Helios Towers plc (HTWS) Earnings Call Transcript & Summary

Hello, everyone, and welcome to the Helios Towers H1 2021 Results Conference. My name is Seb, and I'll be your operator for the call today. [Operator Instructions] I will now hand the floor over to Kash Pandya to begin. Please go ahead.

Thanks, Seb. Good morning, everybody, and thank you for making the time to join us for Helios Towers' half year results presentation. Hopefully, you've got the slide deck in front of you. I'm going to be running through the slides now. I'm on Slide 2. Joining me on the call is the usual trio: Tom Greenwood and Manjit Dhillon. You will notice that Tom, as of last night, has a slightly different title of CEO-Designate. We are very excited and pleased that Tom will be succeeding me when I retire at the AGM in April '22. And like Manjit, Tom, are both internal promoted individuals, and it speaks to the Board's focus on talent development and the program we have been running for years in terms of developing and educating and training good people to take on senior positions. I'm going to move on to Slide 3, which highlights what we're going to go through the presentation shortly and rapidly moving into the highlights on Slide 5. So H1 highlights. While we've seen solid revenue growth of around 4% year-over-year, bringing H1 to $212 million, this is driven by the acquisition of Senegal, of course, and steady organic growth in the first half year. Our EBITDA continues to expand by 5% in the first half of this year, coming in at $114 million. This increases our margin by about 1 percentage point to 54%. In terms of equity placement and convertible cap, as you would have seen, we raised $160 million in the second quarter. This made -- this was made up of $110 million in terms of primary equity as well as $50 million of convertible tap and has led to us reducing overall cost of debt as well, which Manjit can talk to later on in his section. Regarding our strategic metrics, we added some 200 -- sorry, 2,000 -- just under 2,200 tenancies, including 1,500 sites year-over-year, reaching 17,000 tenancies for the overall business and bringing our site count to 8,600 overall. Our tenancy ratio decreased slightly from 2.1 to 1.99. And this is a reflection of the Senegal towers coming into our portfolio. And these towers, if you remember, have a tenancy ratio of 1.05, which dilutes the overall tenancy ratio. Senegal market entry, we've now integrated these sites, some 1,200 sites and 1,264 tenancies into our business. And if you remember correctly, this acquisition also bought 400 tenancies -- sorry, 400 build-to-suit that we will add over the next 3 to 4 years. Regarding acquisition integration of the 5 additional markets that we've announced in the first half across Africa, and these being, of course, Madagascar, Malawi, Chad and Gabon, the Airtel market, and in addition, we announced the Middle East, our first entry into the Middle East in Oman, with the Omantel markets, these are all progressing to time scales. We expect to close some of these by the end of this year with Gabon and Chad closing in the first half of next year. Regarding our full year guidance, we reiterate and maintain our guidance at between 1,000 and 1,500 tenancies. You would have picked up that we've had a relatively slow tenancy growth in the first half year. And I need to remind everybody that this is a lumpy sector. We