Helios Towers (HTWSF): A High-Yield Play on Africa's Telecom Infrastructure Boom

Helios Towers (HTWSF) has emerged as a compelling investment opportunity in 2025, driven by its robust Q2 earnings, aggressive deleveraging, and a strategic push to capitalize on Africa's telecom infrastructure gap. For investors seeking exposure to high-growth emerging markets with strong cash flow yields, the company's recent performance and long-term vision offer a compelling case.

Free Cash Flow Yield: A Magnet for Income-Oriented Investors

Helios Towers' Q2 2025 results underscored its transformation into a cash flow powerhouse. The company generated US$29.9 million in free cash flow for the first half of 2025, a 39.7% increase year-on-year, driven by a 9% rise in Adjusted EBITDA to US$225.5 million and disciplined capital expenditure timing. This performance translated into a free cash flow yield of approximately 2.3% (based on a market cap of £1.27 billion as of June 2025), outpacing peers in the infrastructure sector.

The company's recurring free cash flow (RFCF) surged 40% YoY to US$69.5 million, highlighting its ability to generate sustainable returns. This is particularly attractive in a low-yield environment, where Helios Towers' model of leasing tower space to multiple mobile operators (tenancy ratio of 2.11x) ensures stable, long-term cash flows.

Deleveraging Progress: A Foundation for Future Growth

Net leverage has declined from 4.2x in H1 2024 to 3.8x in H1 2025, with further improvement to 3.8x in Q2 2025 from 4.0x in Q1. This deleveraging, supported by a 23% YoY increase in operating cash flow to US$216.0 million, has already attracted positive credit ratings, including Moody's B1 upgrade with a positive outlook and Fitch's BB- rating.

The company's full-year 2025 guidance targets a net leverage ratio of 3.5x, a level that would position Helios Towers to pursue value-accretive opportunities without straining its balance sheet. This financial flexibility is critical as the company accelerates its CAPEX plans for 2025.

Strategic Expansion in Africa: Unlocking a $34,000-Tenancy Opportunity

Helios Towers is targeting 2,000–2,500 new tenancies in 2025, primarily in high-growth markets like Oman, Tanzania, Malawi, and Senegal. These countries are experiencing rapid mobile network adoption, with low current penetration rates and surging data demand. The company's CAPEX for 2025 is estimated at €150–180 million, with €100–130 million allocated to growth projects, reflecting a capital-efficient approach.

The company's tenancy ratio has climbed to 2.11x, up from 1.81x in 2022, driven by its co-location strategy. By securing anchor tenants and monetizing additional tower slots, Helios Towers is maximizing revenue per site. This model is scalable, with a total addressable market of 34,000 new tenancies by 2030—double its current base.

Long-Term Vision: Beyond Towers to Active Infrastructure

While Helios Towers remains a tower leasing specialist, CEO Tom Greenwood has hinted at exploring active infrastructure services (e.g., power solutions, fiber connectivity) to diversify revenue streams. This pivot aligns with Africa's evolving telecom needs, where reliable power and high-speed data are becoming critical. Though no active projects are announced yet, the company's operational expertise in challenging environments positions it to capitalize on this shift.

The Capital Markets Day on November 6, 2025, will unveil a new five-year strategy, including a revised tenancy ratio target (potentially exceeding 2.2x) and a capital allocation framework. Investors should watch for details on dividend policy and potential shareholder returns, which Greenwood has flagged as feasible by 2026.

Investment Thesis: Balancing Risk and Reward

Helios Towers offers a rare combination of high free cash flow yields, de-risked leverage, and long-term growth potential in a sector poised to benefit from Africa's digital transformation. However, investors must weigh risks such as regulatory hurdles in emerging markets and saturation in core markets.

For a diversified portfolio, Helios Towers' stock (HTWSF) is a buy, particularly for those with a 3–5 year horizon. The company's ability to convert infrastructure scarcity into recurring cash flows, coupled with its strategic flexibility, makes it a standout in the emerging markets space.

In conclusion, Helios Towers is not just a telecom infrastructure play—it's a masterclass in capital allocation and market positioning. As Africa's digital economy accelerates, this company is uniquely poised to deliver both income and growth.