Helios Towers PLC
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Helios Towers PLC
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Hello, everyone, and welcome to the Helios Towers Full Year 2022 Results. My name is Nadia and I’ll be coordinating the call today. [Operator Instructions] I will now hand over to your host, Tom Greenwood CEO to begin, Tom, please go ahead.
Thank you very much, Nadia. So hello, everyone, and welcome to the Helios Towers FY 2022 performance in FY 2023 outlook call. It’s great to have everyone on the call today. I hope you and your families are well. And thank you very much for your time today. First up on page two, we’ve got the usual line up for you of myself Tom Green as the CEO, Manjit Dhillon our CFO and Chris Baker-Sams our Head of Strategic Finance and Investor Relations.
So moving now on to page 5 for our highlight. We were very pleased with our performance in 2022 for two main reasons. Firstly, our business demonstrated its resilience and strength with strong revenue growth and EBITDA growth of 25% and 18% respectively, supported by significant tenancy growth. And secondly, we completed the last two acquisitions in Malawi and Oman, meaning our recent inorganic growth plan over the past two years is complete moving into 2023.
Over the last two years, we’ve roughly doubled the platform, going from five to nine market and 7000 to 14,000 sites. And our platform is now well invested and primed for growth, which is why our big focus for 2023 is organic rollout, lower CapEx and driving returns.
Our EBITDA guidance for this year is $350 million to $365 million representing at the midpoint 26%, year-on-year growth, including 13% organic. And by the way, the inorganic part of this is just the full year of the Oman and Malawi deal, which we closed last year. So in fact, over half of our 2023 growth is already in the bag. And of course, this will be supported by 1600 to 2100 new organic tenancy and 170 to 210 million CapEx, which comes down from a largely M&A driven $765 million in 2022.
And finally, as we continue to move forward, we’ve got a really strong earnings base of $4.7 billion contracted revenue, which of course, all contained CPI and power process later. But now on slide 6 a quick wrap up of our recent expansion and diversification plan. As you may remember, a couple of years ago, we embarked on a strategy to expand and geographically diversify, strengthen the business and take our operational customer service excellence to more markets. We are pleased to say that with Oman closing in December, this phase of our expansion is complete and we move forward into 2023 with an enlarged lease up ready portfolio on which we’re already seeing growth.
As you can see from the right hand side, where EBITDA growth has been on average 24% in the one to two years since the first three deals were closed. So overall, very pleased with progress in our new markets and centering, and we’re targeting strong growth in all of these including Oman for this year.
Now turning to page 7, where we’re providing some medium term guidance on how to think about growth of the newly enlarged portfolio. As you can see from the left hand side, during our previous organic harvesting period 2016 to 2020, we delivered strong margin and tendency ratio growth. Then in 2021, 2022 with our acquisition, this obviously bring some margin and tenancy ratio dilution in the short term, because we’re buying underutilized assets, which are ready for colocation and operational efficiencies to drive EBITDA margin and returns up in the quarters and years ahead.
And we’re already seeing strong tenancy rollout in Q1 this year, which Manjit will provide some updates on later. As you can see from the right hand side, with our leading positions in structurally growing market, we expect continued levels of tenancy growth of around 7% to 9% each year in the medium term, which is what we’ve delivered in the past few years. This year, that’s translating into roughly 13% organic growth of EBITDA and we expect 10% to 12% on this each year following through to 2026.
And so to back some of that up here on page 8, we saw some of the structural drivers, between our market and our business are growing at elevated levels to other parts of the world. We have roughly 50% mobile penetration across our markets, which compares to around 90% in mature markets. This means subscribers are growing at 4% per year, which actually equates to 68 million subscribers coming online in our market in the next five years. And this compares with 1% per year in mature markets.
And of course, population growth of 2% on average across our markets further contributes to the increased demand for telecoms infrastructure, and therefore our revenue growth, which compares the roughly flat population across the G7 market during this time. All of this in our markets is driving the forecast at 8% points of service growth per year through to 2026 which is of course supporting our tenancy and EBITDA growth during this time.
