partners LP since
June 1998, focusing on the media, entertainment and
telecommunications industries. From July 1997 to June 1998,
Mr. Wassong served as Vice President of Lauder Gaspar
Ventures. He was also an Associate of Lauder Gaspar
Ventures, LLC. and Wertheim Schroder & Co. Inc., where he
participated on teams that invested in the telecommunications
industry. From 1992 to 1995, Mr. Wassong worked in
investment banking with Wertheim Schroder in the Media and
Entertainment Group. Mr. Wassong earned his BA from the
University of Pennsylvania and an MBA from the Wharton
School of Business at the University of Pennsylvania.
Waldemar Rafal Szlezak has been a Director of the Company
since January 2010. Mr. Szlezak has been a Principal at Soros
Fund Management LLC since August 2006 and also serves as
Senior Managing Director in the Strategic Investments Group.
He served at Soros Private Equity Investors and prior to that,
he served in the Mergers & Acquisition Investment Banking
group at Credit Suisse. Mr. Szlezak also served as an Associate
at TowerBrook Capital Partners L.P. Mr. Szlezak earned his BS
Industrial Engineering and Operations Research from
Columbia University and his BA in Mathematics from Knox
College in Galesburg, Illinois.
Temitope Olugbeminiyi Lawani has been a Director of the
Company since February 2010. Mr. Lawani, a Nigerian national,
is a co-founder and Managing Partner of Helios Investment
Partners and has more than 20 years of principal investment
experience. Prior to forming Helios, Mr. Lawani was a Principal
in the San Francisco and London offices of TPG Capital, a
global private equity firm. At TPG, Mr. Lawani had a lead role
in the execution of over $10 billion in closed venture capital
and leveraged buy-out investments, including the acquisitions
of Burger King Corp., Debenhams plc, J. Crew Group and
Scottish & Newcastle Retail. Mr. Lawani began his career as a
Mergers & Acquisitions and Corporate Development Analyst
at the Walt Disney Company. Mr. Lawani received a BS in
Chemical Engineering from the Massachusetts Institute of
Technology, a Juris Doctorate (cum laude) from Harvard Law
School and an MBA from Harvard Business School. He is
fluent in Yoruba, a West African language.
Richard Byrne has been a Director of the Company since
December 2010. Mr. Byrne co-founded TowerCo in 2004. He
has served as President and Chief Executive Officer and has
been a member of the Board of Directors from its beginning.
Prior to that, he served as President of the Tower Division of
SpectraSite Communications, which grew from 125 towers to
more than 8,000 during his tenure. Mr. Byrne served as
National Director of Business Development at Nextel
Communications Inc. and was responsible for bringing the
industry’s first major portfolio of wireless carrier towers to
market. Mr. Byrne started his wireless career performing site
acquisitions for AT&T Wireless (then McCaw Cellular) in the
New York Mass Transit Authority system.
Simon Hilliard Poole has been a Director of the Company
since February 2012. From 2009 to 2011, Mr. Poole acted as
Group CFO for Intela Global Ltd where his responsibilities
included managing investor relations and the development
of group strategy. Prior to this, Mr. Poole held various roles at
Celtel including as Interim Group Financial Controller of
Celtel International, Chief Financial Officer of Celtel DRC and
Finance Director of Celtel Burkina Faso. Mr. Poole holds a BSc
in Geography from Exeter University and is a qualified
Chartered Accountant.
Vishma Dharshini Boyjonauth has been a Director of
the Company since August 2013. Ms. Boyjonauth joined
Intercontinental Trust Limited in 2004 and she is currently a
Manager in the Corporate Services Department. She leads
a team in the Corporate Services Department and oversees
operations including the incorporation of companies, advising
on company structures, regulatory matters and the corporate
administration of companies for both domestic and global
business companies in Mauritius. Ms. Boyjonauth graduated
from the University of Mauritius with a BSc (Hons) in
Economics.
Simon David Pitcher has been a Director of the Company
since December 2013. Mr. Pitcher is responsible for Private
Investments at J. Rothschild Capital Management Limited
(“JRCM”). JRCM is the principal subsidiary of RIT Capital
Partners plc. Previously, Mr. Pitcher was a Director at Standard
Bank Private Equity, a Director at Blackwood Capital Partners
in Sydney and an Investment Director at Hermes Private
Equity. He qualified as a Chartered Accountant with
PricewaterhouseCoopers.
Anja Blumert has been a Director of the Company since
October 2015. Ms. Blumert has been head of M&A at Millicom
International Cellular SA (‘Millicom’) since 2013. From 2009 to
2013, Ms. Blumert was an Independent Strategy and M&A
Consultant at Montagu Partners. Prior to this, she was an
Investment Professional at Warburg Pincus International
covering the Central and Eastern Europe region across all
sectors and Western Europe for the TMT sector where she
was responsible for the assessment of investment
opportunities in private and public companies. Ms. Blumert
holds a degree in Finance and Marketing and a master’s
degree in Business Studies from Humboldt University of
Berlin.
Helios Towers | Annual Report 2017 47
Strategic ReportGovernance ReportFinancial StatementsOverview Board of Directors (continued)
Nelson Oliveira has been a Director of the Company since
May 2016. Mr. Oliveira has been Managing Director, General
Counsel and Chief Compliance Officer at Albright Capital
Management LLC (‘Albright’) since March 2007. During this
time, he has been responsible for legal and regulatory aspects
of Albright’s operations as a registered investment adviser
with broad emerging markets mandates, including legal
structuring and risk management of all private investment
transactions and all regulatory aspects of fundraising. Prior to
this, Mr. Oliveira was Deputy General Counsel at Darby
Overseas, Ltd. (a subsidiary of Franklin Resources, Inc.) from
March 2002 until March 2007 where he was responsible for
overseeing and advising on legal aspects of mezzanine debt
and quasi-equity investment transactions in Latin America,
Asia and Eastern Europe. Mr. Oliveira holds a Juris Doctorate
(cum laude) from Boston College Law School.
Xavier Charles Rocoplan has been a Director of the Company
since October 2015. Mr. Rocoplan has been the Chief
Technology and Information Officer (‘CTO’) at Millicom since
December 2012 and has been its Executive Vice President of
Technical since April 2012. In 2002, Mr. Rocoplan was CTO for
Vietnam and then became CTO for the South East Asian
cluster (Cambodia, Laos and Vietnam). In 2004 he was
appointed the CEO of Paktel in Pakistan, a position he held
until 2007. During this time, he launched Paktel’s GSM
operations and led the process that concluded with the
disposal of the business in 2007. After Millicom’s exit from
Asia, Mr. Rocoplan was appointed to head the New Corporate
Business development unit where he managed the Tower
Assets Monetisation programme which led to the creation
of tower companies in Ghana, Tanzania, DRC and Colombia.
In 2012, he was made Chief Global Networks Officer before
being appointed Millicom’s CTO. Mr. Rocoplan holds
master’s degrees from Ecole Nationale Supérieure des
Télécommunications de Paris and from Université Paris IX
Dauphine.
Colin Curvey has been a Director of the Company since May
2016. Mr. Curvey has been Co-Head of the IFC African, Latin
American and Caribbean Fund since 2015 and served as its
Principal since March 2011. Mr. Curvey is employed at IFC
Asset Management Company, LLC. (‘AMC’). Mr. Curvey joined
AMC in March 2011. He served as an Equity Research Analyst
at BTG Pactual Chile S.A. Corredores de Bolsa. He was a
Partner at Duke Street, having initially joined in August 1999
and focused on investments in the consumer, food, insurance
and financial services sectors. Prior to this, Mr. Curvey served
as an Equity Research Analyst at Celfin Capital (now part of
BTG Pactual), where he was ranked as one of Chile’s leading
electric utility analysts. Prior to that, Mr. Curvey worked at
Morgan Stanley as a Financial Analyst and an Investment
Banker in their Investment Banking Division. Mr. Curvey
speaks English and Spanish and holds an MBA from Harvard
Business School and a BA in Economics from Duke University.
48 Helios Towers | Annual Report 2017
Governance Report Helios Towers | Annual Report 2017 49
Strategic ReportGovernance ReportFinancial StatementsOverview Executive team
+100 years’ experience
in emerging markets
towers and power
We have assembled a world-class management team to ensure that Helios
Towers is, and remains, a formidable and customer-centric organisation.
The team combines market-leading, Six Sigma-accredited operational
expertise with African telecom network rollout capabilities and global
tower management experience. Indeed, collectively, we offer more than
100 years’ experience of towers and power in emerging markets.
The team also retains unrivalled relationships with key local constituencies
and major wireless operators across the continent.
Kash Pandya
Chief Executive Officer
Joined 2015
Kash arrived as Chief Executive Officer of
Helios Towers following eight years with
Aggreko plc, where he sat on the Board,
running the European Business for three
years. He was also Managing Director of
Aggreko International for five years,
overseeing a doubling of their international
business.
He began his career with an engineering
apprenticeship, and went on to complete
a Bachelor’s degree in Technology
Engineering and a Master’s in Manufacturing.
In 1989, he started at Jaguar before moving
to roles within General Electric, Caradon
and then APW, where he led all operations
outside the United States.
In 2004, he became the CEO of Johnston
Group, leaving the business on its sale to
Ennstone plc.
Tom Greenwood
Chief Financial Officer
Joined 2010
Alex Leigh
Chief Commercial Officer
Joined 2012
Tom was appointed Chief Financial Officer
in September 2015, having previously been
Helios Towers’ Group Finance Director.
Throughout his time with HT he has been
instrumental in managing and raising debt
and equity for the Group, as well as being a
key member of the team for all acquisitions
and country set-ups.
He is responsible for all finance and IT
activities across the Group, and has led the
set-up of all financial systems, operations and
HT’s shared service centre.
He joined Helios Towers from PwC, where
he was part of the TMT Transaction Services
team, focusing on M&A and re-financings,
mainly in the telecoms sector.
Tom is a Chartered Accountant of the
ICAEW (ACA).
Alex was appointed to the executive team
of Helios Towers in October 2015, and is
responsible for commercial, business
development and sales activity.
Prior to joining the executive team, he served
as Business Development Director covering
M&A, equity raises and business
development. Alex has negotiated many of
HT’s major customer agreements and has
been a key team member in the capital
raising activities of the Group.
Before joining HT, Alex worked at both UBS
and Rothschild, primarily advising TMT
companies in an M&A capacity. He has been
involved in over 20 M&A transactions and
eight leveraged finance deals, and has
provided strategic advice to large TMT
companies across Europe.
Colin Gaston
Director of Operations & Technology
Joined 2015
Colin joined HT as Director of Operations
and Technology.
Previously, he held several senior positions
at Aggreko from 2000 to 2013, including
Operations Director for the International
Business, Regional Director for West and
Central Africa, and Head of Logistics. He then
worked as an independent consultant in
Dubai for two years before joining Helios
Towers.
Colin also has 20 years of international
experience in senior management roles with
Schlumberger, and is an accredited Lean Six
Sigma Black Belt.
50 Helios Towers | Annual Report 2017
Governance Report Roy Cursley
Director of Operational PMO
Joined 2015
Nick Summers
Director of Corporate Services
Joined 2010
Philippe Loridon
CEO Helios Towers Tanzania
Joined 2010
Roy joined HT as Director of Operational
Programme Management Office and is
responsible for the Group’s Project Delivery
and Supply Chain activity.
Prior to HT, Roy was Head of Projects,
Planning & Continuous Improvement at
Aggreko International. He was responsible
for the execution of temporary power
projects internationally, primarily in emerging
markets.
He has a wealth of experience in both South
Africa and the East Africa region, and is an
accredited Lean Six Sigma Black Belt.
Nick has been HT’s Director of Corporate
Services since October 2015. He joined
Helios Towers following nine years with
Vodafone, both in the United Kingdom and
internationally.
His final role at Vodafone was National Head
of RAN Deployment for Vodafone Ghana
(previously the state-owned Ghana Telecom).
Within HT, Nick is responsible for the
Group’s human resources; Group health,
safety, environmental and quality
management; and Group ethics and
compliance. He also provides oversight on
corporate social responsibility activities.
Philippe Loridon has been a Director of HTT
since January 2015 and joined HTT from
Helios Towers DRC, where he had been Chief
Executive Officer since December 2011. He
previously served as Chief Executive Officer
at Equateur Telecom Congo, where he
re-launched ETC in the Republic of Congo.
Prior to this, Philippe accumulated 20 years’
experience in the telecoms industry with
MNOs based in San Marino, Israel and Papua
New Guinea. This included 13 years at
Hutchison Whampoa, fulfilling senior roles in
sales, marketing and business development
before first becoming CEO of Hutchison Sri
Lanka in 1998, and then Head of Hutchison
Telecommunications’ Latin American
operations between 2000 and 2002.
Helen Ebert
Chief Legal Officer
Joined 2018
Helen brings a wealth of experience to the
role of Chief Legal Officer at Helios Towers.
She was previously General Counsel at
Exterion Media (formerly CBS outdoor) and
held senior roles at World Fuel Services; and
the Vista Group.
She also has extensive experience of working
for international law firms in London and
Singapore, including Freshfields Bruckhaus
Deringer, Slaughter and May, and Linklaters.
Helen has significant international M&A,
general commercial and compliance
experience in EMEA, Asia-Pacific, USA,
Russia and Egypt.
She is qualified as a solicitor in England
and Wales and has a law degree from
Cambridge University.
Léon-Paul Manya Okitanyenda
CEO, Helios Towers DRC
Joined 2011
Léon-Paul Manya Okitanyenda has been
Chief Executive Officer of Helios Towers DRC
since January 2015, having previously been
Network Operations Director since February
2011.
He has over 15 years of experience in the
telecommunications industry. Prior to joining
the Company, Léon-Paul worked as a
Contract Execution Manager at Ericsson;
Country Field Manager for MER Telecom;
Operations Manager for Venture; and as
Logistics Manager at Plessey. He is from DRC
and holds a Master’s degree in Economics
and Mathematics.
Jeffrey Schumacher
CEO Helios Towers Ghana &
Helios Towers Congo Brazzaville
Joined 2011
Jeffrey Schumacher has been CEO of Helios
Towers Ghana since September 2015, and
Helios Towers Congo Brazzaville since
October 2016.
He has held various senior positions during
the set-up, launch and growth phases at
subsidiaries in Tanzania, DRC and Chad,
where he was Managing Director. Prior to HT,
Jeffrey was an investment professional at
Soros Fund Management LLC where he had
been actively involved with the Company
since its formation in 2009.
He holds a BS in Mechanical Engineering
(magna cum laude) from Northwestern
University in the United States.
Helios Towers | Annual Report 2017 51
Strategic ReportGovernance ReportFinancial StatementsOverview Board committees
Corporate governance
Our corporate governance framework provides for checks
and balances while allowing our management flexibility for
prompt decision-making in the ordinary course of business.
The Directors have implemented a corporate governance
framework that they consider appropriate for the size and
current ownership structure of the Group.
•
•
•
to annually review and approve annual base salaries for
employees of each member of the Group;
to make recommendations with respect to incentive
compensation plans; and
to make regular reports to the Board of Directors on the
status of outstanding compensation issues.
Audit and Ethics Committee
The Audit and Ethics Committee is appointed by the Board of
Directors and consists of a minimum of three members. The
current members of the Audit and Ethics Committee are
Simon Poole, Nelson Oliveira, Simon David Pitcher and Mohsin
Sohani. The chairman of the Audit and Ethics Committee is
appointed by the Board of Directors for a period of one year.
