Helios Towers PLC
LSE:HTWS
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
68.75
131
|
| Price Target |
|
We'll email you a reminder when the closing price reaches GBX.
Choose the stock you wish to monitor with a price alert.
This alert will be permanently deleted.
Helios Towers PLC
You don't have any saved screeners yet
Good morning, everybody. Thank you for joining our Q1 results update for 2020. First of all, I hope everybody is well, safe and healthy during this difficult time. Joining me on the call today I'm on Slide 2 of our deck, is Tom Greenwood, our CFO; and Manjit Dhillon, who's the Head of our Investor Relations and Corporate Finance. Today, we're going to cover on Slide 3. We're going to cover highlights that I'm going to take you all through and then hand over to Tom to take us through the financial results. And as Jordan has said this plenty of time at the end for Q&A, so we'll go through those right at the end. Moving on to Slide 5. Well, look, Q1 is business as usual as far as we're concerned. Our quarter is on track to what we expected, and we are maintaining our full year 2020 outlook. We've had a strong revenue growth of 9% in the quarter against Q1 of 2019, coming in at $102 million. And correspondingly, our EBITDA has grown by 11%, coming in at $54 million. Our margin improved quarter-over-quarter by 1 percentage point to 53%. And we delivered another quarter of growth that now equates to 21 consecutive quarters of growth for our business and demonstrates the robustness of the business model, but also the robustness of the markets we operate in. The business is delivered in the quarter, portfolio free cash flow of $46 million from 14% increase year-over-year. Regarding our operational dynamics in terms of currency growth and site growth, 4% year-over-year site growth shy end of 7,000 towers in total and 8% year-over-year tenancy growth coming in at a little under 14,700 tenancies. This gives us a tenancy ratio of 2.1x and maintains our trajectory in the sort of medium to long-term horizon, 3 to 5-year horizon of achieving 2.3x to 2.5x tenancy ratio for our business. In terms of our resilience towards particularly the pandemic. We've got a couple of slides coming on during this deck. But look, as I said, it's business as usual. We're maintaining our performance and serving our customers as we've done in the past years, and we'll talk a little bit more detail on how we're doing that. M&A, our strategy continues to focus on expansion in our markets but also into new markets. We're pursuing multi-deals currently, and it's in line with our strategy and we'll touch on that in a slide later on as well. Moving on to Slide 6. Well, just reinforcing 21 consecutive quarters of EBITDA growth. This slide demonstrates the robustness that we've been operating under, and we believe we'll continue to operate under this, our margin slightly decreased. This is just purely driven by some additional costs coming through as we're now a PLC, it was something we expected. But it does represent a 39% CAGR growth in our EBITDA margin and EBITDA since Q1 of 2015, more than doubling our margin over that time. Moving on to Slide 7. Look, I've got a couple of slides on how we're operating under the COVID environment. And our business is robust, and we've had minimal impact. First of all, looking at our staff and colleagues, we executed working from home offices very early prior to lockdowns in the markets and we took the right steps. And this has meant that we've not seen any misses in our operational capability. And the nature of our field operations is an isolated model. Typical field engineer is operator on his own. He has his car, his 4-wheel drive truck. He has spares that he carries and equipment he carries and he goes up to site on his own. So it's a very isolated model. What's important is that all the governments in our markets have classified telecoms communication as an essential service. And so we've got the ability to move around the markets we operate in very easily. And we are 1 of the special service categories that allow us to move freely. In terms of our revenue and existing liquidity, we still have close to $3 billion worth of contracted revenue at around 7 years of contract life remaining. And in our industry, we scientifically 10 to 15-year contracts. So still a long way to go on our contract life. We serve Africa's large MNOs, the big 5, as we call them, over 80% of our revenues with these guys, and they're robust and have healthy balance sheets and are continuing to operate and actually the demands have gone up, which I'll touch on shortly. And overall, in terms of cash and debt capacity, we have $230 million of financial resource to continue to pursue our M&A strategy and continue to drive the performance of our business. Customer rollouts under the current environment. Well, look, we've seen Q1 is in line with the tenancy growth that we've seen in the last 3 years. And that actually you could obviously fractionally better than what we've delivered in 2018 and 2019. The only sort of potential challenges supply chains for our customers, but we believe they're managing this well in terms of availability of equipment to put on new towers active equipment. From our side, our supply chain, we've been proactive in mobilizing the supply chain to make sure that we've bought early and ahead. And during the course of 2020, we see no issues in making sure we can maintain our towers, but more importantly, facilitate building new towers for our customers when and as they need them. And to the extent of fuel consumables, et cetera, we've been proactively purchasing fuel in our markets. And then we have up to 3 months of fuel across our markets on an ongoing basis to ensure that we don't have any blips in servicing our business. And in terms of the organization and our staff and the communication look, what are the benefits of investing in digitized solutions that we have done over the last few years, is that it's coming into its own play now. We've been able to have our staff work from home because We've got cloud-based solutions that we can monitor and communicate video conference things, day-to-day monitoring of our assets hasn't changed. And we have been able to enact our business continuity plans that were already in place prior to this challenge, and they've worked well for us. Slide 8. Really just going on further. If you look at our power time performance, it's just business as usual, we've been operating at close to 100%, well above the SLAs, we have service level agreements with