don't have a smooth tenancy growth. But as you recall, in past years, we've achieved and delivered on our guidance, and we are very confident of doing that this year. Speaking to July, for example, we've doubled our tenancy count by the additions in July on half 1 tenancies. And what one should look at also, as a leading indicator, is our CapEx spend, which indicates our confidence in achieving the half year in terms of what we've committed to CapEx already this year so far. Moving on to Slide 6. Just bringing in some key stats here. So tenancy, as I've mentioned, increased by 1,400 year-over-year or year-to-date -- sorry, year-to-date and over the last 12 months, we've added 1,200-plus tenancies because of Senegal. And our underlying tenancy growth for our established markets was achieved at 2.14 tenancies per tower. Our annualized adjusted EBITDA came in at $224 million, reflecting some 7% growth year-over-year or on full year 2020. And our portfolio free cash flow slightly reduced at $164 million, just reflecting some tax payments and also non-discretionary CapEx that we have spent to achieve and deliver the second half tenancies that we are already actively working hard on building out. Moving on to Slide 7. An update on our sustainable business strategy. In the first half year, we obviously published our first Sustainable Business Report in March last year -- this year, sorry. We also aligned our reporting framework to the Global Reporting Initiative as well as the Sustainable Accounting Standards. And we've joined the UN Compact Network, which will help us to ensure our corporate responsibilities as we move forward and work with our other peer companies to establish the appropriate sustainable objectives. In the second half year, we're looking to publish our carbon emissions targets in Q4 of this year. And we are carefully considering the challenges between balancing, bringing in telecommunications to the markets we operate in, and remember, in our markets, people barely have mobile coverage. Typically, a little over 50% of the markets we operate in have mobile coverage, and on average, around 55% of the populations have mobile phones. So it is a priority for us to bring connectivity to the populations we serve in our market. And in terms of environmental disclosure, we've submitted to CDP in July, and we should have our first scoring by the end of this year from them. Moving on to Slide 8, before I hand over to Tom. Recent developments. So look, I've touched on Senegal closing. We're excited about the team there now, and they're starting to execute as an operating unit of Helios Towers. And remember, 400 committed build-to-suits that will flow out over the next 5 years. Oman, Omantel tower acquisition, close to 3,000 towers for a consideration of $575 million was signed in May. We're busy working with Omantel and the regulator there and are confident of bringing this portfolio into our business by the end of this year. It's a 15-year relationship that we've entered. And again, bringing 300 committed build-to-suits over a 7-year horizon. And as I've mentioned, we've strengthened our balance sheet by bringing $160 million into the balance sheet, which is a combination of our primary raise as well as the bond tap, and overall, bringing down the cost of our debt structure. On that note, I'm going to hand over to Tom to take us through strategic update. Thanks, Tom.