The Audit and Ethics Committee meets on a quarterly basis
and holds a meeting with the external auditors at least once
a year without the presence of any executive member.
The role of the Audit and Ethics Committee is to: (i) be
responsible to the Board of Directors for the oversight of
financial accounting and reporting, internal controls, risk
assessment and management, and ethics and compliance,
including the integrity of the Group’s procurement process; (ii)
be directly responsible for the appointment, compensation
and oversight of the independent auditor, including the
resolution of any disagreements with management; and (iii)
endeavour to work with management and the independent
auditor in a spirit of mutual respect and cooperation. Some of
the specific duties of the Audit and Ethics Committee include
the following:
•
•
•
to oversee systems, processes, internal controls and
procedures, and compliance with the ethical standards
adopted by the Group;
to oversee the independent auditor’s qualifications,
independence and performance; and
to assess compliance with the Group’s procurement
policy.
Compensation Committee
The members of the Compensation Committee are appointed
by, and act at the discretion of, the Board of Directors. The
Compensation Committee consists of a minimum of three
members. The current members of the Compensation
Committee are Waldemar Rafal Szlezak, Nelson Oliveira and
Richard Byrne.
The Compensation Committee meets on a quarterly basis.
The Compensation Committee is responsible for approving
key performance indicators for our business and evaluating
senior executives’ compensation plans, policies and
programmes. Some of the specific duties of the
Compensation Committee include the following:
Budget Committee
The members of the Budget Committee are appointed by,
and act at the discretion of, the Board of Directors. The
Budget Committee consists of a minimum of three members.
The current members of the Budget Committee are Simon
Poole, Waldemar Rafal Szlezak and Kash Pandya. The Budget
Committee meets on a quarterly basis. Some of the specific
duties of the Budget Committee include the following:
•
•
to work with the Group management teams on the
annual Internal Budget Review and stress test detailed
assumptions, projections and expectations to ensure that
management’s expectations are reasonable and
achievable; and
to report to the Board of Directors on the process and
recommend approval of the annual Budget, highlighting
key risks and opportunities considered.
Strategy and Investment Committee
The members of the Strategy and Investment Committee
are appointed by, and act at the discretion of, the Board of
Directors. The Strategy and Investment Committee consists
of a minimum of three members. The current members of
the Strategy and Investment Committee are Simon Poole,
Waldemar Rafal Szlezak, Colin Curvey, Xavier Charles
Rocoplan, Richard Byrne and Kash Pandya. The Strategy
and Investment Committee meets on a quarterly basis.
Some of the specific duties of the Strategy and Investment
Committee include the following:
•
•
•
•
to provide guidance, input and suggestions to the Board
of Directors and to management with respect to the
Group’s strategy for the medium and long term;
to advise and make recommendations to the Board of
Directors and management about the development,
adoption and modification of the Group’s business plan;
to advise and make recommendations to the Board of
Directors and management about acquisitions, joint
ventures, mergers and strategic alliances; and
to review the Group’s progress with respect to the
implementation of its strategy, discuss and, where
appropriate, make recommendations to management on
the Group’s vision as well as share with management the
Board of Directors’ expectations for the strategic
planning process.
Conflicts of Interest
Except as disclosed in these financial statements, there are no
potential conflicts of interest between any duties of the
members of the Group’s administrative, management or
supervisory bodies to the Group and their private interests
and/or other duties.
52 Helios Towers | Annual Report 2017
Governance Report Principal shareholders
The following table sets forth certain information, as of
31 December, 2017, with respect to the ownership of the
Company’s shares by each person who, according to the
Company’s Shareholders Register, owned more than 5% of
the Company’s shares:
Shareholders
Millicom Holding, B.V.
Quantum Strategic Partners, Ltd.
Lath Holdings, Ltd
ACM Africa Holdings, LP
RIT Capital Partners Plc
IFC African Latin American Caribbean Fund, LP
Percentage
directly held
22.83%
21.80%
16.40%
11.60%
7.18%
6.11%
The remaining 14.08% of the Company is owned by minority
shareholders, none of which owns more than 5% of the
Company’s shares.
Our leading shareholders are financial investors which
invested in the Company in 2009, except for Millicom, which
invested in the HT Group in 2010 (through a direct investment
into Ghana, Tanzania, and DRC subsidiaries of the HT Group).
In 2015, Millicom flipped up its investment in the HT Group, so
that its investment was through a direct shareholding in the
Company (with no direct shareholding in a subsidiary of the
Company).
Helios Towers | Annual Report 2017 53
Strategic ReportGovernance ReportFinancial StatementsOverview Directors’ report
The Directors present their report and
audited financial statements for the year
ended 31 December 2017.
Principal activity and review
The principal activity of the Group during the year was
the building and maintaining of telecommunications
towers to provide space on those towers to wireless
telecommunications service and associated service providers
in Africa.
Dividends
During the financial year ended 31 December 2017, the
Directors did not recommend the payment of a dividend
(2016: US$ nil). The Directors, who are members of the Board
at the time of approving the Directors’ report and Operating
and Financial Review are listed on page 46.
Auditor
So far as each Director is aware, there is no relevant
information of which the Group’s external auditors is unaware.
Each Director has taken all steps that ought to have been
taken as a Director in order to be aware of any relevant audit
information and to establish that Deloitte are aware of that
information.
Deloitte has indicated its willingness to continue in office and
will be reappointed at the next Annual Meeting.
Approved by the Board on 11 February 2018.
Kashyap Pushpkant Pandya
The Company was incorporated in the Republic of Mauritius
on 9 December 2009 as a Category 2 – Global Business
Licence Company.
Director appointments and resignations
During the year, there were appointments and resignations of
Directors as follows: Allan E Cook (Appointed 16 October
2017); Charles Campbell Green III (Resigned 22 September
2017).
Results and future prospects
A detailed review of the results, and future prospects is
included in the Operating and Financial Review.
Going concern
The Directors have considered whether there are any material
uncertainties that cast significant doubt on the Group’s ability
to continue as a going concern. In order to mitigate the
operating, commercial, legal, economic and financial risks to
which the Group is exposed, the Directors have put in place a
number of controls, reviews and procedures designed to
address these risks. The Group’s forecasts and projections,
taking account of reasonably possible changes in trading
performance, show that the Group is able to generate positive
cash flows from its operations and meet its liabilities as they
fall due. Additionally in March 2017 the Group successfully
completed its initial public bond offering raising US$600
million which matures in 2022 to refinance the Group’s loan
facilities and fund further development of its operations.
Therefore, the Directors have a reasonable expectation that
the Group has adequate resources to continue in operational
existence for the foreseeable future. Thus, they adopt the
going concern basis of accounting in preparing the annual
financial statements.
54 Helios Towers | Annual Report 2017
Governance Report Directors’ responsibilities statement
The Directors are responsible for the preparation and fair
presentation of these financial statements in accordance
with International Financial Reporting Standards (IFRSs).
International Accounting Standard (“IAS”) 1 requires that
financial statements present fairly for each financial period
the Group and Company’s financial position, financial
performance and cash flows. This requires faithful
representation of the effect of transactions, other events and
conditions in accordance with the definitions and recognition
criteria for assets, liabilities, income and expenses set out on
the International Accounting Standards Board’s ‘Framework
for the Preparation and Presentation of Financial Statements’.
The Directors are also responsible for maintaining an effective
system of internal control and risk management. In virtually all
situations, a fair presentation will be achieved by complying
with all applicable IFRSs. In preparing these financial
statements, the Directors are also required to:
•
•
select suitable accounting policies and then apply them
consistently;
present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• make judgements and accounting estimates that are
reasonable and prudent;
•
•
provide additional disclosures when compliance with
the specific requirements in IFRSs is insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the Group and
Company’s financial position and financial performance;
and
prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the Group
and Company will continue in business. The Directors are
responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable
them to ensure that the financial statements comply with
IFRS. They are also responsible for safeguarding the
assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.
Helios Towers | Annual Report 2017 55
Strategic ReportGovernance ReportFinancial StatementsOverview Glossary
We have prepared the annual report using a number of
conventions, which you should consider when reading
information contained herein as follows:
All references to “we”, “us”, “our”, “HT Group”, our “Group”
and the “Group” are references to Helios Towers Africa, Ltd
(the “Company”) and its subsidiaries taken as a whole.
“3G” means the third generation cellular telecommunications
networks that allow simultaneous use of voice and data
services, and provide high-speed data access using a range
of technologies.
“4G” or “4G LTE” means the fourth generation cellular
telecommunications networks that allow simultaneous use of
voice and data services, and provide high-speed data access
using a range of technologies (these speeds exceed those
available for 3G).
“Adjusted EBITDA” as loss for the period, adjusted for loss
for the period from discontinued operations, additional tax,
income tax, finance costs, other gains and losses, investment
income, share-based payment charges, loss on disposal of
property, plant and equipment, amortisation and impairment
of intangible assets, depreciation and impairment of property,
plant and equipment, deal costs relating to unsuccessful
tower acquisition transactions or successful tower acquisition
transactions that cannot be capitalised, and exceptional items.
Exceptional items are material items that are considered
exceptional in nature by management by virtue of their size
and/or incidence.
“Adjusted EBITDA margin” as Adjusted EBITDA divided
by revenue.
“Airtel” means Bharti Airtel International.
“anchor tenant” means the primary customer occupying
each tower.
“average remaining life” of certain agreements means the
average of the periods through the expiration of the term
under all such agreements.
“colocation tenant” means each additional tenant on a tower
in addition to the primary anchor tenant.
“Company” means Helios Towers Africa, Ltd.
“Congo Brazzaville” means the Republic of Congo,
Congo Brazzaville or Congo.
“contracted revenue” means revenue contracted under
our site agreements under all total tenancies, assuming no
escalation of maintenance fees and no renewal upon the
expiration of the current term.
“DRC” means Democratic Republic of Congo.
“EUR” or “€” means the currency introduced at the start of
the third stage of the European Economic and Monetary
Union pursuant to Article 123 of the treaty establishing the
European Community, as amended.
“G7 countries” means each of the United States, Canada,
France, Germany, Italy, Japan and the United Kingdom.
“Ghana” means the Republic of Ghana.
“gross debt” as our total borrowings (non-current loans and
current loans) excluding unamortised loan issue costs.
“Gross margin” means gross profit, add back site and
warehouse depreciation, divided by revenue.
“GSM” means Global System for Mobile Communication, a
standard for digital mobile communications.
“Guarantors” means the Company, HT Holdings, Ltd., HT
Congo Brazzaville Holdco Limited, Helios Towers DRC
S.A.R.L., Helios Towers Tanzania Limited, Helios Towers Congo
Brazzaville SASU, HT DRC Infraco S.A.R.L., HTT Infraco
Limited, Towers NL Coöperatief U.A., McTam International 1
B.V., Helios Towers Ghana Limited, HTG Managed Services
Limited and McRory Investment B.V. “Helios Towers DRC”
means Helios Towers DRC S.A.R.L.
“Helios Towers Ghana” means Helios Towers Ghana Limited.
“Helios Towers Tanzania” means Helios Towers Tanzania
Limited.
“build-to-suit” means sites constructed by our Group on
order by an MNO.
“HT Congo Brazzaville” means HT Congo Brazzaville Holdco
Limited.
“CAGR” means compound annual growth rate.
“IBS” means in-building cellular enhancement.
“capital expenditures” the additions of property, plant
and equipment.
“CODM” Chief Operating Decision Maker.
“IFRS” means International Financial Reporting Standards.
“ISA” means individual site agreement.
56 Helios Towers | Annual Report 2017
Governance Report “LTE” means Long-Term Evolution, designed to increase the
capacity and speed of mobile telephone networks according
to the standard developed by the 3GPP consortium,
frequently referred to as “4G” or “4th generation”. Some of the
key assumptions of the system are: (i) data transmission at
speeds faster than 3G; (ii) ready for new service types; (iii)
architecture simplified in comparison to 3G; and (iv) provisions
for open interfaces.
“maintenance capital expenditures” as capital expenditures
for periodic refurbishments and replacement of parts and
equipment to keep existing sites in service.
“maintained sites” refers to sites that are maintained by
the Company on behalf of a telecommunications operator
but which are not marketed by the Company to other
telecommunications operators for colocation (and in
respect of which the Company has no right to market).
“managed sites” refers to sites that the Company currently
manages but does not own due to either: (i) certain
conditions for transfer under the relevant acquisition
documentation, ground lease and/or law not yet being
satisfied; or (ii) the site being subject to an agreement with
the relevant MNO under which the MNO retains ownership
and outsources management and marketing to the Company.
“Mauritius” means the Republic of Mauritius.
“Millicom” means Millicom International Cellular SA.
“mobile penetration” means the measure of the amount of
active mobile phone subscriptions compared to the total
market for active mobile phones.
“MLA” means master lease agreement.
“MNO” means mobile network operator.
“MTN” means MTN Group Ltd.
“near investment grade” means one notch below investment
grade.
“site agreement” means the MLA and ISA executed by us
with our customers, which act as an appendix to the relevant
MLA and includes certain site-specific information (for
example, location and any grandfathered equipment).
“SLA” means service-level agreement.
“Tanzania” means the United Republic of Tanzania.
“telecommunications operator” means a company licensed
by the government to provide voice and data communications
services in the countries in which we operate.
“tenancy” means a space leased for installation of a base
transmission site and associated antennas.
“tenancy ratio” means the total number of tenancies divided
by the total number of our towers as of a given date and
represents the average number of tenants per site within a
portfolio.
“Tigo” refers to one or more subsidiaries of Millicom that
operate under the commercial brand “Tigo”.
“total colocations” means total colocation tenants.
“total sites” means total live towers, IBS sites or sites with
customer equipment installed on third-party infrastructure
that are owned and/or managed by the Company with each
reported site having at least one active customer tenancy as
of a given date.
“total tenancies” means the individual tower occupancies by
each customer as of a given date.
“tower sites” means ground-based towers and rooftop
towers and installations constructed and owned by us on real
property (including a rooftop) that is generally owned or
leased by us.
“U.S. dollars” or “$” refers to the lawful currency of the United
States of America.
“United States” or “U.S.” means the United States of America.
“net debt” means gross debt less cash and cash equivalents.
“Vodacom” means Vodacom Group Limited.
“Orange” means Orange S.A.
“Vodacom Tanzania” means Vodacom Tanzania Ltd.
“SHEQ” means Safety, Health, Environment and Quality.
“Zantel” means Zanzibar Telecom PLC.
“site acquisition” means a combination of MLAs, which
provide the commercial terms governing the provision of
tower space, and individual ISA, which act as an appendix to
the relevant MLA, and include site-specific terms for each site.
Helios Towers | Annual Report 2017 57
Strategic ReportGovernance ReportFinancial StatementsOverview Independent auditor’s report to
the shareholders of Helios Towers Africa, Ltd
Report on the audit of the consolidated and separate financial statements
Opinion
We have audited the consolidated and separate financial statements of Helios Towers Africa, Ltd. (the “Company”) and
its subsidiaries (collectively referred to as the “Group”) set out on pages 60 to 100, which comprise the consolidated and
separate statement of financial position as at 31 December 2017, and the consolidated and separate statement of profit or
loss and other comprehensive income, consolidated and separate statement of changes in equity and consolidated and
separate statement of cash flows for the year then ended, and notes to the financial statements, including a summary of
significant accounting policies.