our customers. And it's pleasing to see actually that during April, we've seen a slight improvement in our performance in power delivery and uptime of our sites to our customers. Rollouts for our customers, as you'll see in the comments from Voda and Orange on this slide, there is increased investment from some of our customers is driven by more volume of traffic that we're seeing from our customers are some of the full year trading updates from Vodacom, Orange, Airtel this week, for example, have all talked about increase in data volume and voice traffic. And this is all putting positive strain on the infrastructure, which means more equipment for us, which means in time, more revenue and growth for us. And regarding the operational safety we've enacted the normal PPE you'd expect a business like ours to put in the field to ensure we carry on protecting our staff. Moving on to Slide 9. Touching on our progress on ESG. Look, we've talked about our values that have been ingrained in our business since 2015. We are 1 of the only few companies, it's only company in Africa that's got 4 internationalized standards when it comes to behaving with integrity, focus on quality and protecting the environment and our people. We've invested in capital to introduce green solutions into our portfolio. And part of our ESG focus is care benchmarking exercise during the first few months of this year and is to compare ourselves to what the FTSE 250 companies are doing. It was pleasing to know and the outcome of that bench model is that we are actually in the midpoint of what FTSE 250 companies are doing. We're not satisfied with that. We set ourselves an objective to be in the top quartile of the mix 3 to 5 years as part of our strategy, and we will be communicating our strategy on ESG in the next few weeks, and we've invested in resource into the business who can support us knowledgeable resource to bring an understanding of ESG sustainability and integrate that to our business strategy. So watch this space as we communicate that road map in the next few weeks. On Slide 10, moving on to really our focus on M&A and growth through acquisitions. This slide you've seen just reiterating that the 65,000 towers in Africa that are still owned by MNOs. And the great countries that you see on the continent tower, countries with no independent telcos operating in them today. So we're still very active. And in some ways, I feel that the business development tracker has improved. We've got more opportunities on there than we had a few months ago. And we continue to pursue multiple transactions and are hopeful and positive about bringing them to fruition over the next few months. Obviously, the COVID-19 issue has had a slight slowdown in our ability to travel and the ability to communicate with counterparties just because of the evil that the world is going through, but no change to our outlook on the opportunities to expand, et cetera. And our target and our objective still remains is to enter additional 1, 2, 3 countries over the next 5 years and add a significant amount of towers through M&A into our portfolio. On that, I'm going to hand over to Tom, who's going to take us through the financials. Tom?
Thank you very much, Kash. And hello, everyone. I hope everyone is well. So well. The business really just summarizes some of the main KPIs, which I'll talk through on the next few pages. If we move on to Page 13 to look at our revenue. We've had a solid and steady growth continuing with revenue growth of 9% year-on-year and 2% quarter-on-quarter. And likewise, EBITDA growth of 11% and [indiscernible], respectively, through those periods. Our margin year-on-year has stepped up slightly 1 percentage point, slightly down quarter-on-quarter from Q4 from 54% to 53%. In fact, that's a 0.5% improvement that's predominantly because of some additional TLC related costs on into our business. But very much reiterating guidance for the full year '20, which was to be between the 55% to 60% range that we've set ourselves for the medium term and just coming into the bottom of that range. .If we move on to Page 14, again, a page that is very consistent with previous quarterly update. Our customer base FX mix and Opco split is largely unchanged from 2019. With 86% of our Q1 revenue is coming from Africa, big 5 mobile operators, 59% of our revenue being [indiscernible], which translates to about 65% at EBITDA level. Moving on now to Slide 15. And we see the continued upward growth on our tenant fees. Year-over-year, last 12 months, we've added 1,077 tenancies across our portfolio, which is in the range of our 1,000 to 1,500 guidance from [ Manuel ]. And that, of course, is our guidance for FY '20, which we're reiterating today. In Q1, we added 86 tenancies. Traditionally, Q1 is our quietest quarter for tenancy increase and that's because the big mobile operators typically the finishing or just starting their budget cycles at this point. And if you compare the Q1 for the last few years, it's very much in line and perhaps slightly ahead in 2019, we have 51 and in 2018, 76. We do usually see uptick in tenancy growth for the year, which is our expectation, again, now based on a pretty robust pipeline that we have ahead of us. Moving on to Slide 16 and a look at our gross profit per tower and gross profit per tower has stepped up 10% year-on-year. This demonstrating the continued operational leverage of our platform, essentially adding new tenancies to our platform, which delivers significant bottom line flow through. The OpEx is up slightly in the quarter as we've seen a slight increase in sites and a slight increase in power cost. That was still 33% of revenue being maintained there. We look at Slide 17 now, our CapEx. Again, our CapEx -- we're reiterating our CapEx guidance for the year, which is $110 million on an organic basis with the $30 million earmarked for some smaller market acquisitions, which are near term. One of which actually is very [indiscernible] potentially in the next few days. Our CapEx as of Q1 was $11 million, so relatively low compared to the full year guidance, but that's simply timing of quarter-on-quarter. So again, no change to the CapEx guidance for the full year. And in fact, we've accelerated the purchasing of CapEx items at the end of Q1 and early Q2, so that our CapEx is ready in market, ready for deployment based on the pipeline that we've seen for most today from our customers. Moving on now to Slide 18. Again, our debt position not much has changed here since our last update for FY '19. Our leverage continues