Thanks very much, Kash, and Hi, everyone. Hope you are well. So I'm on Page 10, and I'll take you through the next few slides, looking at our strategic expansion. So first of all, on Page 10, here's a map view of the expansion that we're currently executing. Pleased to say that Senegal is now fully closed and integrated and a number of markets in operation have moved from 5 to 6 and now being focused on getting that 6 up to 11, which the teams are all working hard on. As Kash mentioned, we anticipate closing based on the timescales that we previously communicated at the times of announcing the deals, which to remind everyone was Madagascar, Malawi in or around Q4; Oman by the end of the year; and then Chad and Gabon in or around Q1. And all of those are on track for doing that with the teams on the ground and executing our 100-day plan accordingly. The deals obviously provide us with growth in scale, growth in contracted revenues, growth in average remaining life of contract and a much enlarged platform to drive our organic growth over the coming years. If we look now on Page 11, we see some of the key stats here highlighted in chart format: number of sites, revenues, EBITDA. The number of sites roughly doubling with these acquisitions coming on board and moving up to close to 15,000, including the committed build-to-suits that we have within the deals. Also, these transactions provide us with good diversification in terms of increased number of countries, increased number of customers and a reduction in the contribution to our overall business from our 2 largest markets, Tanzania and DRC. We see our revenues will be going up from around $450 million to around $600 million, with our EBITDA going up to over $300 million just on day 1 pro forma for these acquisitions. Moving on now to Slide 12. We thought it'd be good to show here the Senegal case study in terms of how we entered and closed that market in a seamless transition. And effectively, this is what we're replicating currently the modular format over the other 5 markets that we're moving into. On the right-hand side here, you see a time line with the new market leaders in this country being Leon-Paul Manya, our Group Director of Integration; and Philippe Loridon, who is now our Middle East and East Africa, CEO, who there was covering Senegal at the time of the Senegal transaction. And the time line here depicts effectively the key elements within our 100-day plan, which is tried and vested and reviewed for every other market entries in our history. So as soon as the transaction announces, we have been deriving in country typically between 2 to 4 people shortly afterwards and meetings with local authorities, et cetera, start from there. We have our internal processes around system and process implementations, supplier appointments, office setup, IT setup, et cetera. We're also doing a recruitment drive, recruiting good local talent and bringing on board new people into the Helios structure. This includes a lot of training, a lot of culture development and the reason that we have people from inside the business going to new markets is to ensure that our Helios culture, Helios way of doing things is replicated from day 1 in the new market. We're also bringing on board suppliers at this point in time. And all of this does include transfer of supplies from the mobile operator to Helios, and also typically some staff from the mobile operators to Helios, and the staff will typically be some of the operational staff and the mobile operator who have been doing the passive work on the network previously. So there's a lot of continuity in terms of what happens on the day that ownership transfers from the mobile operators to Helios. Finally, to Senegal, we obtained our license from the telecoms regulator in Q2 and closed shortly after that. So typically, it's the license process in the market that takes the time. Our own 100-day plan operational setup is very achievable to do in the 100 days, including the office, the recruitment, the IT, et cetera. And usually, it's the license, if anything, that takes a bit longer. We then transition fully to operational activities. And on the left-hand side, today, you can see the key people, the key leaders who are responsible for the Senegal business today. So Marlene is our CEO for Central and West Africa, which includes Senegal as well as DRC and some of our other markets. Karim is our Managing Director based in Senegal and Fatoumata is our FD based in Senegal. And so Karim and Fatoumata were recruited between signing and closing. And there you can see some of the key stats for the market. So the Senegal case study here is absolutely what we're replicating across the other 5 markets. We have roughly 20 or so people who are responsible across those markets plus new recruits coming in. And as I said, all broadly on track for the closing timings that we previously communicated. Moving on now to the next page, Page 13. Just here's another reminder of some of the future opportunity that we see in our enlarged portfolio. And the -- some of the key reasons around why we look to acquire the networks that we do acquire is that they meet our acquisition criteria. And a big part of our acquisition criteria is the organic growth subsequent to acquisition, which clearly is what drives margin growth, what drives revenue growth and what drives overall performance. So within our market, independent research tells us that there are 30,000 points of service required over the next 5 or so years to satisfy the anticipated growth in subscribers and data consumption in the market. And to remind everyone, a point of service is a collection of antenna from a mobile operator, so for us, equates to a potential tenancy. So a significant number of potential tenancies in our markets over the coming years. That's also complemented by over 1,000 committed build-to-suits that we have, which we've signed along with the acquisitions, which gives us guaranteed site growth as well. And as we've previously communicated, we've guided to an average annual lease-up of between 0.05 and 0.1 across the acquisition targets. And then just another reminder of the inorganic growth opportunity across our markets. And Africa and the Middle East are both fairly similar in terms of mobile operators owning towers. There are still around 300,000 towers owned by mobile operators across Africa and the Middle East. This represents about 75% of all the towers. And so both regions offer a significant organic growth potential over the coming years. As we've been demonstrating in the past year or so with the recent 6 acquisitions, there is more pipeline ahead, and we will continue to assess acquisitions for potential good fit into our business and potentially go for ones, which look attractive. However, that's not to say we are solely focused on that. The prime focus is execution, business excellence and organic growth for the assets that we've acquired with strategic inorganic growth layered on top of that are relevant. So with that, I will hand over to Manjit for the financial section.