In our opinion, the accompanying consolidated and separate financial statements give a true and fair view of the financial
position of the Group and the Company as at 31 December 2017, and of their consolidated and separate financial
performance and consolidated and separate cash flows for the year then ended in accordance with International Financial
Reporting Standards (IFRSs).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those
Standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated and Separate Financial
Statements section of our report. We are independent of the Group and the Company in accordance with the ethical
requirements of the International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional
Accountants. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Other information
The directors are responsible for the other information. The other information comprises of the Overview, Strategic Report
and Governance Report, but does not include the financial statements and our auditor’s report thereon.
Our opinion on the consolidated and separate financial statements does not cover the other information and we do not
express any form of assurance or conclusion thereon.
In connection with our audit of the consolidated and separate financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the financial statements
or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of directors for the consolidated and separate financial statements
The directors are responsible for the preparation and fair presentation of the consolidated and separate financial statements
in accordance with International Financial Reporting Standards and they are also responsible for such internal control as the
directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free
from material misstatement, whether due to fraud or error.
In preparing the consolidated and separate financial statements, the directors are responsible for assessing the Group’s and
the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group and or the Company or to
cease operations, or have no realistic alternative but to do so.
The directors are responsible for overseeing the Group’s and the Company’s financial reporting process.
58 Helios Towers | Annual Report 2017
Financial Statements Auditor’s responsibilities for the audit of the consolidated and separate financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated and separate financial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated and separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
–
Identify and assess the risks of material misstatement of the consolidated and separate financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
– Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s
and the Company’s internal control.
–
–
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related
disclosures made by management.
Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit
evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt
on the Group’s and the Company’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if
such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group and or the Company to
cease to continue as a going concern.
–
Evaluate the overall presentation, structure and content of the consolidated and separate financial statements, including
the disclosures, and whether the consolidated and separate financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
– Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities
within the group to express an opinion on the consolidated financial statements. We are responsible for the direction,
supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements
regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, related safeguards.
This report is made solely to the Company’s shareholders, as a body. Our audit work has been undertaken so that we might
state to the Company’s shareholders those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Deloitte
Chartered Accountants
11 February 2018
L. Yeung Sik Yuen, ACA
Licensed by FRC
Helios Towers | Annual Report 2017 59
Strategic ReportGovernance ReportFinancial StatementsOverview
Consolidated Statement of profit or loss
and other comprehensive income
For the year ended 31 December 2017
Revenue
Cost of sales
Gross profit
Administrative expenses
Loss on disposal of property, plant and equipment
Operating loss
Investment income
Other gains and losses
Finance costs
Loss before tax
Tax expenses
Loss after tax for the year
Other comprehensive loss:
Items that may be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
Loss attributable to:
Owners of the Company
Non-controlling interest
Loss for the year
Total comprehensive loss attributable to:
Owners of the Company
Non-controlling interest
Total comprehensive loss for the year
Notes
2017
US$’000
Restated
(IFRS 16)
2016
US$’000
3
344,957
(275,651)
282,507
(235,867)
69,306
46,640
(91,261)
(2,018)
(77,741)
(3,761)
(23,973)
(34,862)
706
21,797
(102,757)
216
(6,682)
(73,268)
(104,227)
(114,596)
(3,207)
(1,514)
(107,434)
(116,110)
5
8
24
9
10
(1,384)
(3,603)
(108,818)
(119,713)
(92,817)
(14,617)
(97,740)
(18,370)
(107,434)
(116,110)
(94,984)
(13,834)
(101,457)
(18,256)
(108,818)
(119,713)
60 Helios Towers | Annual Report 2017
The notes on pages 68 to 100 form part of these financial statements.
Financial Statements Company Statement of profit or loss
and other comprehensive income
For the year ended 31 December 2017
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating loss
Investment income
Finance costs
Loss before tax
Tax expenses
Loss after tax and total comprehensive loss for the year
Notes
2017
US$’000
2016
US$’000
–
–
–
683
–
683
(40,131)
(35,293)
(40,131)
132
(677)
(34,610)
–
(1,485)
(40,676)
(36,095)
–
–
(40,676)
(36,095)
5
8
9
10
The notes on pages 68 to 100 form part of these financial statements.
Helios Towers | Annual Report 2017 61
Strategic ReportGovernance ReportFinancial StatementsOverview
Consolidated Statement of financial position
As at 31 December 2017
Non-current assets
Intangible assets
Property, plant and equipment
Right-of-use assets
Investments
Derivative financial assets
Current assets
Inventories
Trade and other receivables
Prepayments
Cash and cash equivalents
Total assets
Equity
Issued capital and reserves
Share capital
Share premium
Stated capital
Other reserves
Minority interest buy-out reserve
Translation reserve
Accumulated losses
Equity attributable to owners
Non-controlling interest
Total equity
Current liabilities
Trade and other payables
Loans
Short-term lease liabilities
Minority interest buy-out liability
Non-current liabilities
Long-term lease liabilities
Loans
Total liabilities
Total equity and liabilities
Notes
2017
US$’000
11
12a
12b
13
25
14
15
16
17
17,961
705,700
115,302
132
23,917
863,012
9,538
108,491
23,403
119,700
261,132
Restated
(IFRS 16)
2016
US$’000
35,556
655,140
112,725
132
1,393
804,946
19,503
126,929
20,466
133,737
300,635
1,124,144 1,105,581
18
909,154
186,951
909,134
186,795
1,096,105 1,095,929
(11,693)
(54,429)
(77,486)
(544,355)
(12,778)
–
(79,653)
(741,757)
261,917
–
261,917
147,324
17,254
20,452
–
185,030
96,097
581,100
677,197
862,227
407,966
(36,322)
371,644
163,857
60,516
20,934
57,886
303,193
90,111
340,633
430,744
733,937
1,124,144 1,105,581
19
20
21
24
21
20
Approved and authorised for issue by the Board on 11 February 2018 and signed on its behalf by
Kashyap Pushpkant Pandya
Simon David Pitcher
The notes on pages 68 to 100 form part of these financial statements.
62 Helios Towers | Annual Report 2017
Financial Statements Company Statement of financial position
As at 31 December 2017
Non-current assets
Intangible assets
Investments
Current assets
Trade and other receivables
Prepayments
Cash and cash equivalents
Total assets
Equity
Issued capital and reserves
Share capital
Share premium
Stated capital
Other reserves
Accumulated losses
Total equity
Current liabilities
Trade and other payables
Total liabilities
Total equity and liabilities
Notes
2017
US$’000
2016
US$’000
11
13
15
16
17
176
430,677
430,853
482,802
221
18,314
501,337
932,190
13,244
430,677
443,921
434,540
5,690
87,553
527,783
971,704
18
909,154
186,951
909,134
186,795
1,096,105 1,095,929
(9,835)
(124,213)
(9,835)
(164,889)
921,381
961,881
19
10,809
10,809
9,823
9,823
932,190
971,704
Approved and authorised for issue by the Board on 11 February 2018 and signed on its behalf by
Kashyap Pushpkant Pandya
Simon David Pitcher
The notes on pages 68 to 100 form part of these financial statements.
Helios Towers | Annual Report 2017 63
Strategic ReportGovernance ReportFinancial StatementsOverview
Consolidated Statement of changes in equity
For the year ended 31 December 2017
Share
capital
US$’000
Share
premium
US$’000
Stated
capital
US$’000
Other
reserves
US$’000
Minority
interest
buy–out
reserves
US$’000
Translation
reserve
US$’000
Accumulated
losses
US$’000
Attributable
to the
owners of
the parent
US$’000
Non–
controlling
interest
(NCI)
US$’000
Total
equity
US$’000
750,394
131,239
881,633
(11,283)
(54,063)
(77,102)
(437,283)
301,902
(18,906)
282,996
–
–
–
–
–
3,333
(9,332)
(5,999)
500
(5,499)
750,394
158,740
–
–
–
131,239
55,556
–
–
–
881,633
214,296
–
–
–
(11,283)
–
–
(410)
–
(54,063)
–
–
–
(366)
(73,769)
–
–
–
–
(446,615)
–
–
–
–
295,903
214,296
–
(410)
(366)
(18,406)
–
340
–
–
277,497
214,296
340
(410)
(366)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(97,740)
(97,740)
(18,370)
(116,110)
(3,717)
–
(3,717)
114
(3,603)
(3,717)
(97,740)
(101,457)
(18,256)
(119,713)
909,134
186,795 1,095,929
(11,693)
(54,429)
(77,486)
(544,355)
407,966
(36,322)
371,644
20
–
–
–
–
–
–
–
156
–
176
–
–
(1,085)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(2,167)
(92,817)
–
176
(1,085)
(92,817)
(2,167)
–
–
176
(1,085)
(14,617)
783
(107,434)
(1,384)
(2,167)
–
(92,817)
(36,658)
(94,984)
(36,658)
(13,834)
50,156
(108,818)
13,498
909,154
186,951 1,096,105
(12,778)
–
(79,653)
(741,757)
261,917
–
54,429
–
–
(13,498)
(54,429)
(13,498)
–
–
–
–
(13,498)
–
261,917
Balance at 1 January 2016
(as previously reported)
Effect of transition to
IFRS16: Leases
Balance at 1 January 2016
restated (IFRS16)
Issue of share capital
Capital from NCI
Share issue costs
Minority buy-out reserves
Loss for the year
Other comprehensive loss
Total comprehensive loss
for the year
Balance at
31 December 2016
Issue of share capital
Share issue costs
Loss for the year
Other comprehensive loss
Total comprehensive loss
for the year
Acquisition of NCI
Premium on acquisition of
NCI
Minority buy-out reserves
Balance at 31 December
2017
Other reserves relate to the costs incurred in issuing equity. These costs include registration and other regulatory fees,
amounts paid to legal, accounting and other professional advisors.
Minority interest buy-out reserves are fair value adjustments which arise when options are granted to Vodacom to exchange
shares in Helios Towers Tanzania Limited for shares in Helios Towers Africa, Ltd. The option expired in October 2017 when
the Vodacom shares were acquired by Helios Towers Holding Limited. See note 24.
Translation reserve relates to the translation of the financial statements of overseas subsidiaries in to the consolidated
financial statements.
64 Helios Towers | Annual Report 2017
Financial StatementsThe notes on pages 68 to 100 form part of these financial statements. Company Statement of changes in equity
For the year ended 31 December 2017
Balance at 1 January 2016
Issue of share capital
Other reserves issued
Loss and total comprehensive loss
for the year
Balance at 31 December 2016
Issue of share capital
Loss and total comprehensive loss
for the year
Share
capital
US$’000
Share
premium
US$’000
Stated
capital
US$’000
Other
reserves
US$’000
Accumulated
losses
US$’000
Total
equity
US$’000
750,394
158,740
–
131,239
55,556
–
881,633
214,296
–
(9,770)
–
(65)
(88,118)
–
–
783,745
214,296
(65)
–
–
–
–
(36,095)
(36,095)
909,134
20
186,795 1,095,929
176
156
(9,835)
–
(124,213)
–
961,881
176
–
–
–
–
(40,676)
(40,676)
Balance at 31 December 2017
909,154
186,951 1,096,105
(9,835)
(164,889)
921,381
Other reserves relates to the costs incurred in issuing equity. These costs include registration and other regulatory fees,
amounts paid to legal, accounting and other professional advisors.
Helios Towers | Annual Report 2017 65
Strategic ReportGovernance ReportFinancial StatementsOverviewThe notes on pages 68 to 100 form part of these financial statements.
Consolidated Statement of cash flows
For the year ended 31 December 2017
Cash flows from operating activities
Loss for the year before taxation
Adjustments for:
Other gains and losses
Finance costs
Investment income
Depreciation and amortisation
Loss on disposal of property, plant and equipment
Movement in working capital:
(Increase)/decrease in inventories
Decrease/(increase) in trade and other receivables
Decrease/(increase) in prepayments
(Decrease)/increase in trade and other payables
Cash generated from operations
Interest paid
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Payments to acquire property, plant and equipment
Payments to acquire intangible assets
Proceeds on disposal on assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Gross proceeds from issue of equity share capital
Equity issuance costs
Payments for buy-back of shares
Borrowing drawdowns
Loan financing costs
Borrowing repayments
Repayment of lease liabilities
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Foreign exchange on translation movement
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
66 Helios Towers | Annual Report 2017
Notes
2017
US$’000
Restated
(IFRS 16)
2016
US$’000
24
9
8
11, 12
(104,227)
(114,596)
(21,797)
102,757
(706)
148,926
2,018
(2,548)
7,632
5,968
(27,567)
110,456
(51,633)
(1,251)
6,682
73,268
(216)
129,455
3,761
387
(46,534)
(5,422)
20,780
67,565
(41,626)
(635)
57,572
25,304
(166,711)
(3,857)
249
704
(273,766)
(22,411)
114
216
(169,615)
(295,847)
163
–
(58,556)
600,000
(24,079)
(407,983)
(11,675)
184,297
(410)
–
173,612
(8,922)
(23,485)
(8,353)
97,870
316,739
(14,173)
46,196
136
133,737
119,700
(749)
88,290
133,737
Financial StatementsThe notes on pages 68 to 100 form part of these financial statements. Company Statement of cash flows
For the year ended 31 December 2017
Cash flows from operating activities
Loss for the year before taxation
Adjustments for:
Finance costs
Investment income
Amortisation
Movement in working capital:
Decrease/(increase) in trade and other receivables
Decrease/(increase) in prepayments
(Increase)/decrease in trade and other payables
Net cash used in operating activities
Cash flows from investing activities
Payment to acquire intangible asset
Net cash used in investing activities
Cash flows from financing activities
Gross proceeds from issue of equity share capital
Equity issuance costs
Net cash generated from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Notes
2017
US$’000
2016
US$’000
(40,676)
(36,095)
9
8
11
677
(132)
13,210
1,485
–
16,982
1,552
3,490
(47,345)
(129,301)
(5,451)
5,480
(69,224)
(146,900)
(178)
(178)
163
–
163
(69,239)
87,553
18,314
(12)
(12)
184,297
(65)
184,232
37,320
50,233
87,553
Helios Towers | Annual Report 2017 67
Strategic ReportGovernance ReportFinancial StatementsOverviewThe notes on pages 68 to 100 form part of these financial statements.
Notes to the Financial Statements
For the year ended 31 December 2017
1. Statement of compliance and presentation of financial statements
Helios Towers Africa, Ltd (the “Company”) is a limited company incorporated and domiciled in the Republic of Mauritius.
The Company and entities controlled by the Company (its subsidiaries, together the “Group”) are disclosed in note 13. The
Group and the Company’s financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRSs) issued by the International Accounting Standards Board (IASB). The Company holds a Category 2 Global
Business Licence issued by the Financial Services Commission (“FSC”). The principal accounting policies adopted by the
Group and the Company are set out in note 2.