to be below our target range. Our leverage is at 3.0x on a net leverage basis at the moment, our target range continues to be 3.5x to 4.5x. So we do have funds available for the expansion path that we've described, we'd expect to deploy some of that in the coming months. If we look now on Slide 19, I get a look at our cash flow, cash conversion portfolio free cash flow continues to be very strong and demonstrate growth, reaching 85% in Q1. And that's almost a 30% increase since 2017, so a significant increase in cash conversion. Our net working capital, which is the other call out on this page is minus 35% -- [ 35 ] million for the quarter. This principally represents investment in CapEx and OpEx for our business as described in terms of the business wisely earlier. This is a forward purchasing an investment for growth that we've done to ensure our business is resilient through this year and also ready for growth as it comes through the pipeline. Our net customer receivables has gone up a bit in the month, $9 million. As you can see on the chart there. This was solely some of the large big 5 MMOs paying us after the March 31 date, which, of course, was some of them was the year-end. And [indiscernible] that around through April. So if we were to show this chart today, it was the [ $17 ]million reduction on this position. So all the cash coming in effectively. And with that, I will pass back to Kash for the summary on Page 23.
Thanks, Tom. This is the last slide. before Q&A. So look, summarize Q1 is in line with our expectations. The business is operating robustly during the COVID crisis and business as usual as far as we're concerned. Organic, inorganic pipeline continues to be robust for us. And we are on track to deliver between 1,000 and 1,500 tenancies this year, which is the guidance we've given, and we're maintaining 2020 guidance. So on that note, I'm going to hand back to our conference coordinator Jordan, who can help with the questions. Jordan, over to you.
[Operator Instructions] Our first question comes from Giles Thorne of Jefferies.
My first question is coming back to the matter of how the coronavirus has impacted wireless traffic?Yes. So to your point, Kash, yes, some of your customers have evidently benefited from a massive pickup in traffic. But I wanted to explore how that could or couldn't come through an accelerated network investments this year or early into next year? And in particular, I was surprised to see that Airtel Africa, as an example, actually kept their March 2021 CapEx guidance unchanged, i.e., there's no ostensible pickup in network investment by Airtel Africa. So it would be useful to hear exactly what your customers are telling you at this point in time. when you speak to them about any changes to immediate investment plans. Hopefully, that all makes sense. Related to that. Let me get the 3 out, and then I'll hand back to Kash.
Yes.
And related to that, Airtel Tanzania was awarded some more 1,800 megahertz in February. Do you think that is something that they're about to imminently deploy? And actually, could this be a case for them to maybe finally sell their towers in that market? And then the final question was on Millicom again under the same kind of umbrella fees. Millicom Tanzania or Tanzania is Millicom's last African market, my reading of the body language from Millicom remains that they are pretty ambivalent to the region. Is this going to be a structural impediment to growth for your Tanzania business? Are they just going to sit on their hands and not invest in that particular operation
Thanks, Charles. Thank you for those questions. So first of all, what we're hearing from the customers, certainly, we our pipeline for tenancies, colocations, et cetera, seems robust over the last few months. And we've had inquiries about additional equipment, et cetera. I cannot go into specifics. And at this stage, we're not saying anything about being above our guidance. We still -- a range of adding tenancies between 1,000 and 1,500 is fairly large, and we'll absorb whatever additional capacity increases they need within that range as far as we're concerned. So we're actively working with our customers. The good thing from our side is we're ready to do what they need across all our markets. We've got the capacity in terms of equipment to build towers, but also to add more tenancies on existing towers. But customers' plans change. It's the beginning of the new budget cycle for some of our customers from the first of April. And we'll hear more during the next 3 months on their rollout plan for the next -- for the next 12 months, which is slightly out of take to budget year effectively. .On Airtel Tanzania, yes, no, look, first of all, they own their own portfolio, as you quite rightly pointed out, they've got more spectrum that they've got to -- it is an entity with the government there in Tanzania. And as they upgrade their network, we should see some improvement in our equipment on our towers where they already have tenancies on. And we're watchful. On the towers that they're selling, we know of those -- that portfolio very well. We've looked at it before. Currently, our view is that while the towers equate to some 300 towers owned by Airtel. For us, there are about 700 towers that are unique because we are in close proximity to those towers. So we'll see what happens with that asset sale. It has been in the public domain. So I won't comment any more on that point. Regarding [indiscernible], it's not a secret that they've been looking at marketing those -- that business. It's their last hold effectively in Africa as a wholly owned entity. And I think this crisis may have slowed down that sale process potentially for a few months. But they were preparing to sell that asset. And yes, they may not invest as much as they should, if it was a long-term commitment. But certainly, we are still getting inquiries from Tigo in Tanzania, that's the brand name on tenancies and expansion, et cetera, because they need to maintain their market share. What's good from our perspective is that we don't believe it will be a merger because the market share would be unfair, whoever buys from within, i.e., Airtel or Vodacom or vital in that market. So we believe that there will be a new player that will come in, whether it's MTN, Orange or someone else to take that MNO. And that will encourage more investment when that happens. So we've learned from acquisitions or takeovers as well as mergers in other markets over the last few years that there's growth when that happens in the markets.