Thanks, Tom. Hi, everyone. It's great to be speaking with you today. I'll be going through the financial results and starting on Slide 15. We've seen strong growth in the quarter, predominantly driven by the acquisition of Free Senegal's tower portfolio. And on this slide, we summarize the main KPIs, which I'll be talking through in more detail over the next few slides. So on to Slide 16, with the addition Free Senegal's tower portfolio, and on this slide, we summarize the main KPIs, which I'll be talking through in more detail over the next few slides. So on to Slide 16, we see continued upward growth in our tenancies, both organically and inorganically. And you now see our reporting, including Senegal, which is closure in the second quarter, adding 1,264 tenancies, resulting in year-on-year growth on a Group basis of 15% and quarter-on-quarter growth of 9%. Excluding Senegal, over the last 12 months, we've added 920 tenancies, and during 2021, we've added 170 tenancies year-to-date. Now whilst this is slightly lighter than where we've been in prior years at H1, we have a very strong commercial pipeline of tenancy additions in our established markets and have reiterated our guidance of 1,000 to 1,500 new tenancy additions for the year. So we are expecting a busy second half of the year. And to give a bit more color, just to reiterate what Kash mentioned earlier, in July, we had a strong month, almost doubling our year-to-date organic additions, moving up close to 170 tenancies in that month alone. We remain focused on organic tenancy additions and are working hard to get these rolled out, and you'll see these coming through in our next couple of quarterly announcements. A quick comment on tenancy ratio. With the introduction of Senegal, the Group tenancy ratio reduced to 1.99. And this is because the acquired portfolio comes with a low tenancy ratio of 1 on day 1. We will see the impact of Senegal on a few metrics, diluting some metrics like tenancy ratio, portfolio free cash flow, return on invested capital. And that is really due to the low initial tenancy ratio. As we integrate other acquisitions, we've announced, you'll see a similar trend as again, the portfolios all have initial low tenancy ratios. However, this is a great opportunity for us. We are growing our asset base, increasing the number of sites to which we can develop, add further colocations over the coming years, and we'll see that tenancy ratio and other metrics build up again. And for reference, removing Senegal, our established market colocation ratio increased by 0.04x year-on-year and remained flat quarter-on-quarter, which is still expected given the slower rollout during H1. On to Slide 17. Looking at revenues and adjusted EBITDA. We've seen growth year-on-year and quarter-on-quarter for revenue and EBITDA, whilst adjusted EBITDA margin remained stable at 54%. Revenue and adjusted EBITDA have both grown 6% year-on-year and 5% quarter-on-quarter. Similar to the previous slide, some of the growth is attributable to the integration of Senegal. We've also seen growth organically, however. Excluding Senegal, adjusted EBITDA increased by 2% year-on-year and 0.5% quarter-on-quarter, reflecting tenancy growth, which has been partially offset by increased HoldCo SG&A investment to support the announced acquisitions. If we move on to Slide 18, you'll see the usual breakdowns provided, which are broadly consistent from previous quarterly updates. We have a strong currency hedge business, which is underpinned by long-term contracts with our blue-chip mobile network operator partners. 99% of our revenue comes from international mobile network operators, comprising mainly Airtel, MTN, Orange, Tigo, Vodacom and Free Senegal, who we recently purchased the Senegalese portfolio from. We have strong long-term contracts with our customers. And as of H1 2021, we have long-term contracted revenues of $3.5 billion, with an average remaining life of 7.4 years. This means, excluding new wins and rollouts, we already have that revenue contracted and in the bag and provides a strong underlying earnings stream for the business. We also have 61% of our revenues in hard currency being either U.S. dollar or euro pegs. As a reminder, this will increase to 68% pro forma for the announced acquisitions, which translates to 73% when looking at EBITDA, which will be in hard currency, which provides a strong natural FX hedge for the business, which is further complemented by our annual inflation escalators, which we have in all of our contracts with our customers. Moving on to Slide 19, and a look at the cost and tower cash flow analysis. We can see a continued reduction in OpEx per sites to 18.1% from 18.7% in 2020. In terms of SG&A mix, this is broadly consistent with the prior periods, except