Vodafone brings in another €500 million from Vantage

Vodafone will receive a further €500 million linked to the sale of its Vantage Towers business, it revealed this week.

The telecoms group brokered a multi-billion-euro co-control deal for the towers business late last year and has since de-listed the outfit from the Frankfurt stock exchange. Now it has completed another element of the deal that will see it reduce its own stake in Vantage in exchange for the aforementioned half a billion euros, bringing its total proceeds from the sale to €5.4 billion.

Vodafone had little to say on the matter, save for sharing the details, but it’s safe to assume that an extra wedge of cash won’t go amiss for a company that remains keen to reduce debt and really needs an overhaul to appease disgruntled shareholders and turn round its nosediving share price. On that last point, Vodafone shares dipped further on news of the latest Vantage deal and at the time of writing were trading at less than 71 pence in London.

The latest transaction will see Vodafone further trim its stake in Oak Holdings, the vehicle that owns the bulk of Vantage Towers, while the consortium of investors that bought in last year – led by Global Infrastructure Partners and KKR – will raise its stake to 40%.

As a result of the take-up of the voluntary takeover offer the companies launched for minority shareholders earlier this year, and the resulting de-listing of Vantage Towers from the Frankfurt exchange, Oak Holdings had an 89.3% interest in Vantage Towers. As of the end of March, according to Vodafone’s latest results announcement, the telco group had a 64% shareholding in Oak Holdings.

It looks likely that its stake will fall further. It has agreed that the investment consortium may acquire up to 50% of Oak Holdings before the end of the calendar year.

Vantage Holdings had the potential to be something of a cash cow for Vodafone, and indeed the telco has extracted billions of euros of value from it since its spin-off back in 2020.

But the towers company has not had an easy ride of late. Its share price was on the slide in the months preceding its delisting and it is not the only towers company having a wobble, the rise in inflation and interest rates having an impact on the sector as a whole.

Further, Vantage is potentially in hot water in one of its key growth markets, Germany, where tenant and market newcomer 1&1 has accused it of deliberately blocking its network rollout. Germany’s Federal Cartel Office is currently investigating and the firm could face censure, not to mention reputational damage should the case not go its way.

On the plus side, it’s numbers look OK. Vantage Towers’ latest annual report shows an increase in tenancy ratios across its European footprint – the UK’s Cornerstone excluded – and both revenue and earnings crept up in the financial year to end-March.

Essentially, towers is still a good business to be in. There are just more challenges than there once were due to the economic situation.

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