And just as a follow-up, the coronavirus because obviously, you've spoken to stimulating network investment. It will be interesting to see if it's stimulating any kind of addition to the top of the M&A funnel, if that makes sense. So our MNOs in the region being prompted by the virus to change industrial policy and an outsource and sale and leaseback? And what's kind of happening at the top of the M&A funnel in response to the virus?
Yes. Look, we do think that -- and this is not just for the virus, but we think that there will be pressure on CapEx, et cetera, which will ultimately continue to feed the pipeline for tower sales in our view. So for example, NTM, I think, this morning or yesterday announced that they've got a constraint. And that all leads to releasing value from the balance sheet, in our view, which will happen over the coming years. There is 165,000 towers still owned by MNOs in the continent. As they outsource that aspect of their business. And it's proven that independent power companies do the job better than MNOs in running passive infrastructure. We've certainly experienced that when we've taken on to our portfolios. And I think there will be more and more of this that will occur in the continent.
Our next question comes from [indiscernible] of Bank of America.
The first one, can you please discuss about your confidence that tenancies would gradually increase throughout the year. That's the first thing. Second question would be on the scope for the refinancing of your bond. And the third one, if you can give a little bit more insights on M&A plans for this year?
Yes. Well, let me take the first part, and then I'll let Tom talk about the bond, and we'll come back to also M&A. So look, as we've said, we're pretty robust in continuing to grow our tenancies. Our pipeline in terms of inquiries for tenancies on existing towers, build-to-suits, et cetera, is healthy and positive at this time of the year. And so our guidance will be within that range of 1,000 to 1,500 tenancies added this year. And look, if you look back, we've -- if you just look at the last 12 months, we've added 0.07x tenancy growth to our portfolio. And we don't see any change to that. And our guidance has always been that we will add between 0.05x to 0.1x tenancies per year. That takes us to our target of around 2.3x to 2.5x in the 5-year horizon, and we're on track for that. And if you look at archery, we've been within that range and confident of delivering on that. Tom, refi?
Yes. No, absolutely. So we're monitoring the market for a refi. We're ready to do it should a window occur. I think people are seeing the bond, the EM bond market has moved quite a lot in the past couple of months. Our bond is currently failing around par. We believe that based on our business strength that we should rely better than that level. So we are monitoring. We're in no super rush to do so, but we're doing what we can control, which is be ready this [indiscernible] So I guess, watch this space and we'll be monitoring the market for any opportunity. And then on the M&A, I'm going to pass it to [indiscernible]
Yes, yes. On the M&A, as I said, again, we've got a number of different opportunities from small to medium-size and large opportunities we're tracking. And actually, there has been a slight uptick on the opportunities. We've had a few more things we engaged with that we had in January, for example. So we're still confident of the acquisition pipeline. But in the short term, as you'd expect with the virus pandemic that there's been a slight slowdown. And if I said anything different, you would believe, so there has been. It's quite simple because people are not able to travel. People are working from home, some of the government bodies that we engaged with in some of the markets, obviously, are not as available, et cetera. So it's a slowdown, but nothing's changed in the opportunity tracker that we're working hard on. It's not detracted our team that we have internally. We've got a dedicated business development team under the leadership of [ Alex Lee ], and that continues to be the focus of that team.
Our next question comes from [indiscernible] of Barclays.
[indiscernible] Barclays. I was just wondering with closed the increase in importance of connectivity. Are you seeing any increased pressure or discussion from governments and regulators to sort of force operators to increase their coverage. And then linked to that, I guess, there's going to be areas where operators will see it uneconomical for them to do that. but the government will still want coverage. Is that an opportunity for you guys? And are you maybe discussion to build out in some of these areas already. I think we've seen similar site happening in other markets in Africa or if you're seeing anything there?