for the introduction of Senegal. We have seen a slight increase in HoldCo SG&A of $3.4 million to $13.8 million for the first half year, which reflects investments made to support the announced acquisitions and some PLC related cost increases. At the beginning of the year, we had guided to $3 million of incremental investment in SG&A for the year, and we're tweaking this up slightly to $5 million-plus inflation from 2020 levels, and this is due to the incremental investments related to the Airtel and Oman transactions. On an annualized cash flow per tower basis, we've seen a bit of a decline, which, again, partially driven by the introduction of Senegal, which comes with the lower cash flow per tower on day 1, but we'll see this increase as we lease up the portfolio. Moving on to Slide 20. We look at CapEx. And year-to-date, we deployed $237 million of the $1 billion of CapEx we've guided to for 2021. Of the $237 million, $59 million has been incurred in our established markets, and $178 million has been incurred in Senegal with the majority of that being the acquisition consideration. As we look out for the rest of the year, we still expect to incur $50 million to $80 million in our established markets, which is predominantly related to organic growth and some non-discretionary maintenance of corporate CapEx, $37 million for Senegal, of which $17 million relates to acquisition costs, which are still to be made, and $20 million from ongoing CapEx there. And the remaining $683 million is for the acquisition considerations relating to Oman, Malawi and Madagascar, which we expect to close during the second half of the year. And all of this gets us to $1 billion of CapEx, which continue to be our guide for the full year. Moving on to Slide 21. Here, we show a summary of our financial debt. Our Q2, our net leverage was 3.2 and continues to be below our target range of 3.5 to 4.5. We've continued to strengthen the balance sheet, as Kash mentioned earlier, and we've tapped the convert $50 million at an implied yield to maturity of 1.76%, raised $110 million of equity and also raised a local EUR120 million facility in Senegal, with a portion already drawn down for the acquisition consideration and the rest being planned for CapEx and working capital. When taken together -- all of this together, we have $1 billion of available funds, comprising $640 million of cash and $390 million undrawn debt facilities. All of these funds are in place for the announced acquisitions, and we're in a strong financial position to support our growth strategy. On to Slide 22. A look at our cash flow. Our portfolio cash flow conversion has reduced to 65%, which is really due to the timing of lease payments, corporate income tax and non-discretionary CapEx payments. In Tanzania and Ghana, we are now profitable. And as such, corporate tax payments have increased from historical levels. And in H1, we also saw an increase in payment of leases, and this is mainly due to the inclusion of Senegal. As we continue to integrate the announced acquisitions, we'll see the portfolio free cash flow conversion maybe flatline. But again, as we continue to increase the tenancy ratios, we'll see these increase over the next coming years. On working capital, we've seen an increase in receivables days, which is mainly due to a couple of reasons. First one is a customer paying us just after period end in July, which we do see from time to time, and also due to Senegal, where following closing, we invoiced our customers and received our payment as per payment terms in July. Adjusting for these, our net receivables days would have been a bit closer to historical levels. And finally, on Slide 23, we look at return on invested capital. And there has been some dilution to return on invested capital during H1, again, partially due to the integration of the Senegalese portfolio with ROIC reducing to 11.8% as well as a slightly lower portfolio free cash flow in our established markets having a bit of a driving factor there. We would expect the portfolio free cash flow to increase during H2, especially for our established markets, given some of the seasonality of timing of cash payments, which impacted portfolio free cash flow during H1. However, it's worth noting that during this transformational period for the Group, where we are closing the announced acquisitions, we will continue to see some short-term flatlining or moderate dilution to ROIC as we continue to integrate the new assets. But as mentioned earlier, as we execute our growth strategy in existing and new markets, leasing up and increasing portfolio free cash flow, we'll see the great cash compounding effects of our investments and ROIC will increase over the medium term. And with that, I'll pass back to Kash to wrap up.