2. Accounting Policies
Basis of preparation
The financial statements have been prepared on the historical cost basis, except for the revaluation of certain financial
instruments that are measured at fair value at the end of each reporting period. The financial statements are presented in
United States Dollars (US$). Historical cost is generally based on the fair value of the consideration given in exchange for
goods and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether that price is directly observable or estimated using
another valuation technique. In estimating the fair value of an asset or a liability, the Group and the Company takes into
account the characteristics of the asset or liability if market participants would take those characteristics into account when
pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these
consolidated and separate financial statements is determined on such a basis, and measurements that have some similarities
to fair value but are not fair value, such as net realisable value in IAS 2 or value in use in IAS 36.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree
to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
–
–
–
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
The principal accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the
Company (its subsidiaries) made up to 31 December each year. Control is achieved when the Company:
–
–
–
has the power over the investee;
is exposed, or has rights, to variable return from its involvement with the investee; and
has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to
one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company
loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other comprehensive income from the date the Company gains control until
the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and to the
non-controlling interests. Total comprehensive income of the subsidiaries is attributed to the owners of the Company and to
the non-controlling interests even if this results in the non-controlling interests having a deficit balance.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into
line with the Group’s accounting policies.
All intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between the members
of the Group are eliminated on consolidation.
68 Helios Towers | Annual Report 2017
Financial Statements 2. Accounting Policies (continued)
Basis of consolidation (continued)
Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. Those interests of non-
controlling shareholders that are present ownership interests entitling their holders to a proportionate share of net assets
upon liquidation may initially be measured at fair value or at the non-controlling interests’ proportionate share of the fair
value of the acquiree’s identifiable net assets. The choice of measurement is made on an acquisition-by-acquisition basis.
Other non-controlling interests are initially measured at fair value. Subsequent to acquisition, the carrying amount of
non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of
subsequent changes in equity.
Changes in the Group’s interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions.
The carrying amount of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their
relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted
and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the
Company.
Going concern
The Group’s business activities, together with factors likely to affect its future development, performance and position
are considered by the Directors on an annual basis. In addition, notes 20 and 25 include details of the Group’s treasury
activities, long-term funding arrangements, financial instruments and financial risk management activities.
The Group has sufficient financial resources which, together with internally generated cash flows, will continue to provide
sufficient sources of liquidity to fund its current operations, including its contractual and commercial commitments as set
out in note 20. The Directors assess forecast and make financing and liquidity reviews on a regular basis.
The Directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the financial statements.
Changes in accounting policies
The Group has early adopted IFRS 15: Revenue from Contracts with Customers and IFRS 16: Leases under the fully
retrospective approach which has resulted in changes in accounting policies. The adoption of IFRS 15 has had no impact on
the consolidated and separate financial statements other than with respect to disclosures. This is principally because the
service contracts were already well aligned with the performance obligation separation requirements of IFRS 15. As such no
restatement of balances previously presented are required in respect of this standard. The adoption of IFRS 16 has resulted in
restatement of balances previously presented, the impact of which is explained below.
Revenue recognition
In the current year, the Group has applied IFRS 15 Revenue from Contracts with Customers (as amended in April 2016) in
advance of its effective date. IFRS 15 introduces a 5-step approach to revenue recognition. Far more prescriptive guidance
has been added in IFRS 15 to deal with specific scenarios. Details of these new requirements as well as their impact on the
Group’s consolidated financial statements are described below.
The Group has applied IFRS 15 in accordance with the fully retrospective transitional approach without using the practical
expedients for completed contracts in IFRS 15.C5(a), and (b), or for modified contracts in IFRS 15.C5(c) or using the
expedient in IFRS 15.C3(d) allowing both non-disclosure of the amount of the transaction price allocated to the remaining
performance obligations, and an explanation of when it expects to recognise that amount as revenue for all reporting
periods presented before the date of initial application.
Helios Towers | Annual Report 2017 69
Strategic ReportGovernance ReportFinancial StatementsOverview 2. Accounting Policies (continued)
Revenue recognition (continued)
IFRS 15 uses the terms ‘contract asset’ and ‘contract liability’ to describe what might more commonly be known as ‘accrued
income’ and ‘deferred income’, however the Standard does not prohibit an entity from using alternative descriptions in the
statement of financial position. The Group has not adopted the terminology used in IFRS 15 to describe such balances.
The Group’s accounting policies for its revenue stream are disclosed in detail below. Apart from providing more extensive
disclosures on the Group’s revenue transactions, the application of IFRS 15 has not had a significant impact on the financial
position and financial performance of the Group.
The Group recognises revenue from the rendering of tower services provided by utilisation of the Group’s tower
infrastructure pursuant to written contracts with its customers. Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for services provided in the normal course of business, VAT and
other sales-related taxes. Revenue is reduced for estimated and agreed liquidated damages resulting from failure to meet
the agreed service performance levels set out in the contract.
The Group provides tower and related services for the utilisation of its tower infrastructure to mobile and other
telecommunication operators. Revenue includes fees for the provision of tower infrastructure, power escalations and tower
service contracts. These services are recognised as the performance obligation is satisfied over time.
Customers are usually billed in advance creating a contract liability which is then recognised as the performance obligation
is met over a straight-line basis. Revenue related to power escalations is recognised when the escalation is calculated in
accordance with the contractual terms.
Though multiple performance obligations arises as a result of the provision of these services, the Group considers it
reasonable to combine the provision of these tower services into a single performance obligation as this does not impact
the ultimate pattern of revenue recognition as they are all recognised over time.
Lessee accounting
Under previous accounting standard IAS 17: Leases, the Group was required to classify its leases as either finance
leases or operating leases and account for those two types of leases differently.
The Group holds leases primarily on land, buildings and motor vehicles used in the ordinary course of business. Based on the
accounting policy applied the Group recognizes a right-of-use asset and a lease liability at the commencement date of the
contract for all leases conveying the right to control the use of an identified asset for a period of time. The commencement
date is the date on which a lessor makes an underlying asset available for use by a lessee.
The right-of-use assets are initially measured at cost, which comprises:
–
–
–
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date, less any lease incentives received; and,
any initial direct costs incurred by the lessee.
After the commencement date the right-of-use assets are measured at cost less any accumulated depreciation and any
accumulated impairment losses and adjusted for any re-measurement of the lease liability.
The Group depreciates the right-of-use asset from the commencement date to the end of the lease term.
The lease liability is initially measured at the present value of the lease payments that are not paid at that date.
These include:
–
–
fixed payments, less any lease incentives receivable; and
variable lease payments that depend on a fixed rate, as at the commencement date.
Variable lease payments not included in the initial measurement of the lease liability are recognised in the consolidated
statement of profit or loss as they arise.
70 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017
2. Accounting Policies (continued)
Lessee accounting (continued)
The lease payments are discounted using the incremental borrowing rate at the commencement of the lease contract
or modification. Generally it is not possible to determine the interest rate implicit in the land and building leases. The
incremental borrowing rate is estimated taking account of the economic environment of the lease, the currency of
the lease and the lease term. The lease term determined by the Group comprises:
–
–
–
non-cancellable period of lease contracts,
periods covered by an option to extend the lease if the Group is reasonably certain to exercise that option; and
periods covered by an option to terminate the lease if the Group is reasonably certain not to exercise that option.
After the commencement date the Group measures the lease liability by:
–
–
–
increasing the carrying amount to reflect interest on the lease liability;
reducing the carrying amount to reflect lease payments made; and
re-measuring the carrying amount to reflect any reassessment or lease modifications.
Interest expense
Interest expense is recognised as interest accrues, using the effective interest method, to the net carrying amount of the
financial liability.
The effective interest method is a method of calculating the amortised cost of a financial asset/financial liability and of
allocating interest income/interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash receipts/payments through the expected life of the financial assets/financial liabilities, or,
where appropriate, a shorter period.
Retirement benefit costs
Payments to defined contribution retirement benefit schemes are recognised as an expense when employees have rendered
service entitling them to the contributions. Payments made to state-managed retirement benefit schemes are dealt with as
payments to defined contribution schemes where the Group’s obligations under the schemes are equivalent to those arising
in a defined contribution retirement benefit scheme.
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
statement of profit or loss and other comprehensive income because it excludes items of income or expense that are taxable
or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for
current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is
accounted for using the statement of financial position liability method. Deferred tax liabilities are generally recognised for all
taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will
be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if
the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where
the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such
investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits
against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Helios Towers | Annual Report 2017 71
Strategic ReportGovernance ReportFinancial StatementsOverview
2. Accounting Policies (continued)
Deferred tax (continued)
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is
realised based on tax laws and rates that have been enacted or substantively enacted at the reporting date. Deferred tax is
charged or credited in the profit or loss, except when it relates to items charged or credited in other comprehensive income,
in which case the deferred tax is also dealt with in other comprehensive income.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in
which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to
settle its current tax assets and liabilities on a net basis.
Current tax and deferred tax for the year
Current and deferred tax are recognised in the statement of profit or loss, except when they relate to items that are
recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also
recognised in other comprehensive income or directly in equity respectively.
Foreign currency exchange
The individual financial statements of each Group company are presented in the currency of the primary economic
environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the
results and financial position of each Group company are expressed in United States Dollars (US$), which is the functional
currency of the Company, and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity’s functional
currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at
the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of
historical cost in a foreign currency are not retranslated.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations
are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average
exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange
rates at the date of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive
income and accumulated in a separate component of equity (attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group’s entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign operation, or a partial disposal of an interest in a joint
arrangement or an associate that includes a foreign operation of which the retained interest become a financial assets), all of
the exchange differences accumulated in a separate component of equity in respect of that operation attributable to the
owners of the Company are reclassified to profit or loss.
In addition, in relation to a partial disposal of a subsidiary that includes a foreign operation that does not result in the Group
losing control over the subsidiary, the proportionate share of accumulated exchange differences are re-attributed to non-
controlling interests and are not recognised in profit or loss. For all other partial disposals (i.e. partial disposals of associates
or joint arrangements that do not result in the Group losing significant influence or joint control), the proportionate share of
the accumulated exchange differences is reclassified to profit or loss.
72 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 2. Accounting Policies (continued)
Property, plant and equipment
Items of property, plant and equipment are stated at cost of acquisition or production cost less accumulated depreciation
and impairment losses, if any.
Assets in the course of construction for production, supply or administrative purposes, are carried at cost, less any
recognised impairment loss. Cost includes material and labour and professional fees in accordance with the Group’s
accounting policy. Depreciation of these assets, on the same basis as other assets, commences when the assets are ready
for their intended use.
Freehold land is not depreciated.
Right-of-use assets
Site Assets – Towers
Site Assets – Generators
Site Assets – Plant & Machinery
Fixtures and Fittings
IT Equipment
Motor Vehicles
Leasehold Improvement
Up to 60 years
Up to 15 years
8 years
3–5 years
3 years
3 years
5 years
5–10 years
Directly attributable costs of acquiring tower assets are capitalised together with the towers acquired and depreciated over
a period of up to 15 years in line with the assets.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected
to arise from continued use of the asset. Any gain or loss arising on disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sale proceeds and the carrying amount of the asset and is
recognised in profit and loss.
Intangible assets
Contract acquired related intangible assets are amortised on a straight-line basis over the life of the contract. Other
intangible assets are amortised on a straight-line basis over their estimated lives of 3–10 years.
An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal.
Gains or losses arising from derecognition of an intangible asset, measured as the difference between the net disposal
proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.
Impairment of tangible and intangible assets
At each reporting date, the Directors review the carrying amounts of its tangible and intangible assets to determine whether
there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not generate
cash flows that are independent from other assets, the Directors estimate the recoverable amount of the cash-generating
unit to which the asset belongs. The recoverable amount is the higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset for which the
estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in profit or loss.
Helios Towers | Annual Report 2017 73
Strategic ReportGovernance ReportFinancial StatementsOverview
2. Accounting Policies (continued)
Investments
Investments are included in the financial statements initially at cost. Cost comprises all the costs associated with the
acquisition of the investment including the fair value of the consideration for the investment instruments, any local taxes and
costs associated with investigation and negotiating the acquisition. At the end of each financial reporting year, the Directors
review the investment instruments to determine the recoverable amount. If the recoverable amount is considered to be less
than cost, an impairment provision is recognised.
Costs incurred in the investigation of prospective investments are expensed in the year in which they are incurred. Should
prospective investments become subsidiaries, the directly attributable costs of investment are capitalised as part of the cost
of the investment.
Inventory
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and those overheads that
have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted
average method.
Trade and other receivables
Trade receivables are recognised by the Group and the Company carried at original invoice amount less an allowance for any
uncollectible or impaired amounts.
An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written off
when they are deemed to be non-collectable.
Other receivables are recognised at fair value. Subsequent measurement is at amortised cost using the effective interest
method, less any impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and short-term deposits. Short-term deposits are defined as
deposits with an initial maturity of three months or less.
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as
a component of cash and cash equivalents for the purposes of the statement of cash flows.
Derivative financial instruments
Short-term debtors and creditors are treated as financial assets or liabilities. The Group does not trade in financial
instruments. The Group enters into derivative financial instruments to manage its exposure to interest rate risk, using interest
rate swaps.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently
remeasured to their fair value at each reporting date. The resulting gain or loss is recognised in profit or loss immediately.
A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is
recognised as a financial liability. A derivative is presented as a non-current asset or a non-current liability if the remaining
maturity of the instrument is more than 12 months and it is not expected to be realised or settled within 12 months. Other
derivatives are presented as current assets or current liabilities.
Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their
risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair
value through profit or loss. Embedded derivatives are disclosed separately in the statement of financial position.
Other financial liabilities
Other financial liabilities, including borrowings, are initially measured at fair value, net of transaction costs.
Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest
expense recognised on an effective yield basis.
74 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 2. Accounting Policies (continued)
Derecognition of financial liabilities
The Group and the Company derecognise financial liabilities when, and only when, the Group’s and the Company’s
obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability
derecognised and the consideration paid and payable is recognised in profit or loss.
Related parties
For the purpose of these financial statements, parties are considered to be related to the Group if they have the ability,
directly or indirectly to control the Group or exercise significant influence over the Group in making financial or operating
decisions, or vice-versa, or where the Group is subject to common control or common significant influence. Related parties
may be individuals or other entities.
Non-controlling interest
Non-controlling interest (NCI) is the portion of equity ownership in subsidiaries not attributable to Helios Towers Africa, Ltd.
Up to October 2017, Helios Towers Africa, Ltd held a 75.9% controlling interest in Helios Towers Tanzania Ltd, a company
incorporated in the Republic of Tanzania, and consolidated the subsidiaries’ financial results. In October 2017, the option to
acquire the NCI expired. See note 24.
Deferred income
Deferred income is recognised when payments are received from customers in advance of services being provided. The
Group policy is to bill customer’s in advance, thus creating deferred income. The deferred income is included as a current
liability within trade and other payables.
New accounting pronouncement
The Group has adopted all of the new and revised Standards and Interpretations issued by the International Accounting
Standards Board (“IASB”) and International Financial Reporting Interpretations Committee (“IFRIC”) of the IASB that are
relevant to its operations and effective for accounting periods covered by the financial statements. IFRS 15; Revenue from
contracts with customers, and IFRS 16: Leases have been adopted early on a fully retrospective basis covering the whole of
the historical financial information period. The adoption of IFRS 16 has had a material effect on the amounts reported. The
impact is analysed in note 29. IFRS 15 has not had an impact on the consolidated and separate financial statements.
New and revised IFRSs in issue but not yet effective
At the date of authorisation of the historical financial information, the Group have not applied the following new and revised
IFRSs that have been issued but are not yet effective:
IFRS 9 Financial Instruments (effective 1 January 2018)
The Group plans to adopt IFRS 9: Financial Instruments on the required effective date. So far the Group has performed a
high-level assessment of the impact of all three aspects of IFRS 9; classification and measurement, impairment, hedge
accounting. This preliminary assessment is based on currently available information and may be subject to changes arising
from further detailed analysis or additional reasonable and supportable information which might be available to the Group in
the future. Overall, the Group expects no material impact on its statement of financial position or equity.