Thanks, Simon. I appreciate your question. Well, yes, absolutely, regarding the current situation of the virus, as I mentioned, telecoms is essential services in our markets because there's no other fixed line infrastructure that people can rely on. And actually, the regulators are focus today on quality of service and availability of service and an expansion. But let me just on the expansion, for example, rural company rural locations, a lot of our governments and regulators have funds that encourage the facilitation of antennas and services from our customers into these small communities, and we're part of that solution. So for example, in Tanzania, we build rural sites. We have a rural solution that's a lower-cost solution designed for 1 tenant services, maybe 2, but less equipment, et cetera. And in our view and what we hear on the ground is that this pandemic is going to accelerate the rollout over time because these communities need connectivity during these difficult times to access medical services through the Internet, for example, et cetera. So perversely, this is going to increase the focus of coverage, which means more activity for independent tower companies as well as our customers.
Our next question comes from John Karidis of Numis.
Just for good order first, can I just check that it's still the case that about 65% of EBITDA during the quarter was in hard currency. And then secondly, last year, revenue growth accelerated during the course of 2019. Should we expect the same to happen this year?
Tom [indiscernible]
Yes. Yes. Yes, short answer, yes, 65% half currency. There's no major change down 59% of revenue level as well. So very consistent with previous years. And on the revenue one, usually Q1 is the quieter quarter when it comes to adding tenancies, the mobile operators are either just getting a budget signed off or just in a budget season. And so that's typically what we see very similar to previous years with the ramp-up expected in the following quarters. or what the pipeline tells us today.
Okay. Tom. If I may, given that consensus is forecasting 10% revenue growth in the year, and you delivered 9% in the first quarter. Do you think that the risk to consensus estimates, therefore, is quite clearly on the upside?
I wouldn't want to go and start talking about upside. I think the -- [ clearly ], Q1 is very close to the full year consensus, and we know that Q1 is generally a slower quarter. So I think we feel fairly good about the full year, but I wouldn't want to start on that upside.
Our next question comes from [ Simran Sandhu ] of [ FCB ].
A couple of questions from me, please, regarding Liquidity. So I noticed the CapEx guidance is unchanged from your prior call, but just curious as to how you're thinking about prioritizing cash conservation and maybe keeping a liquidity buffer on the books versus executing on your growth plans in light of the fairly uncertain broader macro environment we're in. Maybe if you could also comment on how much of $110 million in CapEx is committed? And then secondly, on the cash, could you please tell us how much of the cash balance is maintained in USD versus local currency? And also whether there have been any recent issues in extracting cash from your subsidiaries?
Yes. No, absolutely. Thanks for the question. So look, first of all, on the CapEx, we are reiterating our guidance and that is based on seeing the pipeline ahead of us, a large amount of our CapEx linked to customer rollouts, of course, and some of it we earmarked for the smaller market acquisitions, which are near term, some of which are actually pretty elite. So whilst not all of that is effectively committed today as such, it's very much within our site in terms of pipeline. And so as we mentioned earlier, we have been forward purchasing CapEx at the end of Q1 and into Q2 for the remainder of the year, to ensure that we have all the equipment acquired in country in the event of supply chain delays later in the year, which, by the way, we haven't seen really at all yet in any material way whatsoever. But we're doing that from a prudence point of view. And from a funding point of view, our organic business plan is self-funding. So the earnings of the business through the rest of the year is effectively pays for that CapEx. In terms of our cash balance and available debt to draw, we have, at the end of Q1, $126 million of cash in the bank. -- and over $100 million worth of debt [indiscernible] available to draw. So we are liquid. We do have a good amount of available funding, should that be required for expansion plans. From a leverage point of view, as I mentioned, we're at 3.0x leverage, which is below our stated target level of 3.5% to 4.5%. And this is effectively because we have a high cash balance on the balance sheet today, which some of which will be deployed on the short -- near-term acquisitions that we have in the pipeline. In terms of cash flow, we do always look to keep a healthy balance of cash across the group, mainly all of our cash is in U.S. dollar at group treasury level. So of the $146 million at Q1 end, something in the region of 80% to 90% would be in the U.S. dollar with effectively small float in each OpCo. And that's how we operate. We do monthly streaming of as dollars through our shareholder loan structure across the group. So each month, our OpCo spent up U.S. dollars from the market to our group treasury in Mauritius, and that continues. And that partly leading with us being able to keep small slope in our upgrades, which is our ongoing strategy, cash management and derisking the business. Did that cover your questions?
Great. That's very helpful.
Our next question comes from [ James ] [indiscernible] of Quest.
My first question about the bond refi. Tom, you already covered off. My Second question is around cash flow statements. I see that there's a $37 million outflow due to change of control taxes from around the IPO time. I just wondered if there's any more of these kind of similar transactions to come out or kind of adjustments to make going forward?