Thanks, Manjit. So I'm on Slide 24, and we'll go on to questions right after this slide. So just to go through the key points again. We've had a strong H1 as M&As and organic growth continues, Senegal closed, and we've announced acquisitions in H1 of 5 new markets, while delivering and continuing to execute operationally for our customers. We have continued progress on our Airtel and Omantel acquisitions. And once complete, this will make us the most diverse, geographically most diverse TowerCo across Middle East and Africa. And as Manjit and I have said already, our full year outlook is unchanged, and we maintain our guidance of achieving between 1,000 and 1,500 tenancies for 2021. So on that note, I'm going to hand over to Seb to help coordinate the questions. Thanks, Seb.

[Operator Instructions] Our first one today comes from Giles Thorne at Jefferies.

My first question is on the second half inflection in tenancy growth. It would be useful to get some color on exactly the nature of your visibility into that ramp. I appreciate these are probably things you've said before, but just to qualify whether this is a 'conversations with MNOs' or 'signed off bill of works' would be useful. And indeed, any color around your ability to scale that growth. I mean, if there's a huge second half windfall of works to be done, do you have the, I don't know, manpower to get that all across the line? Second question is an observation around American Tower and their guidance for organic tenant billings growth of more than 8% in Africa and how that compares to what you're seeing. I appreciate your job is to account for yourself, not for American Tower. But any observations you'd like to make on that, that difference would be interesting to hear. And finally, congrats to Tom. I appreciate he's going to be your boss for another 12 months or so, and he sat next to you in the room probably. But it would be interesting, I think we'd all like to hear, Tom, how you feel the Tom Greenwood era of Helios might differ or not differ at all from the Kash Pandya era of Helios?

Thanks, Giles.

Yes, thanks.

Go ahead, Tom. Go ahead.

Well, thanks, George, for the question. Why don't I kick off and the Kash can drive in as well. Just, Giles, on your first one on the H2 growth. Yes, look, in terms of orders in the hand, we actually have a very clear view of that. So we have significant orders in hand roughly 75% of what we're expecting to roll out in H2. We have actually physical orders already in hand. And then the other 25% is it's very advanced discussion. So we would feel, I'd say, pretty confident about that. And as demonstrated in July, for the month of July, we added roughly the same amount of tenancies that we added in all of H1, so roughly another 170 tenancies were added in July. So if we were reporting these numbers of July, the tenancy number would be double what it is in June. So that also helps a good everyone confidence of what we're doing. And look, in terms of sort of resource and non power, yes, obviously, a big tenancy rollout requires a lot of management too, particularly the project management teams, supply chain teams, site acquisition and leasing teams, all very busy. But for sure, achievable and we're all focused on that. Just to, I guess, remind everyone, we do see lumpiness in the sector. Some quarters are quiet. Other quarters are a very large. As you remember that in last year, I think we saw in Q4 alone, we added just shy of 670 in Q4. As I said, it does go up and down. And it's -- we organize ourselves to be able to do that effectively. So we're confident of delivering. Look, from an American Tower perspective, look, we don't particularly sort of compare ourselves like-for-like. They're in different markets. There are different things going on in different markets at different times, which sometimes means that we'll have a big rollout 1 year, other years, we'll have a bigger rollout than them. So I wouldn't want to comment on exactly what's behind their numbers versus ours. Because, as I said, they're in other big markets that we're not in. And so we're not fully sort of involved in on conversations they might be having there. And then, look, on the last point, look, I think, first of all, the transition is a very orderly one, right? The Board and the management is paying closer, a huge amount of focus in our business on succession planning. And we've got umpteen examples across the whole Group where people have moved up into different positions, and that's been through methodical planning rather than sort of fluke or random behavior. So this is very much just in line with that. And from that perspective, I would see this is very much an evolution rather than revolution. Out through this, I'd been CFO other than COO, and now moving into the CEO position. It seems like a fairly natural progression and then Kash moving into the Deputy Chair position on the Board, again, means that he's fully involved and inclined in the business and is there to share his wisdom with all of us for the foreseeable future. So I see less of a step change. It's just more of a natural evolution. I think in terms of the kind of "Tom Greenwood Helios Towers", and how does that differ. I think, again, I would say it's evolution rather than revolution. I think the key thrust of our business is around execution and business excellence, it's around driving organic growth and performance. It's around increasing scale through M&A at the right opportunity for the right country or asset. And I think that, that is the direction of travel for our business as we move forward. In terms of short term priorities, it's clearly integrating the 5 other transactions that we've announced into the business, continuing to drive the organic growth in the performance. And in 9 months or so time, we anticipate to having integrated the 5 other markets and established the new larger platform. And I think that will be a great springboard to move off and go forward on both from an organic growth perspective and an inorganic perspective for the -- any deal that makes sense for us. So I'd say largely more of the same continuing in that direction and continued focus on execution and business excellence, which I think is the key to success for this business. Kash, anything to add?