And as you can, as you can see on page 9, we have delivered around 8% tenancy growth organically year-on-year since our IPO in 2019, which has all been within guidance each year. And we’re providing similar guidance of around 8% for 2023, which equates to around 1600 to 2100 tenancy additions we expect this year. Furthermore, with the chart on the right hand side, our teams explain the tenancy ratio change year-on-year and how the new site by lease-up initially, as you can see, we grew our sites in hand at the start of the year by 0.8x and then significantly grew the site count through new filter and acquisitions during the year, leading to ending the year at 1.81.
This of course provides us with a new enlarged asset base, which would be leasing up now to drive organic EBITDA returns growth through this year and beyond. And on that note, looking now at page 10, we really do have a good track record of leasing up both acquired and new built site. We got 0.2x or 0.3x tenancy ratios increased each year on build-the-suite of 0.1x on a acquired site. This of course is no coincidence. It’s based on our assessment of commercial potential wherever we deploy capital by buying or building a site. Lease up potential is our number one criteria we look at when assessing any site location and putting additional talent on a site translates into the financial return, as you see on the right hand side.
And on the subject of infrastructure sharing, and telecom coverage growth the next page 11 shows some key highlights from our sustainable business strategy. We were really pleased in 2022 to receive a AAA rating from MSCI, which actually is the highest rating, and which really demonstrates our credentials in this space from one of the most recognized agencies in the world. So building on this in 2023 and beyond, by further embedding non-financial KPIs to management and centers, which you can see on the right. The targets you see here are our key metrics that we focus on within our five year sustainable business strategy and cover key areas including digital inclusion, female and local empowerment, people development and climate change. The first two are linked to our annual bonus. The next three are linked to our three year exit, and the final two, which is key enablers to delivering our sustainable business strategy. So this means management of significant financial incentives, driving all of these which are all very important to us as a business.
So without further ado, I’ll hand over to Manjit and look forward to talking to everyone at the end the Q&A. Over to you Manjit.
Thanks, Tom. And hello, everyone. It’s great to be speaking with you all today. I’ll be going through the financial results and starting on slide 13. Continuing on from what Tom mentioned earlier, and despite broader macro volatility, we are seeing across the globe, we’ve had a very strong year delivering on full metrics of our 2020 guidance.
Looking at our actual performance versus guidance, 2022 was one of our busiest our best ever years in terms of organic tenancy growth with 1601 tenancies added which was at the upper end of guidance of 1400 to 1700. From a financial perspective, our lease rates for tenants designs at the high end of the guidance range of 4% year-on-year and adjusted EBITDA margin and CapEx and base came within the guidance given. I’ll be going through the financial details of these results over the next few slides. But in general, we are proud of our strong financial and operational delivery in 2022.
Moving on to slide 14, where we present some of our main KPIs. We’ve continued to see adjusted EBITDA and portfolio free cash flow growth, both the double digit year-on-year growth which was the dominant needs driven by tenancy addition. In a few slides we present how our robust business model effectively protects us from broader macro volatility and which importantly results in growth being linked to what is within our control i.e. operational improvements and tenancy additions. And the effects of this is evident in our dollar EBITDA progression.
Now we have seen some moderate return on invested capital dilution, which is previously signposted during the year and at our capital markets day. And it’s really due to the initial dilution from our new acquisitions. These portfolios come with lower margins and lower tenancy ratios as they were purchased from mobile network operators who [Indiscernible] cost centers rather than his pure pay businesses. And this is where we see the opportunity to invest, to develop and lease up these assets to deliver long-term compounding returns all of which will drive that return on invested capital in the coming years.
Moving onto slide 15, our site and tenancy growth. And as mentioned earlier, we delivered record organic sites and tenancy growth in 2022. From a site perspective, we saw a 40% increase year-on-year, reflecting organic growth of 751 sites and 3242 acquired sites across Malawi and Oman. Year-on-year we’ve added 5,716 tenancies, which is a 30% increase from 2021 organically we’ve added 1601 as mentioned earlier, and this is our second test every year of our tenancy growth for the company.
Our tenancy ratio has dropped slightly on a group basis. And again, this is largely driven by the lower tenancy ratios of the acquired sites in Malawi and Oman, which combined have a tenancy ratio of 1.3. On an organic basis, our tenancy ratio remains broadly flat and this is due to the large site rollout during the year.