Critical accounting judgements and key sources of estimation uncertainty
In the application of the Group’s accounting policies, which are described above, the directors are required to make
judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make
estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical experience and other factors that are considered
to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision
and future periods if the revision affects both current and future period.
Critical judgements in applying the group’s accounting policies
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below),
that the directors, have made in the process of applying the Group’s accounting policies and that have the most significant
effect on the amounts recognised in financial statements.
Helios Towers | Annual Report 2017 75
Strategic ReportGovernance ReportFinancial StatementsOverview 2. Accounting Policies (continued)
Revenue recognition
Revenue is recognised as service revenue in accordance with IFRS 15: Revenue from contracts with customers. In arriving at
this assessment the Directors concluded that there is not an embedded lease because its contracts permit it, subject to
certain conditions, to relocate customer’s equipment on its towers in order to accommodate other tenants and therefore the
contract does not provide the customer with the right to a specific location on the tower.
Business combinations
From time to time, the Group acquires a portfolio of towers, comprising the tower infrastructure and other associated assets.
The Directors assess each acquisition on the basis of its purchase agreement and the substance of the transaction to
determine if it is considered to be a business combination in accordance with IFRS 3. To date, such portfolio acquisitions do
not meet the definition of a business under IFRS 3 since they do not represent integrated sets of activities and assets that
are capable of being conducted and managed independently, and consequently have been accounted for as an asset
acquisition under IAS 16. Accordingly, no goodwill is recognised and the costs incurred are capitalised as part of the costs of
acquisition of the towers.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting date, that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year, are discussed below.
Fair value of derivative financial instruments
Derivative financial instruments are held at fair value through profit and loss. In estimating the fair value of an asset or a
liability, the Group uses market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group
engages a third party qualified valuer to perform the valuation. Management works closely with the qualified external valuer
to establish the appropriate valuation techniques and inputs to the model. Information about the valuation techniques and
inputs used in determining the fair value of the derivative financial instrument is disclosed in note 25.
Providing for doubtful debts
The Group provides services to business customers on credit terms. Certain debts may not be recovered due to default of
our customers. Estimates, based upon historical experience are used in determining the level of debt that we do not expect
to be collected.
76 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 3. Segmental reporting
The following segmental information is presented in a consistent format with management information considered by the
CEO of each operating segment, and the CEO and CFO of the Group, who are considered to be the chief operating decision
makers (CODM). Operating segments are determined based on geographical location. All operating segments have the
same business of operating and maintaining telecoms towers and renting space on such towers. Accounting policies are
applied consistently for all operating segments. The segment operating result used by CODM is Adjusted EBITDA, which is
defined in note 4.
31 December 2017
Revenue
Gross margin
Adjusted EBITDA
Adjusted EBITDA margin
Financing costs
Interest costs
Foreign exchange differences
31 December 2016
Revenue
Gross margin
Adjusted EBITDA
Adjusted EBITDA margin
Financing costs
Interest costs
Foreign exchange differences
Ghana
US$’000
40,144
56%
17,821
44%
Tanzania
US$’000
141,230
56%
66,839
47%
DRC
US$’000
140,156
55%
66,530
47%
Congo
Brazaville
US$’000
23,427
61%
9,783
42%
Total
operating
companies
US$’000
344,957
56%
160,973
47%
Corporate
US$’000
–
–
(15,011)
–
Group
total
US$’000
344,957
56%
145,962
42%
(4,528)
(4,470)
(65,324)
(7,732)
(51,053)
9
(10,760)
6,117
(131,665)
(6,076)
32,137
2,847
(99,528)
(3,229)
(8,998)
(73,056)
(51,044)
(4,643)
(137,741)
34,984
(102,757)
Ghana
US$’000
34,393
46%
11,072
32%
Tanzania
US$’000
122,301
52%
51,308
42%
DRC
US$’000
102,171
54%
46,671
46%
Congo
Brazaville
US$’000
23,642
62%
10,944
46%
Total
operating
companies
US$’000
282,507
53%
119,995
42%
Corporate
US$’000
–
–
(14,834)
–
Group
total
US$’000
282,507
53%
105,161
37%
(2,374)
(3,029)
(69,052)
(2,676)
(21,534)
(1,177)
(5,305)
(1,522)
(98,265)
(8,404)
34,793
(1,392)
(63,472)
(9,796)
(5,403)
(71,728)
(22,711)
(6,827)
(106,669)
33,401
(73,268)
Capital Additions, Depreciation and Amortisation
Ghana
Tanzania
Congo Brazzaville
Democratic Republic of Congo
Total Operating Company
Corporate
Total
Right-of-use assets
Ghana
Tanzania
Congo Brazzaville
Democratic Republic of Congo
Total
Year ended
31 December 2017
Year ended
31 December 2016
Capital
Additions
US$’000
13,228
66,273
10,209
80,887
Depreciation
and
Amortisation
US$’000
7,955
51,592
11,651
53,294
Capital
Additions
US$’000
6,905
63,043
8,343
224,942
Depreciation
and
Amortisation
US$’000
6,503
44,947
10,238
40,109
170,597
124,492
303,233
101,797
142
13,210
30,000
16,997
170,739
137,702
333,233
118,794
Year ended
31 December 2017
Year ended
31 December 2016
Capital
Additions
US$’000
532
7,611
466
5,212
Depreciation
US$’000
712
6,466
792
3,254
13,821
11,224
Capital
Additions
US$’000
2,373
7,980
853
15,284
26,490
Depreciation
US$’000
723
6,450
904
2,584
10,661
Helios Towers | Annual Report 2017 77
Strategic ReportGovernance ReportFinancial StatementsOverview 4. Adjusted EBITDA
The segment operating result used by the chief operating decision makers is Adjusted EBITDA.
Management define Adjusted EBITDA as loss for the year, adjusted for loss for the year from discontinued operations,
additional tax, income tax, finance costs, other gains and losses, investment income, share-based payment charges, loss on
disposal of property, plant and equipment, amortisation and impairment of intangible assets, depreciation and impairment
of property, plant and equipment, deal costs relating to unsuccessful tower acquisition transactions or successful tower
acquisition transactions that cannot be capitalised and exceptional items. Exceptional items are items that are considered
exceptional in nature by management by virtue of their size and/or incidence. Adjusted EBITDA is reconciled to loss before
tax as follows:
The Group
Adjusted EBITDA
Adjustments applied to give Adjusted EBITDA
Exceptional items:
Restructuring costs(i)
Tanzanian IPO(ii)
Exceptional project costs(iii)
Deal costs for aborted acquisitions(iv)
Loss on disposal of assets
Other gains and losses (note 24)
Recharged depreciation(v)
Depreciation of property, plant and equipment
Amortisation of intangibles
Investment income
Finance cost
Loss before tax
2017
US$’000
Restated
(IFRS 16)
2016
US$’000
145,962
105,161
(3,215)
(1,481)
(9,780)
(3,306)
(2,018)
21,797
(1,209)
(127,148)
(21,778)
706
(102,757)
(4,318)
–
–
(1,414)
(3,761)
(6,682)
(1,075)
(107,390)
(22,065)
216
(73,268)
(104,227)
(114,596)
(i) Restructuring costs reflect specific actions taken by management to improve the Group’s future profitability and mainly comprise the costs of an operational excellence
programme where management worked to optimise operational headcount to gain efficiencies and adopt robust internal compliance best practices, and have therefore
incurred certain severance and office closure costs in 2017. Management consider such costs to be exceptional as they are not representative of the trading performance
of the Group’s operations.
(ii) Advisory and other costs relating to the Group’s preparation for the IPO of HTT Infraco, the Group’s primary operating subsidiary in Tanzania.
(iii) Exceptional project costs are in relation to the exploration of strategic options for the Group including, but not limited to, a potential London Stock Exchange (LSE)
listing.
(iv) Deal costs relate to unsuccessful tower acquisition transactions or successful tower acquisition transactions that cannot be capitalised. These mainly comprise
professional fees and travel costs incurred while investigating potential tower acquisitions. Such costs are expensed when the potential tower acquisition does not
proceed. Management have excluded such costs from Adjusted EBITDA on the basis that they are not representative of the trading performance of the Group’s
operations.
(v) The Group incurs cost charged to it through a service contract from Helios Towers Africa LLP. Management consider that the depreciation element of the charge should
be removed from adjusted EBITDA as it is depreciation in nature.
78 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 5. Operating loss
Operating loss is stated after charging the following:
Cost of inventory expensed
Auditor’s remuneration:
– Audit and audit related services
– Non-audit fees
Depreciation and amortisation
Cost associated with aborted investments
Staff costs
Group
Company
2017
US$’000
62,634
1,783
1,847
148,926
3,306
13,852
Restated
(IFRS 16)
2016
US$’000
52,556
735
540
129,455
1,414
14,576
2017
US$’000
2016
US$’000
–
–
90
–
13,210
–
900
35
–
16,982
2,181
1,048
Amortisation of intangible assets is presented in administrative expenses in the statement of profit or loss. 2016 has been
restated with respect to the fully retrospective transition to IFRS 16 during the year ended 31 December 2017, meaning that
operating leases are no longer recognised.
Audit and audit related services include non-recurring fees of US$1.2 million in respect of exceptional project costs
(see note 4).
6. Staff costs
Staff costs consist of the following components:
Wages and salaries
Social security costs
Group
Company
2017
US$’000
13,586
266
13,852
2016
US$’000
14,327
249
14,576
2017
US$’000
900
–
900
2016
US$’000
1,016
32
1,048
The average monthly number of employees during the year was made up as follows:
Operations
Legal and regulatory
Administration
Finance
Sales and marketing
7. Directors’ remuneration
Remuneration
Group
2017
146
32
26
76
66
346
2016
219
34
26
91
63
433
Company
2017
2016
1
–
2
2
–
5
2
–
1
1
–
4
Group
Company
2017
US$’000
2,950
2016
US$’000
2,072
2017
US$’000
2,950
2016
US$’000
2,072
The above remuneration information relates to Directors in Helios Towers Africa, Ltd who were recharged to the Group and
the Company by Helios Towers Africa LLP, a related company. None of the Directors received a contribution to a pension
scheme in the current or prior year.
The Group has set up a share-based payment plan in the current year. The plan has been set up to incentivise key
management personnel to achieve the long-term growth and performance objectives of the Group. Payments are
dependent on a successful transaction of the share capital of Helios Towers Africa, Ltd in the future. At the current time,
management do not consider this probable and therefore no share-based payment charge has been recognised.
Helios Towers | Annual Report 2017 79
Strategic ReportGovernance ReportFinancial StatementsOverview 8. Investment income
Other interest receivable
9. Finance costs
Foreign exchange differences
Interest costs
Interest costs on lease liabilities
Deferred loan cost amortisation
10. Tax expense
Additional taxes
Group
Company
2017
US$’000
706
2016
US$’000
216
2017
US$’000
132
2016
US$’000
–
Group
Company
2017
US$’000
3,229
71,608
14,991
12,929
102,757
Restated
(IFRS 16)
2016
US$’000
9,796
44,645
13,812
5,015
73,268
2017
US$’000
2016
US$’000
(62)
739
–
–
677
1,387
98
–
–
1,485
Group
Company
2017
US$’000
3,207
2016
US$’000
1,514
2017
US$’000
2016
US$’000
–
–
Though entities in Congo B, Tanzania and DRC have continued to be loss making, minimum tax has been levied
based on revenue as stipulated by law in these jurisdictions.
The Company was a Category 2 – Global Business License Company (C2-GBLC) during the current and preceding financial
periods. C2-GBLC is not subject to any income tax in Mauritius.
The applicable tax rates for the Company’s subsidiaries range from 20% to 40%.
80 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 11. Intangible assets
The Group
Cost
At 1 January 2016
Additions during the year
Effects of foreign currency exchange differences
At 31 December 2016
Additions during the year
Effects of foreign currency exchange differences
At 31 December 2017
Amortisation
At 1 January 2016
Charge for year
Effects of foreign currency exchange differences
At 31 December 2016
Charge for year
Effects of foreign currency exchange differences
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2016
At 1 January 2016
Right of first
refusal
US$’000
Non-compete
agreement
US$’000
15,000
20,000
–
35,000
–
–
–
30,000
–
30,000
–
–
Computer
software
and licence
US$’000
9,214
2,411
(222)
11,403
3,857
(95)
Total
US$’000
24,214
52,411
(222)
76,403
3,857
(95)
35,000
30,000
15,165
80,165
(15,000)
(2,500)
–
–
(16,894)
–
(4,016)
(2,671)
234
(19,016)
(22,065)
234
(17,500)
(16,894)
(6,453)
(40,847)
(5,000)
–
(13,106)
–
(3,672)
421
(21,778)
421
(22,500)
(30,000)
(9,704)
(62,204)
12,500
17,500
–
–
13,106
–
5,461
4,950
5,198
17,961
35,556
5,198
In 2016, alongside the purchase of 967 towers from Airtel group (see note 12), a right of first refusal “ROFR” agreement was
signed with Airtel Group in the DRC giving the Group the right of first refusal over build-to-suit towers that Airtel group wish
to commission. A payment of US$20 million was made for this right and is amortised on a straight line basis over its
exercisable period ending on 1 May 2020.
As part of the same transaction, the Group and the Company entered into a non-compete Agreement with Airtel group
under which the Group and the Company was granted the right that Airtel will not compete with the Group in DRC and/or
Congo Brazzaville. The Group and the Company issued shares with a fair value of US$30 million to Airtel group for this
right commencing on the date of the agreement (5 May 2016) and terminating 12 consecutive months after first closing
(7 July 2016). The issuance of these share was a non-cash transaction.
Helios Towers | Annual Report 2017 81
Strategic ReportGovernance ReportFinancial StatementsOverview Non-compete
agreement
US$’000
Computer
software
and license
US$’000
Total
US$’000
1,098
30,033
31,131
142
31,273
1,098
33
1,131
142
1,273
(905)
(88)
(993)
(104)
(905)
(16,982)
(17,887)
(13,210)
(1,097)
(31,097)
176
138
193
176
13,244
193
–
30,000
30,000
–
30,000
–
(16,894)
(16,894)
(13,106)
(30,000)
–
13,106
–
11. Intangible assets (continued)
The Company
Cost
At 1 January 2016
Additions during the year
At 31 December 2016
Additions during the year
At 31 December 2017
Amortisation
At 1 January 2016
Charge for year
At 31 December 2016
Charge for year
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2016
At 1 January 2016
82 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 12a. Property, plant and equipment
The Group
Cost
At 1 January 2016
Additions
Disposals
Effects of foreign currency exchange
differences
At 31 December 2016
Additions
Disposals
Reclassifications
Effects of foreign currency exchange
differences
At 31 December 2017
Depreciation
At 1 January 2016
Charge for the year
Disposals
Effects of foreign currency exchange
differences
At 31 December 2016
Charge for the year
Disposals
Effects of foreign currency exchange
differences
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2016
At 1 January 2016
IT equipment
US$’000
Fixtures
and fittings
US$’000
Motor
vehicles
US$’000
Site assets
US$’000
Land
US$’000
Leasehold
improve-
ments
US$’000
Total
US$’000
2,027
1,888
(9)
(24)
3,882
2,102
(13)
–
37
6,008
(1,117)
(699)
2
(98)
(1,912)
(1,168)
13
(147)
(3,214)
2,794
1,970
910
719
272
(156)
3,451
1,410
–
655,919
272,175
(5,368)
(18)
(120)
(11,178)
4,741
683
(654)
–
911,548
163,751
(1,754)
754
(68)
(3,616)
4,702 1,070,683
(2,103)
(714)
–
(177,778)
(94,947)
2,690
92
2,846
(2,725)
(719)
561
(267,189)
(113,663)
816
80
4,133
(2,803)
(375,903)
817
120
–
–
15
952
(431)
(176)
111
16
(480)
(206)
–
(11)
(697)
255
337
288
1,399
4,409
–
–
5,808
–
–
(754)
211
5,265
–
–
–
–
–
–
–
–
–
895
668
(665)
664,410
280,822
(6,198)
(7)
(11,347)
891
226
–
–
927,687
166,882
(2,421)
–
(2)
(3,423)
1,115 1,088,725
(333)
(193)
282
(181,762)
(96,729)
3,085
3
2,859
(241)
(168)
–
(272,547)
(115,924)
1,390
1
4,056
(408)
(383,025)
1,899
2,016
1,348
694,780
644,359
478,141
5,265
5,808
1,399
707
650
562
705,700
655,140
482,648
At 31 December 2017, the Group had US$111.3 million (2016: US$36.1 million) of expenditure recognised in the carrying
amount of items of site assets that were in the course of construction. On completion of the construction, they form part of
the additions of site assets in the year.
