Chief Executive Nick Read said the launch of Vantage Towers was
a major step in improving the return from Vodafone's assets, an
objective he outlined when he became CEO in 2018, and floating a
minority stake would unlock value for shareholders.
He said there was investor demand for the steady income from
tenants on the masts, anchored by Vodafone itself, which will
account for about 90% of the initial revenue.
"We are just at the start of the 5G cycle when operators and
government are looking to expand coverage," Read said, adding
that data usage was ever increasing.
"These trends create good growth opportunities for a towers
business and Vantage Towers is well positioned across each of
its markets to capitalise," he said.
Read said the size of the stake to be floated had yet to be
decided, although Vodafone would retain a majority.
Frankfurt was chosen over London because Germany was home to the
biggest number of towers in the unit, he said.
Vodafone's shares were down 4.5% in morning trading, as analysts
said the pro-forma core earnings Vodafone attributed to the
tower business were below expectations.
Jefferies said the tower business's earnings looked to be 8-10%
below the 900 million euros ($1.04 billion) previously
indicated, with Vodafone putting the difference down to factors
including adjusted anchor tenant fees.
The company had announced the creation of a European mast
business worth upwards of 18 billion euros a year ago.
The spin-out, which has more than 68,000 mobile towers across
nine European markets and is led by Vivek Badrinath, became
operational in May.
As part of the towers initiative, Vodafone said it had created
Greece's largest tower company through a deal with Crystal
Almond, the controlling shareholder of Greek mobile operator
Wind Hellas, which will be added to Vantage.
The new company will also include a 33.2% stake in INWIT,
Vodafone's joint venture with Telecom Italia <TLIT.MI>, and
Vodafone said it could also add its 50% stake in UK masts
company CTIL, its joint venture with Telefonica's <TEF.MC> O2.
Rothschild is leading the IPO, sources said. UBS <UBSG.S> and
Morgan Stanley <MS.N> are also involved, Reuters reported
earlier this month.
Vodafone also reported a 1.3% decline in first-quarter organic
service revenue, which it said was mainly due to COVID-19
impacts, particularly on roaming revenue as customers locked
down. It reiterated its guidance for the year.
(Editing by Guy Faulconbridge and Jane Merriman)
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