And onto slide 16. We see here our revenue growth and EBITDA growth, which is 25% and 18%, year-on-year, and that’s 14% and 9% organically respectively. The revenue growth is principally driven by tenancy addition in addition to CPI and power escalation, which I’ll come on to more detail on the following slides.
Adjusted EBITDA growth was driven by our organic tenancy growth and contributions from our new markets. Our EBITDA margin declined by three percentage points year-on-year to 50.4%. The margin decrease is driven, it’s driven due to the dilution of the market. But these margins will grow over the coming years, and also due to higher power costs, which I’ll explain now on the next slide.
So moving on to Slide 17. And here we set out the walkthroughs of our revenue and EBITDA progression for 2023. We’ve shown this detailed break this detailed breakdown throughout the year to really show our robust business model in action. So to take you again through the analysis, the first four bars of each bridge, organic tenancy growth, power escalation, CPI, escalations, and FX, all combined to make up organic growth and acquisitions being the contributions from new markets.
Organic tenancy growth of 1,601 year-on-year has driven the eight percentage growth in revenue and 10% in EBITDA. I want to take a minute here to focus on escalation movements. As a reminder, we have escalations in every customer contract in all of our markets. For power, 50% for contracts are quarterly power escalators and 50% of annual power escalators. These escalate in relation to the local pricing for fuel and electricity. So the local prices go up and the escalators go up. And as the prices go down, the escalators go down. The CPI we have annual CPI escalators which kick in around January. Year-on-year, we’ve seen that on average local fuel prices have increased by 36%. And that’s principally driven by DRC, Tanzania and Ghana, which have accordingly increased revenues by 6% with further escalations expected in the first quarter of 2023.
We have a robust business model by design. We have structured the increasing revenue to effectively offset the increased OpEx due to higher power prices to protect our EBITDA on $1 basis. On the left hand side, you can see that the power revenues increased by $25 million and that falls through to flat EBITDA on the right hand side. So from a margin perspective, there is some dilution because the EBITDA margin on the power price movement is lower than the overall group margin. And in this case, this diluted margin by two percentage points.
However, in the year of macro volatility, where we’ve seen 36% power price increases, we’ve been able to keep our EBITDA flat on this portion, meaning that our contracts are escalating effectively, and offset the OpEx impact of higher power prices.
Moving on to CPI and FX. Local CPI is currently around 9% with our revenues up 3% from our CPI escalators, which occur annually, as I mentioned earlier, and principally in the earlier parts of the year. The FX movements we’ve seen mainly in Malawi and Ghana occurred largely in the second half of the year, which were partially offset by the CPI escalators that kicked in early last year. This is still less than the minor impacts on overall group results.
However, we expect to see escalations capturing more of our CPI movement at our Q1 results, as CPI escalators kicking around now. I think, standing back this is a useful, useful demonstration of our business mechanics and looking at this space, and looking at from an EBITDA level what you can see clearly here is that the key driver of growth is tenancy addition, both organically and in organically. Previously, as we mentioned the capital markets day, we showed how over the past six or seven years, our EBITDA growth was highly correlated to tenancy growth with little to no correlation to FX or oil prices. And this year is further demonstration of our earnings growth being driven by tenancy additions and being well protected against macro volatility due to our robust business model. All meaning that we are and will continue to efficiently and effectively capture the compelling growth opportunity across our markets that Tom spoke to earlier.
Moving onto slide 18, again here we set out a simple example showing the margin impact of power escalators. On the left hand side, we saw an illustrative example where power price does not have power escalators in their contracts. And in this simple example, we show Power FX increased by $10 million without a corresponding increase in revenue, resulting in EBITDA reducing by $10 million in EBITDA margins reducing by 20 percentage points.
On the right hand side, we say the same illustration but with the Helios Towers power escalators. In the middle table, you can see simply here are the OpEx price increase has been offset by the corresponding revenue increase from Power Price escalators. This protects EBTIDA of $20 million however, given the revenue is increased to $60 million to offset the OpEx increase there was a margin dilution of seven percentage points, which is lower than the without power escalations example. On the far right, we see this example in action. And again, what this shows is our revenues and OpEx have increased due to power prices and a subsequent impact on margins. I think the combination of this slide and the walkthrough on the prior slide show that whilst there may be macrovolatility, importantly, we as a company are set up effectively to ensure that our dollar EBITDA is well protected.