In July 2016, the Group acquired 967 towers and associated assets from Airtel group for US$165 million. This has been
accounted for as an assets acquisition in accordance with IAS 16.
Helios Towers | Annual Report 2017 83
Strategic ReportGovernance ReportFinancial StatementsOverview 12b. Right-of-use assets
Cost
At 1 January 2016
Additions
Effects of foreign currency exchange differences
At 31 December 2016
Additions
Effects of foreign currency exchange differences
At 31 December 2017
Depreciation
At 1 January 2016
Charge for the year
Effects of foreign currency exchange differences
At 31 December 2016
Charge for the year
Effects of foreign currency exchange differences
At 31 December 2017
Net book value
At 31 December 2017
At 31 December 2016
At 1 January 2016
Land
US$’000
Buildings
US$’000
Motor
vehicles
US$’000
Total
US$’000
104,528
22,886
(468)
126,946
12,408
(218)
139,136
(12,915)
(7,466)
80
(20,301)
(8,080)
149
(28,232)
110,904
106,645
91,613
7,897
3,604
(69)
11,432
1,413
27
12,872
(3,189)
(2,749)
19
(5,919)
(2,698)
22
(8,595)
4,277
5,513
4,708
1,243
–
–
1,243
–
–
1,243
(230)
(446)
–
(676)
(446)
–
113,668
26,490
(537)
139,621
13,821
(191)
153,251
(16,334)
(10,661)
99
(26,896)
(11,224)
171
(1,122)
(37,949)
121
567
115,302
112,725
1,013
97,334
13. Investments
The Group
The Group’s investment of US$132,000 (2016: US$132,000) relates to an interest in Helios Towers Africa LLP. The Group
holds 91% of the voting rights of Helios Towers Africa LLP. The Directors do not consider that the Group has control over the
operation of Helios Towers Africa LLP as it is a limited liability partnership and has no access to returns from the investment.
Therefore the investment has been accounted for as investment at cost.
The Company
Cost
At 1 January and 31 December
2017
US$’000
2016
US$’000
430,677
430,677
84 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 13. Investments (continued)
The subsidiary companies are as follows:
Name of subsidiaries
Country of incorporation
Direct %
Indirect %
Direct %
Indirect %
Effective shareholding
2017
Effective shareholding
2016
Helios Towers Ghana Limited
HTG Managed Services Limited
HTA Group, Ltd
HTA Holdings Ltd
Helios Towers DRC S.A.R.L.
HT DRC Infraco S.A.R.L.
Helios Towers Tanzania Limited
HTT Infraco Limited
HT Congo Brazzaville Holdco Limited
HT Congo SARLU
HT Gabon Holdco Limited (Dormant)
HT Chad Mauritius Holdco Limited
HT Chad SARLU (Dormant)
Towers NL Coöperatief U.A.
HTA (UK) Partner Ltd
HTA Equity GP Ltd
McRory Investment B.V.
McTam International 1 B.V.
Ghana
Ghana
Mauritius
Mauritius
Democratic Republic of Congo
Democratic Republic of Congo
Tanzania
Tanzania
Mauritius
Congo Brazaville
Mauritius
Mauritius
Chad
The Netherlands
England & Wales
Cayman Islands
The Netherlands
The Netherlands
60%
–
–
100%
–
–
–
–
–
–
–
–
–
–
100%
100%
–
–
40%
100%
100%
–
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
–
100%
100%
60%
–
–
100%
–
–
–
–
–
–
–
–
–
–
100%
100%
–
–
40%
100%
100%
–
100%
100%
76.3%
76.3%
100%
100%
100%
100%
100%
100%
–
–
100%
100%
All subsidiaries were incorporated in prior years. Helios Towers Africa, Ltd or its subsidiaries have subscribed to the majority
of the shares as shown above. The consideration paid for these shares on incorporation was minimal. The Directors are of the
opinion that the investments in subsidiaries are fairly stated and no impairment is required. The registered office address of
all subsidiaries is included in Appendix 1.
During the current and prior years, further contributions were made to Helios Towers Tanzania Limited (HTT) for the
acquisition of tower assets. In October 2017, the remaining 24.1% in HTT was acquired. See note 24.
Helios Towers Ghana Limited, HTA Holdings Ltd, Helios Towers DRC S.A.R.L., Helios Towers Tanzania Limited, HT Congo
Brazzaville Holdco Limited, HT Chad Mauritius Holdco Limited, Towers NL Cooperatief U.A., McRory Investment B.V., McTam
International 1 B.V. and HTA (UK) Partner Ltd are intermediate holding companies.
HTA Equity GP, Ltd acts as a general partner. The principal activities of HTG Managed Services Limited, HT DRC Infraco
S.A.R.L., HTT Infraco Limited, and HT Congo SARLU are the building and maintenance of telecommunications towers to
provide space on those towers to wireless telecommunication service providers in Africa. HT Chad SARLU and HT Gabon
Holdco Limited have ceased trading during the prior years.
14. Inventories
Inventories
Group
2017
US$’000
2016
US$’000
9,538
19,503
Inventories are primarily made up of fuel stocks and raw materials. The decrease in the inventory balance is due to the timing
of transfer from site equipment to site assets as a result of ongoing projects in the latter part of the year.
The impact of inventories recognised as an expense during the year in respect of continuing operations was US$62.6 million
(2016: US$52.6 million).
There is no material difference between the carrying value of inventories and their net realisable value.
Helios Towers | Annual Report 2017 85
Strategic ReportGovernance ReportFinancial StatementsOverview 15. Trade and other receivables
Trade receivables
Allowance for doubtful debts
Trade receivable from related parties
Trade receivable from non-controlling interest
Other receivables from related parties
Other receivables
VAT & Withholding tax receivable
Group
Company
2017
US$’000
72,996
(4,725)
68,271
9,436
–
77,707
–
23,027
7,757
2016
US$’000
57,586
(1,289)
56,297
17,769
26,015
100,081
–
15,404
11,444
108,491
126,929
2017
US$’000
2016
US$’000
–
–
–
–
–
–
–
–
–
–
–
482,783
19
–
482,802
–
433,594
946
–
434,540
Trade receivables (as per the ageing analysis) represents the amounts which the Group does not consider as impaired as
at reporting date as there has not been a significant change in credit quality and the amounts are still considered as
recoverable. Allowance for impairment losses are recognised on a case-by-case basis for each trade receivable. As at
reporting date, the allowance for impairment losses are not significant to the Group and will not affect the recoverability of
the trade receivables amounts (as per the ageing analysis). Interest can be charged on past due debtors. The normal credit
period of services is 30 days.
Other receivables mainly comprise of accrued income, and sundry receivables.
Of the trade receivables balance at 31 December 2017, 67% (31 December 2016: 66%) is due from four of the Group’s largest
customers. The Group does not hold any collateral or other credit enhancements over these balances nor does it have a
legal right of offset against any amounts owed by the Group to the counterparty. The average trade receivables collection
period is 44 days (31 December 2016: 47 days).
Debtor days are calculated as trade receivables and receivables from related parties and the non-controlling interest, less
allowance for doubtful debts, less amounts invoiced but not yet due (2017: US$42.5 million, 2016: US$42.1 million), relative
to average monthly revenue for the last quarter (2017: US$88.4 million, 2016: US$82.5 million).
Ageing analysis of trade receivables not impaired:
Not yet due
1–30 days
30–60 days
60–90 days
90+ days
Group
2017
US$’000
35,248
10,940
14,230
7,680
9,609
77,707
2016
US$’000
58,027
11,426
7,654
8,982
13,992
100,081
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade
receivable from the date credit was initially granted up to the reporting date. The Directors consider that the carrying
amount of trade and other receivables is approximately equal to their fair value.
Terms and conditions attached to receivable balances due by related parties and by the non-controlling interest are
disclosed in note 23.
86 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 16. Prepayments
Prepayments
Prepayments are primarily comprised of advance payments to suppliers.
17. Cash and cash equivalents
Bank balances
Short-term deposits
18. Share capital
Authorised, issued and fully paid
Ordinary share capital class A of US$1
Ordinary share capital class C of US$100
Ordinary share capital class D of US$1
Ordinary share capital class G of US$1
Ordinary share capital class H of US$100
Ordinary share capital class Z of US$100
Group
Company
2017
US$’000
Restated
(IFRS 16)
2016
US$’000
23,403
20,466
2017
US$’000
221
2016
US$’000
5,690
Group
Company
2017
US$’000
49,519
70,181
2016
US$’000
133,737
–
119,700
133,737
2017
US$’000
18,314
–
18,314
2016
US$’000
87,553
–
87,553
Group and Company
2017
Number
of shares
390,410,138
100
100
518,714,176
100
100
US$’000
390,410
10
–
518,714
10
10
2016
Number
of shares
390,410,138
100
100
518,714,176
–
–
US$’000
390,410
10
–
518,714
–
–
909,124,714
909,154
909,124,514
909,134
The Class A Shares and Class G Shares rank equally with each other and senior to the Class C, Class D, Class H, and Class Z
shares as to redemption proceeds and any other form of distribution or return of capital. Class A and G Shares have voting
rights whilst the others have no voting rights. Class H and Class Z also have dividend rights.
19. Trade and other payables
Trade payables
Amounts payable to related parties
Payable to non-controlling interest
Deferred income
Deferred consideration
Other payables and accruals
VAT & Witholding tax payable
Group
Company
2017
US$’000
11,612
1,617
–
40,482
12,946
69,214
11,453
Restated
(IFRS 16)
2016
US$’000
15,691
922
1,349
60,386
13,453
72,056
–
2017
US$’000
2016
US$’000
–
2,082
–
–
–
8,727
–
–
702
–
–
–
9,121
–
9,823
147,324
163,857
10,809
Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average
credit period taken for trade purchases is 24 days (2016: 39 days). Payable days are calculated as trade payables and
payables to related parties and the non-controlling interest, divided by cost of sales plus administration expenses less staff
costs and depreciation. No interest is charged on trade payables. The Group has financial risk management policies in place
to ensure that all payables are paid within the pre-agreed credit terms. Amounts payable to related parties are unsecured,
interest free and repayable on demand.
Helios Towers | Annual Report 2017 87
Strategic ReportGovernance ReportFinancial StatementsOverview 19. Trade and other payables (continued)
Deferred consideration relates to consideration that is payable in the future for the purchase of certain tower assets in DRC
and Congo B following the Airtel deal if certain conditions are met to enable transfer of ownership of the assets to Helios
Towers Africa, Ltd.
Other payables and accruals consist of general operational accruals, accrued capital items, and goods received but not
yet invoiced.
Trade and other payables are classified as financial liabilities and measured at amortised cost. These are initially recognised
at fair value and subsequently at amortised cost. These are expected to be settled within a year.
The Directors consider the carrying amount of trade payables approximates to their fair value.
20. Loans
US$ 600 million 9.125% senior notes 2022
US$ 77 million (LIBOR + 6.00%)
TZS 57.363 billion (TIBOR + 5.00%)
US$ 60 million (LIBOR + 6.00%)
TZS 9.625 billion (TIBOR + 5.00%)
TZS 22.727 billion (TIBOR + 5.00%)
US$ 23.8 million (LIBOR + 5.00%)
US$ 15.0 million (LIBOR + 5.00%)
US$ 40.0 million (LIBOR + 5.00%)
US$ 15.0 million (LIBOR + 5.00%)
US$ 70.0 million (LIBOR + 5.00%)
US$ 5.0 million (LIBOR + 5.00%)
US$ 8.146 million (LIBOR + 5.00%)
US$ 10.0 million (LIBOR + 5.00%)
XAF 5.222 billion (LIBOR + 5.00%)
Shareholder loans
HTT Infraco Limited
HTG Managed Services Limited
HT DRC Infraco S.A.R.L
Total borrowings
Current
Non-current
31 December
2017
US$’000
31 December
2016
US$’000
598,354
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
74,977
25,582
58,423
4,292
10,136
23,038
14,520
38,720
14,520
67,760
4,840
7,189
8,825
7,423
598,354
360,245
–
–
–
–
32,850
2,414
5,640
40,904
598,354
401,149
17,254
581,100
60,516
340,633
598,354
401,149
On 8 March 2017, HTA Group Limited, a wholly-owned subsidiary of HTA Ltd, issued US$600 million of 9.125% bonds due
2022 which are listed on the Irish Stock Exchange. Interest is payable semi-annually beginning on 8 September 2017. The
bonds are guaranteed on a senior basis by the Company, and certain of the HTA Ltd subsidiaries. The proceeds of the
issuance were used, among other things, to refinance existing indebtedness of the Company’s subsidiaries (HTT Infraco
Limited, HT DRC Infraco S.A.R.L and HT Congo Brazzaville Holding Limited).
Loans are classified as financial liabilities and measured at amortised cost.
The shareholder loans in 2016 carried an interest rate ranging from 5% to 15%.
The current portion of borrrowings relates to accrued interest which is payable in March 2018.
88 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 21. Lease liabilities
Short-term lease liabilities
Land
Buildings
Motor vehicles
Long-term lease liabilities
Land
Buildings
Motor vehicles
2017
US$’000
2016
US$’000
18,828
1,524
100
20,452
18,244
2,189
501
20,934
2017
US$’000
2016
US$’000
94,088
2,009
–
96,097
87,644
2,403
64
90,111
The below undiscounted cash flows do not include escalations based on CPI or other indexes which change over time.
Renewal options are considered on a case by case basis with judgements around the lease term being based on
management’s contractual rights and their current intentions.
The total cash paid on leases in the year was US$25.8 million (2016: US$21.1 million).
The profile of the outstanding undiscounted contractual payments fall due as follows:
The Group
31 December 2017
31 December 2016
Within
1 year
US$’000
2–5 years
US$’000
5+ years
US$’000
Total
US$’000
20,452
72,120
443,261
535,833
20,934
69,042
405,993
495,969
See note 29 for analysis of the impact of IFRS 16: Leases transition during the year.
22. Uncompleted performance obligations
The table below represent uncompleted performance obligations at the end of the reporting period. This is total revenue
which is contractually due to the Group, subject to the performance of the obligation of the Group related to these revenues.