Yes, absolutely. So that's very much in line with the structure that we set out at IPO, and that was funded through an escrow account from the pre-IPO shareholders, which had been drawn at year-end. So if you look on our December 31 balance sheet, there's $220-or-so million of cash, but $37 million of that was restricted cash. And that was the cash that's just been drawn from the escrow pre-year-end and on settlement of that the tax authority was post year-end. So it's slightly confusing the fact that it straddled at period end versus why we had restricted cash on balance sheet at year-end, and then that's come out on our bank accounts this quarter, which is why you see it coming out of the cash flow taken this quarter. So if that has happened within a quarter and not at a period end, then obviously, you wouldn't have seen any of that, so that I guess would have been less confusing, but that's what's happened there. And we have -- as per the IPO disclosure, there are certain change of control takes due in our markets and the pre-IPO shareholders funding that through an escrow account. So to the extent there is more of that paid and that would be drawn from the escrow cap that is currently sitting there and come through the company and the tax authority. So If that happens again, struggling at period end, then you would see that. You would see some restricted cash on balance sheet at the period end, and then that would come out in the following quarter, but we can't exactly predict the [indiscernible] So that's all that is effectively
Our next question comes from Alexander Vengranovich of Renaissance Capital.
The first one, I'm trying to get some like local color on the [indiscernible] of the coronavirus. It looks like there's a lot of the media information may be volatile actual action? And did you see any substantial risks to your business or what were there if the enterprise this product [indiscernible] and affects more of your -- more of them on operation of the people as far as I understand the no actual lockdown in the country right now? That's my first question. The second question...
Sorry, Tom, are you able to say the question clearly because I couldn't get all of that.
Can you hear me now, maybe it's better to control.
Yes. That's much higher.
Sorry, my mic was like probably the [indiscernible]
Would you repeat?
Yes, I'm going to repeat. So my first question is on Tanzania, and the actual spread of the coronavirus and action there. So I'm just trying to get some local color from your side because it looks like there is a lot of the misleading information about the virus in the country. As far as I understand, there is no additional down, but it looks like the infection goes arena there like more and more people being impacted unofficially. So just trying to understand where you see any significant risks there if this spread goes faster than it was initially expected by the government?
Yes. Yes. Let me take that before we go onto the second question Look, Tanzania has been 1 of the countries who basically hasn't had a lockdown and people have been encouraged to operator as normal there. However, our customers and ourselves enacted a lot down for our staff. So working from home, working remotely, et cetera, et cetera. And we've taken all the standard precautions we've taken across the continent where we operate to protect our staff community, et cetera. And it's business as usual for us in Tanzania. In terms of the -- and I can only quote official figures. My job is not to speculate. The official figures say there's a low infection rate and low death rate, the fatality rate there in Tanzania. But it's not affecting our ability to deliver service and carry on running and growing our business in Tanzania. Yes, that's what I can really say about that regarding Tanzania.
Okay. And then -- the second question is about...
Just to give you a flavor, though, above our staff over the -- across the whole of our business, we've only had 2 individuals who have been affected by the virus, did go to a hospital for a couple of weeks. That was a DRC, both staff -- both members of our, call it, stuck for hours in hospital and recovering well back home. So again, low impact on our business so far.
Good. And the second question to Tom on working capital, let's again. So in the first quarter, was around $35 million net change, like a negative change in the working capital, mainly driven by, again, like the increase on the define mental payment timings. So just trying to understand what sort of volatility should we expect for net receivable days this year should affect the number of the receivables to grow further? Or you think that the current level of the first quarter is more or less sustainable?
Yes. Thanks, Alex. Yes, if you look at our working capital on Page 19, the majority of the $35 million is actually us investing in early CapEx and OpEx. So [ $16 million ] on CapEx level on OpEx. That's for the reasons I described earlier. In terms of the net customer receivables, yes, it increased [ $9 million ]. That was solely due to some of the big customers paying us later, some of whom had year-end 31st of March. If we were to show these numbers to the end of April, though then it would be $17 million lower. So the payments that were dragged out around year-end, very much, of course, up and more so through April. So I think from a modeling perspective, I would just move that flat through the year. That's probably the best set at this point. But yes, actually, the money is coming in the door, just after the March 31 reporting that.
Next question comes from Jonathan Kennedy-Good of Standard Bank.
Apologies if this might have been cut had joined the call a little late. The 1,000, to 1,500 towers -- tenancy growth for the year. Is it possible to give us a little bit of color to where you see the majority of that growth coming from by regions? It looks to me like there's a bit of a head start with DRC so far this year. I'm just wondering whether that continue for the rest of the year? And then where you see kind of highest [ ROIC ] and most attractive kind of return profile within the various operations. And then just finally on Ghana, MTN seems to be showing very, very strong growth. There's still -- just wondering how the whole ATC Eaton deal played out how that's affected the market and what do you see the time looking like there given what looks to be very strong M&A growth and now the deal completed?
Yes. Tom, do you want to I'll talk about on that? .