Move it on to Slide 19. Here you’ll see the usual breakdown that we normally provide which is very consistent from previous updates. 98% of our revenue come from large blue-chip mobile network operators to a largely investment grade or near investment grade, comprising Airtel, Africa Vodacom, Tigo/Axian, and Orange. Our largest single customer exposure is 28% and that’s spread across five different markets. We have strong long-term contracts with our customers and at the end of the year; we had long-term contracted revenues of $4.7 billion, with an average remaining life of 7.6 years, up from $3.9 billion at the end of 2021.
This means excluding new rents and rollouts you already have that revenue contracted and provide a strong underlying revenue stream to the business. We also have 63% of our revenues in hard currency being either U.S. dollars or euro type, which increases to 67% when you annualize the new market acquisition, and that translates to 68% to 72% when looking at it from an adjusted EBITDA perspective. This is a fantastic natural FX hedge for the business, which is further complemented by the escalators which I spoke about earlier.
Finally on this side for the new market expansion we’re seeing a more diversified set of revenues per market and pro forma for the full year of acquisitions no single market accounts more than 34% of revenues.
Onto slide 20 and I look at CapEx. In 2022 we incurred total CapEx of $765 million, which includes $557 million of acquisition CapEx principally related to Malawi and Oman. Organic CapEx came in at about $208 million, which is slightly above our guidance and this is principally due to some CapEx spent in Oman late last year when we closed the transaction.
For 2023 we are guiding to a CapEx range of $170 million to $210 million, of which $130 million to $170 million is discretionary and $40 million being non-discretionary, both of which are in line with prior guidance we shared at the capital market day. As you can see in our CapEx guidance, now that we’ve gone through a key phase of expansion in 2023, we’ll be focusing on organic growth and leasing up our expanded portfolio and keeping CapEx tightly controlled as always.
Moving onto Slide 21 and taking a look at our cash flow. As mentioned earlier, we’ve seen portfolio cash flow up to $201 million, up 20% year-on-year. This is principally driven by adjusted EBITDA growth, higher cash conversion and controlled non-discretionary CapEx expenditure. With regards to working capital, we’ve seen an $87 million working capital outflows. This is related to investment in advanced growth in 2003, on our larger, more diversified platform, which is now actually supported more than 400 tenancies being delivered so far this year, which is a fantastic start to the year, that’s actually above our cyclical seasonality, and again, evidence of the structural growth opportunities in our market.
Additionally, the working capital outflow also reflects the timing of customer payments, which as we’ve seen year-on-year and quarter-on-quarter can be lumpy in cash travel periods, and those typical for our business with our receivables days increasing from 46 to 57 days out in 2022. To be clear, this is purely linked to timing and not related to any bad debt issues. And year-to-date we’ve already made good progress and receiving a good portion of the outstanding balance.
As always, cash flow management and capital allocation is top of mind and discipline which brings us to slide 22, which is a summary of our financial debt. Our net leverage at the end of the 2022 was 5.1x. And that’s above our medium term target range of 3.5% to 4.5% as we had communicated in prior results and throughout the year. The increase is due to the closing of our new markets where we utilize predominately debt capital for consideration however excluding Oman our net leverage was a turn lower at 4.1x, so around the midpoint of our target range and due to the U.S. dollar peg and relative risk profile of Oman this allows it to be more highly levered, with around $200 million of local debt and minority shareholders alone utilized to partially fund the acquisition.
Importantly, we continue to have headroom against our financial covenants. And the business will have a clear path to deliver a roughly a rate of a half return per annum, driven by organic growth. As it stands today, we have ample liquidity, and roughly about half a billion dollars’ worth of available funds, comprising $120 million cash on balance sheet, and $375 million of undrawn debt facilities. We sit on a very strong balance sheets with long tenure debt that an average meaning life of four years. 83% of our drawn debt is also at fixed rate so overall we’re in a great position to say that we have a very stable financial package. And if we do that during the financing or refinancing, we’ll be doing this for strategic reasons.
