Imminent IPO values Vantage Towers at under €15 billion

Vodafone will float Vantage Towers next week, raising up to €2.8 billion in the process.

Mary Lennighan

March 9, 2021

3 Min Read
telecoms radio towers

Vodafone will float Vantage Towers next week, raising up to €2.8 billion in the process.

The telecoms group plans to price its towers IPO at between €22.50 and €29.00 per share, which implies a total market capitalisation of €11.4 billion-€14.7 billion, lower than the market had once predicted, but in line with reports that emerged alongside the publication of the company’s intention to float document a fortnight ago.

Vodafone expects to raise €2 billion from a base offer of 88.9 million shares, but has also provisioned for a possible upsize option and greenshoe option, which, if exercised in full, would increase the offer size to €2.8 billion, representing 19.1% to 24.6% of Vantage Towers’ outstanding share capital.

“Today’s price range announcement is accompanied by the news that two leading global investors have committed to cornerstone our IPO with the purchase of €950 million of shares at the offer price,” said Vantage Towers CEO Vivek Badrinath, in a statement.

Just to clarify, because I had to read it twice, Badrinath’s comment has nothing specifically to do with the Cornerstone joint venture between Vodafone and Telefonica in the UK that was wrapped into Vantage Towers in January. It’s just the standard term for an investor who commits to buying shares ahead of an IPO, rather than an unusual choice of words from the chief executive.

The two global investors mentioned by Badrinath are US-based infrastructure investment firm Digital Colony and Singapore-based global equity fund RRJ. Digital Colony has committed €500 million to the process and RRJ €450 million.

The final per-share offer price will be determined by 17 March, following the bookbuilding process, with the flotation scheduled to take place in Frankfurt the following day.

The listing feels like it has been a long time coming, but Vodafone initially said it was aiming for early 2021 and it is set to float Vantage well before the end of Q1. The price is not as high as the market hype around telecoms towers had led us to believe, although at the top end of the range Vantage is still looking at an enterprise value of close to 20x annual EBITDA (including all assets in the UK and Italy), based on pro forma figures for 2020.

That’s a healthy number, and an equally healthy injection of cash for Vodafone, which is, of course, the whole point of the move. Almost without exception telcos are keen to monetise their passive infrastructure and the big guns appear to be splitting into two camps: those that want to retain control of their towers but bring in a few billion from selling a stake; and those happy to offload the whole lot in return for a bigger windfall.

Vodafone naturally falls into the first group, along with major European peers Orange and Deutsche Telekom – and there is still potential for deal-making between any of those three players – while the likes of Telefonica and CK Hutchison, which brokered major towers sales worth €7.7 billion and €10 billion respectively in recent months, are firmly in the second.

Whichever way you approach it, towers assets are worth significant sums and investors are apparently willing to pay more for them than they were just a few years ago. Rolling out networks isn’t cheap; telcos need all the help they can get.

About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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