Yes. Jonathan, Thanks for the questions. Yes, the tenant fees we are very [indiscernible] across the group. I think as we look at the pipeline today, there's no sort of 1 country that's done out particularly ahead of the rest or particularly below the rest. So we would anticipate the broad country split to be maintained through this year on an organic basis. So I think that's what to assume there. From a [ ROIC ] point of view, again, the numbers that we've shown previously in 1 build-to-suit yields and things like that are maintained and to remind you of that single 9% to tenant, 19% and 32%, which is what we've shown in previous and pre-IPO materials. But no major change there. There's not huge differences either between the market on that. So again, we wouldn't guide to model any particular big variance there in terms of yield or ROIC -- So I guess, very much expecting the business as a whole to keep growing roughly with all markets on track with each other [indiscernible] .Then on the Ghana point, Kash, you want to take that 1 on that?
Yes. So look, MTN is the lead dominant player in Ghana. And over the past 2, 3 years, we've been building towers, MTN have had a strategy to continue increasing coverage. And I think now they're probably up to 95-plus percent coverage of the geographies. Vodafone and [ Saltigo ], obviously, are the challenges there, but still solid market share for those 2 operators. And that one, we can't go into detail, but we certainly have good pipeline from all our customers in Ghana regarding upgrades and expansion. So it's clearly [ Saltigo ] are focused on their strength or stronger position as a merged entity and a bigger market share to carry on investing and growing their market share there. And we are obviously 1 of 2 telcos in that market than the American Towers. And we're active working with Saltigo, Voda and MNT, and all our customers in Ghana.
Great. And no material change in kind of what ATC is doing in Ghana, given the Eaton?
No. I mean, there's still obviously integrating that asset and doing what they need to do, but no change at all. No. In some ways, what we've -- in our view, is that the erratic behavior of the Eaton has disappeared. There's more structure as far as we are concerned. And our agility, we believe will put us in a good place now in that market.
Our next question comes from [ Charles Cartledge ] of Sloane Robinson. Our next question comes from [ Alex Aiba ] of [ Waha ] Capital.
Thank you very much, thanks for the call and for the great results. I have a few questions, actually. One is on the oil impact. I thought that lower oil prices would have an impact on the EBITDA. I think when we went to show, I think, like a 10% decrease would have a 2.5% decrease in EBITDA. Can you just tell us whether that's in the case or not and why?
Yes, so the oil impact the movement of prices open our market is really the key factor here for our own P&L. The prices in the markets are not 1-to-1 elastic with global oil prices. So [indiscernible] oil prices move as much as they have done that when they mean reflected in the pricing and local markets. So we've seen some reduction of some fuel prices in the past few weeks, as the global oil supply chain has been arising at ports in our countries. And I'd say there's been -- depending on the region anywhere between 0 to 10% or 15% reduction in the price currently. And that's just trying to feed in. I don't think we anticipate and it may change to our business, either from an OpEx saving perspective or an overall P&L perspective as we move through the year. So we wouldn't guide to make any changes based on these movements that we've seen or are seeing sort of over the last few weeks. We just recommend [indiscernible] model
Okay. Got it. But just to understand how that works. I mean, ultimately, if this fuel price decreased by 10%, your revenues are going to be impacted on the quarter, you will review your revenue on a quarterly basis with your clients? Or is it on a monthly basis? How does this impact the price with your clients? Is it monthly, quarterly price reset?
It's either quarterly or annually. Most of our power assets later are quarterly. So there's a little time lag before that feeds in. So we've got a little bit of OpEx benefit could be for a few weeks. And then some of that feeds through to our customers over next escalation date, which for the contracts which are quarterly escalator now would be from the start of July. But again, the impact is minimal.
Perfect. And just -- so I have just 2 more questions. On the FX, is are like a 65% is in hard currency. Does it mean that you receive it in dollars in these countries? Or you receive it in local currency and you have to convert it? I'm just wondering how much are you supposed to convert your risk on that [ $65 ]
Yes, absolutely. So at the [ $55, $40 ] of the [ $65 ] roughly comes from DRC. And DRC is a dollarized economy. So everything there is in dollars. We get paid physical dollars in DRC. And then the balance of the remaining 25% comes from a spread across all of our other markets. In those markets, the contracts allow the the settlement in dollars or in local currency at spot rates. And so in those markets where we do receive local currency, we sometimes do dollar swaps with the banks there if we need dollars. But yes, [ $40 out of the $60 ] comes from DRC, which is all dollars.
Perfect. And just the next question is on the tax. So like how much tax should we expect going forward? I know it was a one-off, the $38 million, which was supposed to be paid at the end of the year related to the sales control with the IPO. But -- is there like still a significant amount pending? Or is it that much? And then aside from that, how much tax roughly should we factor in for 2020 and going forward?
