Helios Towers PLC (LON:HTWS) is a ‘buy’ according to European bank Berenberg which sees strong organic growth ahead for the mobile-phone infrastructure business.
Berenberg sets a 203p price target for its initiation, suggesting some 27% upside to the current share price of around 159p.
Analyst David Burns, in a note, points to ‘currency-neutral exposure to the high-growth dynamic of frontier markets’ and the potential for ‘outsized returns on capital’ which he says justify a high valuation for the Africa focussed company.
Helios stands to benefit materially as African mobile operators continue to expand and roll-out to new customers over the coming years, he highlighted.
“The tower grid is 4x less dense in Helios’s markets than Europe and the US, while 3G and 4G coverage is also low,” Burns explained.
The analyst added: “Helios hopes to grow its business from c9k towers in six markets to 12k towers in eight markets by 2025. An M&A pipeline of c10k towers is under consideration.”
Helios has ample ample financial capacity to pursue opportunities.
“We believe Helios’s uniquely currency protected and high returns towerco business model deserves to trade at the top end of the peer group (c14x),” Burns added.
“This would still leave it at a 50% discount to the EU and a more than 50% discount to the US peer group.”