Onto slide 23, and a look at our guidance. We’ve changed the format of our guidance to provide explicit ranges of expected outcomes for the year and this will be the format going forward. To start with tenancies, given our robust tenancy growth and pipeline we’re targeting organic tenancy growth of between 1600 to 2100 in 2023 and this implies a year-on-year growth of 7% to 9%.
Regarding adjusted EBITDA to a range of $350 million to $365 million, reflecting our strong commercial pipeline for tenancy growth and continued operational improvements. Portfolio free cash flow is expected to be in the range of $230 million to $245 million. And as mentioned earlier, CapEx is expected to reduce significantly to a range of $170 million to $210 million, of which $40 million is expected to be non-discretionary.
As you can see we’re targeting another record year in 2023. And this again simply demonstrates the robustness, the robustness of our business model through macro volatility, as well as the compelling structural growth of our market.
And finally on to Slide 24 housekeeping item, following the completion of the key phase of expansion and investment in four new markets. We will now align our financial reporting to these segmented regional structures. This will be mirrored the coverage of our regional CEOs and how we track performance internally. So East and West Africa will include Tanzania, Senegal, and Malawi, and will become one reporting segment, Central and Southern Africa will be another including DRC, Ghana, Madagascar, Congo B in South Africa, while Oman will pass in the Middle East and North Africa. We will provide financial metrics now on these groupings and the new reporting structure will become effective from Q1 2023.
And with that, I’ll pass back to Tom to wrap up.
Thank you very much for that Manjit. So I’m on slide 25 now. That’s the really key takeaways and outlook for 2023. Number one, the key phase of our inorganic expansion is complete with the closing of Oman and Malawi last year, and of course, we delivered record sites and tenancies as well. In 2022, we really demonstrated the resilience of our macro volatility. I think the slides that Manjit just took us through on the power price and CPI protection, a very, very key one. And, that really means that as a business, we can drive forward, benefiting from the structural growth on our drive robust business model, and navigate through these volatile times.
And looking forward for this year and beyond, we provided some really strong guidance here in terms of EBITDA growth, of course, over half of which is already in the bag and lower CapEx for this year. We’ve also provided some more medium term guidance as well on EBITDA to provide everyone with a lot of clarity of what we’re going to be doing over the next few years. So thank you very much for listening. And I’ll toss back to Nadia now to open up for the Q&A. Thank you.
Thank you. [Operator Instructions] And our first question today we go to Jeremy Dellis of Jeffries. Jeremy, please go ahead. Your line is open.
Yes, good morning, everybody. And thank you very much for the presentation. I’ve got three questions please. Firstly, you talked in terms of organic EBITDA growth of between 10% and 12% between 2024 and 2026. Is it possible please to give us an indication as to what sort of CPI assumption underpins that growth rate. So that we can define, how much comes from lease up. And then in terms of your confidence on lease up driving that sort of medium term EBITDA growth of how much of that how much of those additional tenancies that are sort of contracted at this stage.
Second question has to with the returns? I think you posted a 10.3% return on capital in 2022. And you’re guided to between 10% and 11% for 2023. Within the country mix, are there, perhaps some outlying countries, perhaps ones whose returns are lagging a bit? And is there a case where some active portfolio management here maybe exiting one or two countries? Or is are you confident that you can really raise returns across the portfolio?
And then finally, in terms of the new segmental disclosure? Obviously, notice that sort of Oman sits on its own in one division? Could you talk to us please about M&A opportunities that you think might sort of arise in the Middle Eastern market over the medium term? Thank you.
Yes, hi, Jerry, thank you, thank you very much for that. Look on the outlook for 2024 to 2026 there is CPI assumptions in there. The real key driver, though, is the, the tenancy growth within that. So we, as we’ve guided to roughly 8% or so, or 7% to 9% tendency growth each year that really as the main driver for it with fairly moderate assumptions in there on escalations at an EBITDA level, of course, because our contracts have escalations and of course, our costs also go up to some extent with CPI, the actual impact of CPI on EBITDA is fairly small, whatever the CPI is, and the real key driver of that is the tenancy growth.
Regarding the rate, points, yeah, so the guidance this year 10% to 11%. That some of that is Oman is starting with a slightly lower rate than some of the other markets, which reflects its risk profile. So you see some of that within the 10% to 11% guidance for this year. I think in terms of selling a market, no, that’s not on the agenda at the moment. We’re very focused on driving growth in all of our markets, for the foreseeable future.