Yes. Absolutely. Say from a corporate corporation tax perspective. So ignoring the change of control tax from an all funded or escrow account from the pre-IPO shareholders. So just from a a normal corporate income tax perspective. The blended rate across our markets is around 30%. However, as you know, we're in a tax loss position in most of the markets at the moment, and let me just pay a de minimis amount of tax in those markets. That will change over the next few years. And as we guided at the IPO and reiterate today, we would see a gradual step-up of tax or normalized levels of 30% of profit before tax over the next 4-year or so period. I think at IPO, we guided to in the next 5 years, we would gradually step up to a normalized level of 30% profit before tax. So that's what put in the model from a change of control at point of view. I can't really comment on the exact timing of future amounts, but it's it's funded by the pre-IPO shareholders in an escrow account. So it's not a -- whilst it comes through our bank accounts and obviously you sit on the cash flow statement as a [indiscernible] goes out the door. It's not a cost for the company as such. It's actually money in from the escrow and then money out. immediately. Just so happens that when we did it around the year end, it struggled a year-end period, and so you saw the inflow on period and the out the next period. But that's that thing
Very clear. Sorry, last question on the M&A. I'm just trying to understand about the liquidity. So you have around [ $50 million ] of cash on balance sheet. What's the minimum amount you'd be comfortable with [indiscernible] balance sheet? Like would you be comfortable with like $30 million, $50 million of cash on balance sheet and using the remainder of acquisitions? Or do you think you need more or much less?
Yes. I think around $50 million or so is reasonable. Obviously, we've got a fair amount of [ status ] at the moment. But yes, something in that level
Got it. And so still on the M&A, we're wondering like could it maybe make sense to do the refi first and then the M&A because M&A you're likely to have a higher leverage, maybe the cost of debt would be higher, while it will be cheaper I guess, it really depends then you don't want to I just want to I was wondering whether you have some thoughts around that, timing of M&A before refi or vice versa?
Yes. I mean, I think to some extent, we've got to be flexible on both those options, partly because of the window of the bond market, we don't control, but also the M&A is reliant on third-party wells. We don't exactly control timing of that. So I think we've got to be as flexible as we can on it. The refi is principally to refinance existing debt. So I'd say, the acquisitions that we have in our very near term which are the ones we've called out in our CapEx guidance, they're not reliant from the replies to happen before they do. So I think we'll just have to say that 1 by ear, and be ready for both M&A or the bond market depending on when the window opens.
Our next question comes from [indiscernible] of DEG.
Hello. Can you hear me? Can you hear me?
Yes. Yes, we can hear you. Yes.Hello. We can hear you clearly.
Our next question comes from Peter [indiscernible] of GML Capital.
Yes. Thank you. Can you hear me, okay. I'm interested to know following up from the previous question about the refi. I mean your bond recovered to par that did fall down quite sharply. I think they got into around 90-ish. Surely the right time to be refinancing it right now. I mean, given the global uncertainties, particularly in terms of what's happening in emerging markets, surely, if you're talking about the opportunity to refinance it is now?
Yes. I mean I think we're monitoring it. we're closely watching the market, both our bonds but also the wider market. And I think that other CM bonds traded down more sharply than ours but that also have recovered somewhat. So I think we're managing it weekly, and we'll go at the right time for us. They're not in a super rush to do it. that we do want to take the window when it comes. So I think we'll monitor for now and see how that goes.
But to give you assurance, we are ready to do it off of our Q1 numbers when the right window occurs for us.
Can I just understand 1 thing. I mean, what does that mean, if the bond is trading at par, surely that rate [indiscernible]
Well.
Well, I mean that -- are true cost of debt should be what it means. And the business is a resilient business, which is being demonstrated at this time. And we will be watching developments to see where the market is moving to. But I think we believe that it would be premature to just refine now part we're not in a rush to do it. So I think that's all of you at the moment.
[Operator Instructions] We have a question from [indiscernible] DEG.
Can you hear me now? I had some issues.
Yes. .
Yes.
My question relates to the regulatory low regulatory developed environment of your host countries. And I was wondering with the heat maps rising in those countries and the budgetary deficit widening -- Do you expect any risks that both your clients and yourselves will be facing any claims from state authorities to cover up state deficits?
First of all, we've been operating in these environments for a long time, and we're used to being very rigorous around our tax management and so on. So -- and the regulators are very professional in the markets we operate in regarding telecoms -- We pay fees, our customers pay license fees, et cetera, et cetera. So from our perspective, the business will continue as normal. We're used to rigorous tax audits, and we've never had a problem in our 10 years of existing in these markets. So we're confident that it will be normal behavior. Tom, I don't know if you want to add something more to that?
No, thank you. That's fine.
We have no further questions on the line, so I'll hand back.
That's great. Thanks, Jordan. Well, look, thank you very much, everybody, for your time and great questions, and we look forward to giving you a half year trading update sometime in August. Thank you. Bye-bye.
Ladies and gentlemen, ladies and gentlemen, this concludes today's call. Thank you for joining. You may now disconnect your lines.