No, no, no, you've covered it all very well. Thank you, Tom. Thanks, Giles, for the question.

The next question is from John Karidis from Numis.

I have 3 questions, please. Firstly, what is the average cost of your debt today? Secondly, South Africa has been -- has sort of remained a relatively insignificant part of your business, more so after the bolt-ons. No doubt, COVID restrictions have been a factor there. But please, if you can paint a picture of what you hope or you expect over the next 2 or 3 years there? And thirdly, essentially, I'd like more information to bolster the confidence about the tenancy growth in the second half. So sort of my version of the question would be, Tom, you just said that you've got 75% of what you expect to roll out in the second half. You have that as firm orders. When I look at the range that you've given -- your guidance range that you've given, and we're now in August, 340 or so tenancies in the bag already. Can you sort of detail why you think that the top of the range is still achievable? And how would you link that to the 75%-25% comment you gave in answer to Giles' question, please?

Yes, absolutely. Thanks, John, for the question. Manjit, why don't you take the first cost of debt question?

Yes, absolutely. So in terms of our cost of debt at the moment, we're now at sub-6% levels. So our average cost of debt is now 5.8%. And just as a reminder, in about March of last year, our cost of debt was 9.135%. So we continue to see some good work in that space. And we continue to look at options as well in terms of further reducing our cost of debt, whether that be looking at some local financings in some markets where we think we can get some good costings, but I certainly think that there are opportunities for the Group as we go forward in terms of moving ahead with that trajectory of continuing to improve our cost of financing. Back over to you, Tom.

Yes. Great. Thanks, Manjit. So John, I think your next question was regarding South Africa and how do we see that evolving over the next few years. So look, I think South Africa, for us, we entered it just over 2 years ago. Now we've been busy rolling out organically with a few small tower bolt-ons as well. I think that continues. I think that there's organic rollout happening there right now, there is a small bolt-on in the markets that are potentially available that we're assessing. There's also large acquisitions in that market that potentially could happen. And again, we would approach those in the way that we do any transaction and look at our acquisition criteria and assessment over there if they're good fits for our business. So we'll continue doing what we do there in that respect. But there's also adjacent technologies in South Africa, which are being assessed. We already have 13 edge data centers in South Africa. And that's enabling us to help South Africa as a bit of an incubator there in terms of learning new technologies, particularly as 5G networks roll out and that becomes the need for more edge data centers across network, more small cells and things like that. We're also doing a few small cell pilots there as well. And so South Africa gives us that optionality as well and that learning ability to then go and apply it to other markets, which is typically tracking behind South Africa from a technology evolution point of view. But South Africa allows us to gain that knowledge and expertise early such that we can then deploy it in other markets as it becomes relevant. So yes, so I think more growth, more organic growth there, probably a few small bolt-on acquisitions as well. We'll assess larger acquisitions as they might come to market. And we'll also be developing more adjacent technologies there to support all of our mobile operator customers in the 5G rollout, which is starting soon in South Africa. And then, yes, look, finally, on the tenancy rollout, yes, so I mean, we've reiterated our guidance, which is between 1,000 and 1,500. There is a range clearly. We have some variability in timing of exactly when new tenancies come online. Some of that is beyond our control. So we have stuck with a range at this point rather than narrowing the range at all. We're considering Q3 reporting whether we narrow the range at that point, but for now, we've kept it as is. And as we've said, there is a very strong, healthy pipeline there, which we're currently busy converting.

Can I ask if you, for one reason or another, you end up not participating in large TowerCo acquisitions in Africa, are you likely to still stay there just because it's a sort of center of knowledge, given what you said about South Africa being ahead of its neighbors?

Well, yes, and for organic rollout opportunities, there's -- particularly as 5G comes, there's a need for significant densification of network. And so that offers a very encouraging organic rollout opportunities. So for that reason, plus the technology reason, which again, is not just a learning opportunity, it's a real revenue and profitability opportunity as well. And so I think the market has a lot to offer in all of those assets.