And then regarding Oman being on its own in the segmental disclosure, the M&A opportunities in the region of Mena [Ph], certainly there are some, I think that, this year for us is very much focused on organic growth, not returns growth and some deleveraging. We obviously, are always, as a management team looking for further inorganic opportunities as any responsible management team does. But deals in this space typically take a very long time to gestate. So, this year for us is all about focusing on organic growth, and, and really integrating the new markets into the group.
Thank you. That’s very good.
Thank you. The next question, go to John Karidis of Numis. John, please go ahead. Your line is open.
Thank you. Good morning. Congratulations to the team for good federal results and good guidance. I’ve got a few questions. Firstly, in terms of macro background, I’m interested in understanding if you’re getting any signals from first of all your customers in terms of their rollout plans, and secondly, from local governments looking to raise more revenue and therefore maybe increasing license costs, for example. So that’s one.
The second of two is to do with the EBITDA guidance range that you’ve given us. It’s super clear that the EBITDA is driven by a tenancy growth. I suspect that tenancy growth in the year is a driver, but there might be other drivers as well. So I just sort of wonder, apart from the tenancy growth that you expect in 2023 what else needs to happen for you, for example, to hit the top end of your EBITDA guidance range? Thank you.
Yes, thanks very much, John, what am I say? So look, with regards to our customers we’ve got a, we’ve got a really strong pipeline at this point in the year, as Manjit says, we’ve up to 400 or so tenancies, so far in this quarter this Q1, which, historically can be quite a quiet quarter. And we’ve got, good pipeline and good visibility of pipelines for the next few quarters as well. So, when we report Q1, and in a few, I guess, in a few weeks’ time, you’ll see that coming through. So that’s very encouraging from our point of view. And I think I think our customers are generally all performing well, as well, which is, which is great.
Regarding, the government and the rate, any regulatory license costs, no -- at the moment that none of that conversation going on, of course, we always keep a watchful eye on that across all our markets. But no, we’re not hearing any of that at the moment.
And then in terms of the EBITDA guidance range, yes, look, I mean, the key is, the number one, by a long way, is tenancy growth just to be I guess, quite simple and clear is tenancy growth, Colo, Colo, Colo Colo [Ph], which is an internal phrase we use. And there are some operational efficiency projects going on as well. But that’s far and away, tenancy growth, particularly Colo growth is the key here.
Great. Thank you.
Thank you.
Thank you. The next question goes to Fred Brennan of Morgan Stanley. Fred, please go ahead. Your line is open.
Good. Morning, guys. Great to see the strong pent [Ph] this morning. I just had one question the day of Vodacom results, they commented that some of their sites in the DRC had been affected by severe flooding. I think there was some negative read across in the day, can you comment on what you are seeing on the ground in the DRC, and whether your site’s been impacted? Thank you.
Hey, Fred, thanks for the question. Yes, look, I won’t comment on any specific customers that, of course, we’ve operated in the DRC for, since 2011, for going on 12 years. And, like like any market, there’s always operational challenges to deal with flooding, could be one of them. And, and that’s, a regular occurrence. And in a lot of markets, to be honest, when there’s rainy season. And, ultimately what we focus on is to try and mitigate all of those risks for operational focus. And, that’s, that’s, that’s the name of the game of our business. And the DRC is, is probably well certainly in for example, sodium, probably across most of the continent is one of the most challenging markets to operate in. But I guess fairly common knowledge that comes with issues around the number of tarmac roads in the country and the terrain and where some of the sites are built. But ultimately, we aim to focus our processes, people and system around all that in order to mitigate that as much as possible to where we’re very pleased with our performance in DRC, and again this year, there’s a lot going on in that market, which is really exciting.
Okay, thank you.
Thanks Fred.
Thank you. [Operator Instructions] And our next question go to Rohit Modi of Citi. Rohit, please go ahead. Your line is open.