Total contracted revenue
2017
US$’000
2016
US$’000
3,101,429 2,897,598
Helios Towers | Annual Report 2017 89
Strategic ReportGovernance ReportFinancial StatementsOverview
22. Uncompleted performance obligations (continued)
Contracted Revenue
The following table provides our total contracted revenue by country under agreements with our customers as of
31 December, 2017 for each of the six years from 2018 to 2023, with local currency amounts converted at the applicable spot
rate for U.S. dollars on 31 December, 2017 held constant. Our contracted revenue calculation for each year presented
assumes: (i) no escalation in fee rates, (ii) no increases in sites or tenancies other than our committed colocations described
elsewhere in these financial statements, (iii) our customers do not utilise any cancellation allowances set forth in their MLAs
and (iv) our customers do not terminate MLAs early for any reason.
The following tables provide the Company’s contracted revenue from 2018 through 2023 on a country-by-country basis and
an illustration of our total contracted revenue:
(US$’000s)
Tanzania
DRC
Congo Brazzaville
Ghana
Total
Year Ended 31 December,
2018
2019
2020
2021
2022
2023
147,044
140,355
24,373
38,821
149,099
141,546
24,373
39,429
151,387
152,294
23,194
38,966
150,648
151,859
16,954
36,721
149,440
150,004
16,949
27,293
143,673
149,085
16,941
12,784
350,593
354,447
365,841
356,182
343,686
322,483
23. Related party transactions
The Group
Balances and transactions between the Company and its subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note.
During the year, the Group companies entered into the following commercial transactions with related parties:
Millicom Holding B.V. and subsidiaries
Vodacom Group Limited and subsidiaries*
Millicom Holding B.V. and subsidiaries
Vodacom Group Limited and subsidiaries*
Helios Towers Africa LLP
2017
2016
Income from
towers
US$’000
Purchase
of goods
US$’000
Income from
towers
US$’000
60,182
72,167
5,194
2,588
60,243
71,919
Purchase
of goods
US$’000
516
9,701
2017
2016
Amount owed
by US$’000
Amount owed
to US$’000
Amount owed
by US$’000
Amount owed
to US$’000
7,366
2,070
–
228
–
1,389
14,145
26,015
3,604
3,334
34,201
–
* Until October 2017, Vodacom Tanzania Ltd was the non-controlling interest holder in Helios Towers Tanzania Ltd. Millicom Holding B.V is a shareholder of Helios Towers
Africa, Ltd.
During the year, the Group received advisory services from Helios Towers Africa LLP, an entity in which the Group has no
economic benefits for which fees of US$17.0 million (2016: US$16.7 million) were incurred.
At the year end, there was a payable of US$1.4 million (2016: receivable of US$3.6 million) from Helios Towers Africa LLP.
Amounts outstanding to related parties carry an interest charge ranging from 0% to 15%. Total compensation of key
management for 2017 amounted to US$3.0 million (2016: US$2.1 million) which was recharged by Helios Tower Africa LLP.
90 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 23. Related party transactions (continued)
The Company
Amounts receivable from related parties
Amounts payable to related parties
2017
US$’000
2016
US$’000
482,783
2,082
433,594
702
Other transactions with related parties in the year includes technical and management fee charges for services provided to
the subsidiary companies. Compensation of key management personnel are disclosed in note 7.
Intercontinental Trust Limited is considered as a related party to the Company as it provided company secretary services.
Name of related party
Relationship
2017
Transactions
during the
year
US$’000
2016
Transactions
during the
year
US$’000
2017
Balance
due at year
end
US$’000
2016
Balance
due at year
end
US$’000
Type of
transaction
Intercontinental Trust Limited
Company secretary
Fees
40
46
–
–
24. Other gains and losses
The Group
Other gains and losses
Fair value movement of derivative financial instruments
Fair value movement of minority interest
The movement in the minority interest buy-out liability is set out below:
Minority interest buy-out liability
Balance at start of the year
Options granted in the year
Fair value movement in the year
Options exercised in the year
2017
US$’000
2016
US$’000
(21,797)
–
(21,797)
–
6,682
6,682
2017
US$’000
2016
US$’000
57,886
574
58,460
–
58,460
(58,460)
–
50,839
365
51,204
6,682
57,886
–
57,886
Vodacom Tanzania Ltd, previously a minority interest holder in Helios Towers Tanzania Ltd (‘HTT’), had a right to exchange
its shares in HTT from 19 February 2014 to 31 December 2017 for shares in the Group. The exercise price is based on the fair
market value of HTT shares at the time the option is exercised, either by independent valuation, or if the Group is being sold
through an Initial Public Offering at the value agreed with the buyer, and then exchanged for shares accordingly in Helios
Towers Africa, Ltd. The option expired in October 2017 after acquisition of minority shares by HTA Holding, Ltd.
The put option granted to Vodacom Tanzania Ltd results in an obligation for the Group to purchase through a share
exchange the minority interest in the future and therefore represents a contract that contains an obligation for the Group to
purchase its own equity instruments. The Group is required to recognise a financial liability for the present value of the
redemption amount. At 31 December 2017, the Group recognised an aggregate financial liability of US$nil (2016: US$57.9
million) being the present value of the contractual obligation which is deemed to be the market value of the minority interest
at that date. The movement in 2016 of US$6.7 million represents the fair value increase in this liability.
In February 2017, Vodacom Tanzania Ltd, HTA Holdings, Ltd and Helios Towers Tanzania Ltd entered into an agreement
pursuant to which HTA Holdings, Ltd acquired a portion of the shareholder loans advanced by Vodacom Tanzania Ltd for
US$30 million in cash. Under the same agreement, HTA Holdings, Ltd received an option up to and including March 31, 2018
to acquire Vodacom Tanzania Ltd shares in Helios Towers Tanzania Ltd for approximately US$58.5 million in cash and the
remaining outstanding shareholder loans and accrued interest thereon advanced by Vodacom Tanzania Ltd for US$2.7
million in cash. The acquisition of such shares and the outstanding loan amounts was completed in October 2017 after
customary closing conditions, including, among other things, relevant government approvals.
Helios Towers | Annual Report 2017 91
Strategic ReportGovernance ReportFinancial StatementsOverview 25. Financial instruments
Financial instruments held by the Group at fair value had the following effect on profit and loss:
Derivative financial assets
Change in fair value of derivative financials instruments
Minority interest buy-out liability
Other gains and losses
2017
US$’000
2016
US$’000
(21,797)
(1,293)
–
6,682
Fair value measurements
The information set out below provides an analysis of financial instruments that are measured subsequent to initial
recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:
–
–
–
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets
or liabilities;
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
Some of the Group’s financial assets and financial liabilities are measured at fair value at the end of each reporting period.
For all other assets and liabilities the carrying value is approximately equal to the fair value. The information set out below
provides information about how the fair values of these financial assets and financial liabilities are determined (in particular,
the valuation technique(s) and inputs used).
For those financial instruments held at valuation, the Group has categorised them into a three level fair value hierarchy based
on the priority of the inputs to the valuation technique in accordance with IFRS 13. The hierarchy gives the highest priority to
quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs
(Level 3). If the inputs used to measure fair value fall within different levels of the hierarchy, the category level is based on the
lowest priority level input that is significant to the fair value measurement of the instrument in its entirety. The fair values of
the Group’s outstanding interest rate swaps have been estimated by calculating the present value of future cash flows, using
appropriate market discount rates, representing Level 2 fair value measurements as defined by IFRS 13. Minority interest
buy-out liability was grouped as Level 3 fair value measurement until its acquisition in October 2017. There are no financial
instruments which have been categorised as Level 1. There were no transfers between the levels in the year.
Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the
Group consists of debt, which includes borrowings disclosed in note 20, cash and cash equivalents and equity attributable to
equity holders of the parent, comprising of issued capital, reserves and retained earnings as disclosed in the statement of
changes in equity.
Gearing ratio
The Group keeps its capital structure under review. The gearing ratio at the year end is as follows:
Debt (net of issue costs)
Cash and cash equivalents
Net debt
Equity attributable to the owners
Debt is defined as long and short-term borrowings, as detailed in note 20.
92 Helios Towers | Annual Report 2017
2017
US$’000
Restated
(IFRS 16)
2016
US$’000
714,903
(119,700)
512,194
(133,737)
595,203
261,917
227.2%
378,457
407,966
92.8%
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 25. Financial instruments (continued)
Equity includes all capital and reserves of the Group attributable to equity holders of the parent.
Externally imposed capital requirements
The Group is not subject to externally imposed capital requirements.
Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset,
financial liability and equity instrument are disclosed in note 2 to the financial statements.
Categories of financial instruments
Financial assets
Loans and receivables:
Cash and cash equivalents
Trade and other receivables
Fair value through profit or loss:
Derivative financial assets
Financial liabilities
Amortised cost:
Trade and other payables
Finance lease liabilities
Loans
At fair value:
Minority interest buy-out liability
Group
Company
2017
US$’000
2016
US$’000
2017
US$’000
2016
US$’000
119,700
100,734
133,737
115,485
18,314
482,802
87,553
434,540
23,917
1,393
–
–
244,351
250,615
501,116
522,093
95.389
116,549
598,354
103,471
111,045
401,149
10,809
-
–
9,823
-
–
–
57,866
–
–
810,292
673,531
10,809
9,823
At 31 December 2017, the Group had US$Nil (2016: US$5.3 million) of cash pledged as collateral for financial liabilities.
Financial risk management objectives and policies
The Group’s finance function provides services to the business, coordinates access to domestic and international financial
markets, monitors and manages the financial risks relating to the operations of the Group through internal risk reports which
analyse exposures by degree and magnitude of risks. These risks include market risk (including currency risk, fair value
interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. The Group seeks to minimise the
effects of these risks by using derivative financial instruments to hedge these risk exposures. The use of financial derivatives
is governed by the Group’s policies approved by the Board of Directors, which provide written principles on foreign
exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments.
Compliance with policies and exposure limits is reviewed by the Board of Directors regularly. The Group does not enter
into or trade financial instruments, including derivative financial instruments, for speculative purposes.
Key financial risks and exposures are monitored through a monthly report to the Board of Directors, together with an annual
Board review of corporate treasury matters. The Group and the Company have exposure to sterling (GBP) fluctuations,
however this is not considered material.
Financial risk
The principal financial risks to which the Group is exposed through its activities are risks of changes in foreign currency
exchange rates and interest rates. The Group enters into interest rate swaps to manage its exposure to the interest rate risk.
Helios Towers | Annual Report 2017 93
Strategic ReportGovernance ReportFinancial StatementsOverview 25. Financial instruments (continued)
Foreign currency risk management
The Group undertakes transactions denominated in foreign currencies; consequently exposures to exchange rate
fluctuations arise. The Group’s main currency exposures were to the Ghanaian Cedi (GHS), Tanzanian Shilling (TZS) and
Central African Franc (XAF) through its main operating subsidiaries.
During the year ended 31 December 2017, the Group did not enter into any foreign currency hedging contracts, as
management considered foreign exchange risk to be at an acceptable level due to the natural hedge existing in the Group as
a result of having both USD, TZS, GHS and XAF denominated revenues and costs, and minimal foreign denominated third
party debt levels within the business.
The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities at the
reporting date are as follows:
Liabilities
Assets
New Ghana Cedi
Tanzanian Shilling
Central African Franc
2017
US$’000
16,204
176,874
14,314
207,392
2016
US$’000
13,915
55,220
11,867
81,002
2017
US$’000
22,540
71,887
20,598
115,025
2016
US$’000
18,565
41,464
7,693
67,722
Foreign currency sensitivity analysis
The following table details the Group’s sensitivity to a 10% increase and decrease in US Dollar against GHS, XAF and TZS.
10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents
management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes
only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 10%
change in foreign currency rates. A positive number below indicates an increase in profit and other equity where US Dollar
weakens 10% against the GHS, XAF or TZS. For a 10% strengthening of US Dollar against the GHS, XAF or TZS, there would
be a comparable impact on the profit and other equity, and the balances below would be negative.
Central African Franc impact
New Ghana Cedi impact
Tanzania Shillings impact
Impact on profit or loss
(628)
417
(634)
(465)
10,499
2017
US$’000
2016
US$’000
2017
US$’000
2016
US$’000
2017
US$’000
2016
US$’000
1,376
This is mainly attributable to the exposure outstanding on GHS, XAF and TZS receivables and payables in the Group at the
reporting date.
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk for the Group or
the Company as the year end exposure does not reflect the exposure during the year.
Interest rate swap contracts
Under interest rate swap contracts, the Group agrees to exchange the difference between fixed and floating rate interest
amounts calculated on agreed notional principal amounts. Such contracts enable the Group to mitigate the risk of changing
interest rates on the cash flow exposures on the issued variable rate debt held. The fair value of interest rate swaps at the
reporting date is determined by discounting the future cash flows using the yield curves at the reporting date and the credit
risk inherent in the contract, and is disclosed below.
There were no interest rate swap contracts outstanding as at the reporting date:
Outstanding contracts
USD IRS
Two to five years
Average contract fixed rate
Amortising notional value
Fair value
2017
%
2016
%
2017
US$’000
2016
US$’000
2017
US$’000
2016
US$’000
–
1.61
–
195,500
–
(1,393)
94 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 25. Financial instruments (continued)
Credit risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral
where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group uses publicly available
financial information and other information provided by the counterparty (where appropriate) to rate its major customers. As
of 31 December 2017, the Group has a concentration risk with regards to four of its largest customers and its related parties
and the Company has a concentration risk with regards to the receivable balances with related parties. The Group’s exposure
and the credit ratings of its counterparties and related parties are continuously monitored and the aggregate value of
credit risk within the business is spread amongst a number of approved counterparties. Credit exposure is controlled by
counterparty limits that are reviewed and approved by management. The carrying amount of the financial assets recorded
in the financial statements, which is net of impairment losses, represents the Group’s and the Company’s exposure to
credit risk.
Liquidity risk management
The Group has long-term debt financing through Senior Loan notes of US$600 million due for repayment in March 2022.
The Group has a revolving credit facility of US$60 million for funding working capital requirements. As at December 2017 the
facility was undrawn and is available until March 2021. The Group has remained compliant during the year to 31 December
2017 with all the covenants contained in the Senior Credit facility.
Ultimate responsibility for liquidity risk management rests with the Board of Directors. The Group manages liquidity risk by
maintaining adequate reserves and banking facilities and continuously monitoring forecast and actual cash flows including
consideration of appropriate sensitivities.
Non-derivative financial liabilities
The following tables detail the Group’s and the Company’s remaining contractual maturity for its non-derivative financial
liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest
date on which the Group can be required to pay.
The table includes principal cash flows.
The Group
31 December 2017
Non-interest bearing
Fixed interest rate instruments
31 December 2016
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
The Company
31 December 2017
Non-interest bearing
31 December 2016
Non-interest bearing
Within
1 year
US$’000
147,324
–
147,324
163,857
32,962
32,852
229,671
1–2 years
US$’000
2–5 years
US$’000
5+ years
US$’000
Total
US$’000
–
–
–
–
–
–
–
598,354
147,324
598,354
598,354
745,678
–
60,324
–
60,324
–
235,526
–
235,526
–
44,600
8,052
52,652
163,857
373,412
40,904
578,173
Within
1 year
US$’000
Total
US$’000
10,797
10,797
9,823
9,823
The interest profile of the Group’s variable interest bearing financial liabilities has been disclosed under note 20.