I'm sorry, to move lastly, at the risk of pushing my luck in a big, big way, the 75%-25% comments that you made in answer to Giles' question for the second half, would that get you to an aggregate number at least in the middle of the range that you've given to date?

Well, we're not going to give any more sort of direct detail or narrowing of the range. I think the 75%-25% is sort of a reasonable midpoint of where we're at right now. There is upside to what we're looking at right now, which could take us up the range, certainly. We're only in August at the moment, of the range, certainly. We're only in August at the moment. Quite often, more orders come in later in the year as well, as mobile operators get midyear reviews and new budgets signed off. So that can always happen. But I think we feel very comfortable at this point about finishing within our range, and we'll be reporting on that more in Q3 and then obviously at year-end.

The next question is from Simon Coles at Barclays.

Yes, just on the equity placing that you did. I just wanted to understand a bit more the thinking behind why you did the raise the way you did versus, say, coming for a bigger amount of equity sales. You had a big TowerCo transaction that you might announce in the future, was it opportunistic? Was it just to make sure that you could show to the MNOs that you have a strong, healthy balance sheet, given you had quite a few acquisitions this year, maybe a few more than we might have expected? Just trying to understand the thinking for why you did this equity placing and the sizing?

Thanks, Simon, for the question. So look, we were very happy with the rate. We were able to see through this raising reduce our overall cost of debt, whilst raising some additional funds for potential incremental opportunities that are coming. In terms of the actual equity raise quantum, we take a balanced approach to raisings. We do not want to over-equitize. And given the cadence appraises that we have, this raise helps to provide some incremental capital for some smaller opportunities we're monitoring, but also helps them further manage our leverage in the short term. I think having net debt now at 3.2, following the Senegal closing and having over $1 billion of capital means we're managing our financial position very well, and we're in a good position for any potential opportunities that may come up. So I think in general, the sizing seems to makes sense from our perspective.

Our next question is from David Burns at Berenberg.

I have 2 questions, please. Back on organic tenancy now, Tom, I think you've previously mentioned, I think it was last quarter that this year's pipeline is substantially ahead from previous years in terms of rollout. Just wondering that's all the expectation based on orders received to date? And secondly, you're clearly on full speed integration at the moment. Just interested to hear how your M&A pipeline is developing? And generally, how strong your appetite is given your integration efforts and pro forma leverage?

Thanks for the question. So yes, look, on the organic kind of the pipeline, it is a strong pipeline, as it was at Q1. At Q1, we had a lot of orders in for build-to-suits, actually. And that's one of the reasons why they're back-ended because build-to-suits take longer than colocation to get up. And at Q1, I think that was -- we had our biggest ever amount of orders in at that point of the year. And obviously, we're busy now converting those into tenancy. Some of which came on in July, as we've heard. So I think as at this point in the year, the pipeline is still very strong. We've added to the pipeline of orders since Q1. I'd say in terms of comparison to previous years, whilst Q1 was, say, a lot higher than previous years in terms of comparing to previous Q1 at this point in the year, I'd say we're still a bit higher, but not as much higher as compared to the Q1 differential, but a very strong level and high confidence of delivering the guidance by the end of the year, as we described. In terms of the M&A pipeline, the M&A pipeline for our regions continues for this strong as it has done for the past 18 to 24 months, to be honest. We are hearing about new deals potentially coming into the pipeline very soon as well. We're currently monitoring some opportunities. Our key focus right now is integrating the acquisitions as announced. We did that with Senegal and we did on the others, as I've described earlier in this call. But that's not to say we've turned the tap off on the new acquisitions. We're monitoring them. We have a very busy business development team, who is, relative to look and assess of the new opportunities that are coming in, and we'll continue to do that.

We have no further questions on the line. So I will hand the call back to Kash.

That's great. Thanks, Seb. Well, look, thank you very much, everybody, and we look forward to talking to you in November for our Q3 updates. Have a good day. Thank you. Bye-bye.