Telecom infrastructure company Helios Towers Nigeria (HTN) has received a ‘B’ long-term Issuer Default Rating (IDR) from Fitch Rating suggesting a stable outlook for the company that successful placed US$250 million of 8.375% senior unsecured notes due 2019.
ThisDay reported the notes have been assigned a final ‘B’ rating and recovery rating of ‘RR4′ upon receipt of final documentation conforming to preliminary information already received by Fitch.
HTN issued US$250 million of senior unsecured notes maturing in 2019 through a fully owned Dutch finance subsidiary, Helios Towers Finance Netherlands B.V. The notes were guaranteed by HTN and Tower Infrastructure Company Limited, a fully owned subsidiary of HTN, which owns part of the group’s tower infrastructure assets.
Fitch said its rating on the company was influenced by the rapidly increasing demand for mobile and broadband communication services in Nigeria.
It said given a distinct lack of fixed-line infrastructure, poor mobile coverage and regulatory pressure to improve quality of service, mobile operators are expected to continue investing in voice and data capacity and deploy more base stations to take advantage of this growth potential.
Fitch said: “Operators are also looking to free up capital to invest in their networks by divesting their tower assets, following a wider shift in Africa towards co-location and leasing towers from independent tower operators.
“HTN should be able to capitalise on these trends, mainly by adding more tenants to its portfolio of live and dormant towers, as it has successfully done over the past few years.
“This should help HTN realise significant economies of scale and improve its free cash-flow generation and leverage profile,” it noted. According to the report, HTN benefits from a visible revenue stream driven by long-term lease agreements, which comprise embedded contractual escalators and, in some cases, cost pass-through mechanisms. Following a shift in the market from CDMA to GSM operators, over 75 per cent of revenues are derived from three major tier-1 GSM players, MTN, Etisalat, and Airtel, which are all backed by investment-grade parents.”
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