Helios Towers PLC (LSE: HTWS) 

Helios Towers PLC (LSE: HTWS) is an FTSE 250 index listed independent telecommunications infrastructure entity that offers tower-related operational services including site selection, site preparation, maintenance, security, and power management. This Report covers the Key Recommendation Rationale, Conclusion, and Recommendation on the stock.

Key Recommendation Rationale – Sell at GBX 107.00

• Resistance near Current levels: HTWS stock price almost touched the Resistance (R1) which was stated in the previous report on 27 November 2024 therefore, there can be a possibility of a decline from resistance levels. Considering the market conditions and the price action, it is prudent to exit the stock.
• Debt Levels and Leverage Concerns: Despite a positive trend in financial performance, the company’s net leverage ratio remains high at 4.0x during FY24, which may raise concerns for investors about the sustainability of debt levels, particularly in the face of future market volatility or economic downturns. While the company has shown improvement in free cash flow and a decrease in net debt, its leverage ratio still suggests a reliance on borrowed capital that could potentially limit its financial flexibility or capacity to weather unexpected challenges.
• Revenue Growth Dependency on Tenancy Expansion: While the company’s revenue growth for FY24 was primarily driven by tenancy growth, this raises concerns about its long-term ability to sustain growth if tenancy expansion slows down. The business model appears heavily reliant on the acquisition of new tenancies, and any slowdown in markets such as DRC, Tanzania, or Oman could significantly impact future growth prospects, especially in the context of a highly competitive and potentially saturated telecommunications sector.

Valuation Methodology: Price/ Earnings Approach

Share Price Chart  

Conclusion

HTWS is expected to trade at a premium, considering the recent outlook and guidance, cost optimization strategies, and the reduction in interest rates. For conducting the valuation, the following peers have been considered: Airtel Africa PLC (LSE: AAF), Gamma Communications PLC (LSE: GAMA) and others.

Given its current trading levels, Leverage Concerns, recent rally in the share price, relative valuation, and associated risks, it is prudent to exit the stock at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the closing Market Price of GBX 107.00 as of 27 March 2025.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 27 March 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level which the stock is expected to reach as per the relative valuation method and/or technical analysis taking into consideration both short-term and long-term scenario.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the London Stock Exchange (LSE) and or REFINITIV. Typically, both sources (LSE and or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

Note 6: Dividend Yield may vary as per the stock price movement.