Thank you for the question. And qualities of [Indiscernible] concerning previous calls, I just wanted to understand personally on your part currency mix ratio. Basically, I understand you have our currency ratio right now, based on the current contract, but as your new tendencies growth, are you going to look to new tenancies based on your sudden contrasts or do you see the mix will change gradually towards -- anybody who might have lower our currency but our generation compared to now. And secondly, on the same lines, given the FX pressure going on in most of your markets, do you operators are now more willing to renegotiate the contract are you saying that any kind of pressure from current clients, but they need to renegotiate some of the some of the elements of your contract.
Third question based on your re-financing. I understand you don’t have any re-financing coming in, when you can see, but there’s some coming in. How are you [Indiscernible] Are you still like, Are you already in discussions with banks around that? And how do you how do you think we should see this cause going forward more beyond 2023? Should we increase [Indiscernible] interest cost going forward? Thank you.
Thanks Rohit. Maybe I’ll take the first two and then Manjit you take the third one on the re-finance. I mean, first one is quick. I mean, look, I think we generally expect reasonably standard distribution of new tenancies across the group. So from an organic basis, so I wouldn’t expect any major changes up or down. But based on new tendencies, I think we’ll see a fairly even spread across the group over the coming few years. I mean, customer renegotiation, that -- currency is, is usually one of the things out of about 50 things that are on the list when any contract negotiated. It’s back with escalator, that there is operational requirements in the contract, that all goes into the mix. And we always consider, everything holistically.
So we always prefer hard currency, where we were as possible, but obviously made easier, because quite a few of our markets actually are based on hard currency anyway. So to some extent, it’s not even a conversation in those markets, such as Oman, Senegal, Congo, the DRC, etcetera. And I will always take it into consideration in the whole based on what else is being negotiated. I wouldn’t suggest there’s any kind of major change on that coming soon at all. And then Manjit over to you for the refinancing.
Yes. Thanks, Tom. Yes, and actually, I just reiterate that that point you made at the end, which is the majority, when it comes to our hard currency, makeup. And a lot of that is made it by the fact that we’re in a nice hard currency market to DRC is dollarized. A mine is dollar peg, your Congo, the Senegal, to our Euro peg, so these are very, very stable currency market. So the actual relative risk is, I’d say, relatively limited.
In terms of the refinancing, look we continue to keep our options open or enter into an active discussions. But as you would expect, and what we’ve always done, we always remain very, very nimble and ready to go in access to capital markets whenever we think that that would be around. So we always have our perspective on it. We’re always ready. We’re always looking. And if something comes up that we think is of strategic benefit, then we’ll go for it. But for now, I wouldn’t point to any re-financings happening in the very, very short term for now. But again, we do keep our eyes open.
Thank you.
Thank you. [Operator Instructions] And our next question goes to Bharath Nagaraj of Berenberg. Bharath, please go ahead. Your line is open.
Thank you. Good morning. Congrats on the results. Just a quick question for me. Can you please provide some color on the Tanzanian market with regards to further leasing up given that the tenancy ratio has been rather flat in the last three years? Thank you.
Yes hey, Bharath, I’ll take this one. Yes look, I think the -- in terms of market continues to be a very, very strong market for the four major mobile operators who are all significantly active, and there’s a very, very low penetration. I think the lowest is below 50%. In terms of people with SIM cards in Tanzania. So there’s significant growth. I think over the past three years, we have actually delivered very large tenancy rollouts. Some of those have been built to [Indiscernible] and some colos which is why when you do the math on the tenancy ratio, tenancy ratio remains fairly flat, but that is just simply because it’s been a mixture of build pursuits and colos which is the reason that you’re seeing that the market continues to be strong and we continue to work with all the major mobile operators in the market for more lease up and more rollout which is, which is on-going right now.
Perfect, thank you very clear.
Thanks, Bharath.
Thank you. We have no further questions. I’ll hand back to you, Tom for any closing remarks.
Yes, thanks, Nadia. And thank you very much, everyone, everyone for joining in today. We really value your time and your attention. So thanks very much. If you’ve got any follow on questions, you know where we are. Speak to me, Manjit or Chris, at any time. And we really look forward to speaking to you again for our Q1 reporting. So have a good day. Have a good week, and we’ll talk to you soon. Thanks very much.
Thank you This now concludes today’s call. Thank you so much for joining. You may now disconnect your lines.