Helios Towers | Annual Report 2017 95
Strategic ReportGovernance ReportFinancial StatementsOverview 25. Financial instruments (continued)
Non-derivative financial liabilities (continued)
The Group and the Company manage liquidity risk by maintaining adequate reserves and banking facilities and by
continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities.
Non-derivative financial assets
The following table details the Group’s and the Company’s expected maturity for other non-derivative financial assets. The
tables below have been drawn up based on the undiscounted contractual maturities of the financial assets except where the
Group and the Company anticipates that the cash flow will occur in a different period.
The Group
31 December 2017
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
31 December 2016
Non-interest bearing
Variable interest rate instruments
Fixed interest rate instruments
The Company
31 December 2017
Non-interest bearing
31 December 2016
Non-interest bearing
Within
1 year
US$’000
220,434
-
-
220,434
250,667
–
–
250,667
1–2 years
US$’000
2–5 years
US$’000
5+ years
US$’000
Total
US$’000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
220,434
–
–
220,434
250,667
–
–
250,667
Within
1 year
US$’000
Total
US$’000
499,034
499,034
522,093
522,093
Derivative financial instruments (assets)/liabilities:
The following table details the Group’s liquidity analysis for its derivative financial instruments based on contractual
maturities. The table has been drawn up based on the undiscounted net cash inflows and outflows on derivative instruments
that settle on a net basis, and the undiscounted gross inflows and outflows on those derivatives that require gross
settlement. When the amount payable or receivable is not fixed, the amount disclosed has been determined by reference to
the projected interest rates as illustrated by the yield curves existing at the reporting date.
The derivatives represent the fair value of the put and call options embedded within the terms of the notes. The call options
give the Group the right to redeem the bond instruments at a date prior to the maturity date (8 March 2022), in certain
circumstances and at a premium over the initial notional amount.
The put option provides the holders with the right (and the Group with an obligation) to settle the notes before their
redemption date in the event of a change in control (as defined in the terms of the notes, which also includes a major asset
sale), and at a premium over the initial notional amount. The options are fair valued using an option pricing model that is
commonly used by market participants to value such options and makes the maximum use of market inputs, relying as little
as possible on the entity’s specific inputs and making reference to the fair value of similar instruments in the market. Thus, it
is considered a level 2 financial instrument in the fair value hierarchy of IFRS 13.
96 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 25. Financial instruments (continued)
The key assumptions in determining the fair value are, the initial fair value of the bond (assumed to be priced at 100% on
issue date), the credit spread (derived using Bloomberg analytics at issuance and based on credit market data thereafter),
the yield curve and the probabilities of a change in control (0% assumed) and a major asset sale (0% assumed). The
probabilities relating to change of control and major asset sale represent a reasonable expectation of those events occuring
that would be held by a market participant.
The Group
31 December 2017
Net settled:
Embedded derivatives
31 December 2016
Net settled:
Interest rate swaps
Gross settled:
Minority interest buy-out
Within
1 year
US$’000
–
–
–
57,886
57,886
1–2 years
US$’000
2–5 years
US$’000
5+ years
US$’000
Total
US$’000
–
–
–
–
–
(23,917)
(23,917)
(1,393)
–
(1,393)
–
–
–
–
–
(23,917)
(23,917)
(1,393)
57,886
56,493
Interest rate risk management
The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest
rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and
by the use of interest rate swap contracts, Hedging activities are evaluated regularly to align with interest rate views and
defined risk appetite, ensuring the most cost-effective hedging strategies are applied.
The Group’s exposure to interest rates on financial assets and financial liabilities are detailed in the liquidity risk management
section.
The Company is not significantly exposed to foreign currency fluctuations as most of its financial assets and financial
liabilities are denominated in its functional currency.
The Company is not exposed to interest rate variations as its financial assets and financial liabilities are non-interest bearing.
26. Contingencies
In the year ended 31 December 2015, the Democratic Republic of Congo’s National Tax Services issued an assessment
against the Group for the financial years ended 31 December 2014 and 31 December 2015 of approximately US$3.4 million
including interest and penalties. Also, in the year ended 31 December 2016, the Ghana Revenue Authority issued an
assessment against the Company for the financial years ended 31 December 2010 to 31 December 2012 of approximately
US$4.9 million for unpaid direct and indirect taxes.
The Directors have appealed against these assessments and together with their advisors are in discussion with the tax
authorities to bring the matters to conclusions based on the facts.
The Directors, having taken advice as appropriate, believe that there is no merit to these assessments and accordingly will
defend their position vigorously and do not believe there will be a material impact to the Group.
The Group did not make a provision in respect of these matters for the year ended 31 December 2017 or 31 December 2016.
Helios Towers | Annual Report 2017 97
Strategic ReportGovernance ReportFinancial StatementsOverview 27. Net debt
External debt
Lease liabilities
Derivative financial instruments
Net cash and cash equivalents
Net debt
The movement in net debt is as follows:
2017
Net cash and cash equivalents
External debt
Lease liabilities
Derivative financial instruments
Net debt
2016
Net cash and cash equivalents
External debt
Lease liabilities
Net debt
2017
US$’000
2016
US$’000
(596,418)
(116,549)
(1,936)
119,700
(401,149)
(111,045)
–
133,737
(595,203)
(378,457)
At 1 January
2017
US$’000
Cash flows
US$’000
Other(1)
US$’000
At
31 December
2017
US$’000
133,737
(14,173)
136
119,700
(401,149)
(111,045)
–
(167,938)
11,675
–
(27,331)
(17,179)
(1,936)
(596,418)
(116,549)
(1,936)
(512,194)
(156,263)
(46,446)
(714,903)
(378,457)
(170,436)
(46,310)
(595,203)
At 1 January
2016
US$’000
Cash flows
US$’000
Other
US$’000
At
31 December
2016
US$’000
88,290
46,196
(749)
133,737
(253,716)
(93,947)
(141,205)
8,353
(6,228)
(25,451)
(401,149)
(111,045)
(347,663)
(132,852)
(31,679)
(512,194)
(259,373)
(86,656)
(32,428)
(378,457)
(1) Other includes foreign exchange, interest and other non-cash movements.
External debt is the total debt owed to commercial banks and institutional investors.
28. Subsequent events
There are no material subsequent events to note.
98 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017 29. Transition summary – IFRS 16
The tables below show the amount of adjustments for each financial statement line item affected by the application of IFRS
16 for the current and prior year. There is no impact on the Company’s financial statements.
Statement of profit or loss
US$’000s
Revenue
Cost of sales(1)
Gross profit
Administrative expenses(2)
Loss on disposal of property, plant and equipment
Operating loss
Investment income
Other gains and losses
Finance costs(3)
Loss before tax
Tax expenses
Loss after tax
Loss for the year
Other comprehensive loss:
Items that may be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations
Total comprehensive loss for the year
Loss attributable to:
Owners of the Company
Non-controlling interest
Loss for the year
Total comprehensive loss attributable to:
Owners of the Company
Non-controlling interest
Total comprehensive loss for the year
As reported
31 December
2016
282,507
(245,434)
37,073
(78,257)
(3,761)
(44,945)
216
(6,682)
(60,027)
Change
2016
–
9,567
9,567
516
–
10,083
–
–
(13,241)
Restated
31 December
2016
282,507
(235,867)
46,640
(77,741)
(3,761)
(34,862)
216
(6,682)
(73,268)
(111,438)
(1,514)
(3,158)
–
(114,596)
(1,514)
(112,952)
(3,158)
(116,110)
(112,952)
(3,158)
(116,110)
(2,496)
(1,107)
(3,603)
(115,448)
(4,265)
(119,713)
(95,082)
(17,870)
(2,658)
(500)
(97,740)
(18,370)
(112,952)
(3,158)
(116,110)
(97,692)
(17,756)
(3,765)
(500)
(101,457)
(18,256)
(115,448)
(4,265)
(119,713)
(1) Net effect of the reversal of leases previously expensed as operating leases, offset by a right-of-use asset depreciation charge for land.
(2) Net effect of the reversal of leases previously expensed as operating leases, offset by a right-of-use asset depreciation charge for buildings and motor vehicles.
(3) Interest charges and FX impact in relation to long-term lease liabilities.
Helios Towers | Annual Report 2017 99
Strategic ReportGovernance ReportFinancial StatementsOverview 29. Transition summary – IFRS 16 (continued)
Statement of Financial Position
US$’000s
Intangible assets
Property, plant and equipment
Right-of-use assets(1)
Investments in subsidiaries
Derivatives financial assets
Inventories
Trade and other receivables
Prepayments(2)
Cash and bank balances
Total assets
Share capital
Share premium
Stated capital
Other reserves
Minority interest buy-out reserve
Translation reserve(3)
Accumulated losses
Equity attributable to owners
Non-controlling interest
Total equity
Trade and other payables(4)
Loans – short-term
Loans – long-term
Minority interest buy-out liability
Short-term lease liabilities(5)
Long-term lease liabilities(5)
Derivatives financial liabilities
Total liabilities
Total equity and liabilities
1 January
2016
5,198
482,648
–
96
–
487,942
14,974
84,344
16,198
88,290
691,748
750,394
131,239
881,633
(11,283)
(54,063)
(77,102)
(437,283)
301,902
(18,906)
282,996
102,864
34,359
219,357
50,839
–
–
1,333
408,752
691,748
Change
at 1 January
2016
Restated
1 January
2016
As reported
31 December
2016
Change
2016
Restated
31 December
2016
–
–
97,334
-
–
97,334
–
–
(12,544)
–
5,198
482,648
97,334
96
–
585,276
14,974
84,344
3,654
88,290
35,556
655,140
-
132
1,393
692,221
19,503
126,929
34,752
133,737
–
–
112,725
-
–
112,725
–
–
(14,286)
–
35,556
655,140
112,725
132
1,393
804,946
19,503
126,929
20,466
133,737
84,790
776,538 1,007,142
98,439 1,105,581
–
–
750,394
131,239
909,134
186,795
–
–
909,134
186,795
–
–
–
3,333
(9,332)
(5,999)
500
(5,499)
(3,658)
–
–
–
18,642
75,305
–
90,289
84,790
881,633 1,095,929
(11,693)
(11,283)
(54,429)
(54,063)
(79,712)
(73,769)
(532,366)
(446,615)
297,903
(18,406)
417,729
(36,322)
277,497
99,206
34,359
219,357
50,839
18,642
75,305
1,333
381,407
166,700
60,516
340,633
57,886
–
–
–
– 1,095,929
(11,693)
–
(54,429)
–
(77,486)
2,226
(544,355)
(11,989)
(9,763)
–
(9,763)
(2,843)
–
–
–
20,934
90,111
–
407,966
(36,322)
371,644
163,857
60,516
340,633
57,886
20,934
90,111
–
499,041
625,735
108,202
733,937
776,538 1,007,142
98,439 1,105,581
(1) Right-of-use assets for the lease of land, buildings, and motor vehicles.
(2) Reversal of prepayment of land and building leases, previously accounted for as operating leases.
(3) Cumulative FX impact of non US$ denominated leases.
(4) Reversal of accruals for lease liabilities previously accounted for as operating leases.
(5) Long-term lease liabilities for land, buildings, and motor vehicles at the end of each reporting period.
100 Helios Towers | Annual Report 2017
Financial StatementsNotes to the Financial Statements (continued)For the year ended 31 December 2017
Appendix 1
Name of subsidiaries
Registered office address
Helios Towers Africa, Ltd
Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius
HTA Holdings, Ltd
HTA Group, Ltd
Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius
Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius
HTA (UK) Partner Ltd
5 Merchant Square, 10th Floor, London, W2 1AS
HT Congo Brazzaville Holdco Limited
Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius
Helios Towers Congo Brazzaville SASU 100 ter Avenue Maréchal Lyautey Centre - Ville Brazzaville République du Congo
Helios Towers DRC SARL
1st Floor, Tower LE 130, 130B, Avenue Kwango, Kinshasa, Gombe, DRC
HT DRC Infraco SARL
1st Floor, Tower LE 130, 130B, Avenue Kwango, Kinshasa, Gombe, DRC
Helios Towers Tanzania Limited
Ground Floor, Peninsula House, Plot No. 251 Toure Drive, P.O. Box 105297,
Oysterbay, Dar Es Salaam, Tanzania
HTT Infraco Limited
Ground Floor, Peninsula House, Plot No. 251 Toure Drive, P.O. Box 105297,
Oysterbay, Dar Es Salaam, Tanzania
HT Chad SARLU
Quartier Chagoua, Avenue du 10 Octobre, BP 6572, N’djamena- CHAD
Helios Chad Holdoco Limited
Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius
HTA Equity GP Ltd
Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius
HT Gabon Holdco Limited
Level 3, Alexander House, 35 Cybercity, Ebene, Mauritius
Helios Towers Ghana Limited
No.31, Akosombo Road, Airport Residential Area, Private Mail Bag CT 409,
Cantonments, Accra-Ghana
HTG Managed Services Limited
No.31, Akosombo Road, Airport Residential Area, Private Mail Bag CT 409,
Cantonments, Accra-Ghana
Towers NL Cooperatief U.A.
Prins Bernhardplein 200, 1097JB Amsterdam
McTam International 1 B.V.
Oslo 1, 2993LD Barendrecht
McRory Investment B.V.
Oslo 1, 2993LD Barendrecht
Helios Towers | Annual Report 2017 101
Strategic ReportGovernance ReportFinancial StatementsOverview Officers and professional advisors
Directors
Allan E Cook (appointed 1 January 2018)
Anja Blumert
Charles Campbell Green III (resigned 22 September 2017)
Colin Curvey
David Karol Wassong
Kashyap Pushpkant Pandya
Nelson Oliveira
Richard Byrne
Simon David Pitcher
Simon Hillard Poole
Temitope Olugbeminiyi Lawani
Vishma Dharshini Boyjonauth
Waldemar Rafal Szlezak
Xavier Charles Rocoplan
Registered office
Level 3
Alexander House
35 Cybercity
Ebene
Mauritius
Company secretary
Intercontinental Trust Limited Level 3
Alexander House
35 Cybercity
Ebene
Mauritius
Banker
Barclays Bank Plc International Banking Division
Barclays House
68-68A Cybercity
Ebene
Mauritius
Auditor
Deloitte
7th Floor, Standard Chartered Tower
19-21, Bank Street
Cybercity
Ebene 72201
Mauritius
This Annual Report and Accounts does not constitute an invitation to underwrite, subscribe for, or otherwise
acquire or dispose of any company shares or other securities. This Annual Report and Accounts contains certain
forward-looking statements with respect to the financial condition, results, operations and businesses of the
company. These statements and forecasts involve risk and uncertainty because they relate to events and depend
on circumstances that will occur in the future. There are a number of factors that could cause actual results or
developments to differ materially from those expressed or implied by these forward-looking statements and
forecasts. Past performance is no guide to future performance and persons needing advice should consult an
independent financial adviser.
102 Helios Towers | Annual Report 2017
Helios Towers | Annual Report 2017 103
Strategic ReportGovernance ReportFinancial StatementsOverview 104 Helios Towers | Annual Report 2017
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Registered office address
Level 3
Alexander House
35 Cybercity
Ebene
Mauritius
T: +44 (0) 207 871 3670
F: +44 (0) 207 235 6542
Registered Company Number
092064
B
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www.heliostowersafrica.com