Talk of Vodafone towers deal comes quickly after Niel news

Vodafone is reportedly looking to sell a multi-billion-pound stake in its Vantage Towers business, a move that would help it reduce debt and keep shareholders off its back.

Mary Lennighan

September 26, 2022

3 Min Read
Silhouette, telecommunication towers with TV antennas, satellite dish in sunset

Vodafone is reportedly looking to sell a multi-billion-pound stake in its Vantage Towers business, a move that would help it reduce debt and keep shareholders off its back.

The report, published by This is Money at the weekend, comes hot on the heels of the arrival of Xavier Niel amongst the telco’s investors and related talk on the speeding up of its streamlining process and movement on in-market consolidation.

In recent months Vodafone has been fairly open about its intention to pursue its various options for its towers business, as well as examining M&A opportunities in its European markets, but there is a growing sense that it is not moving fast enough for certain shareholders.

Niel’s Atlas Investissement, which picked up 2.5% of Vodafone last week, highlighted “opportunities to accelerate” in both areas, therefore it is likely no coincidence that the papers are starting to speculate on deals.

According to This is Money, Vodafone wants to sell off a large chunk of Vantage Towers, the passive infrastructure business it spun off and floated in Frankfurt 18 months ago. The news outlet did not cite any sources, unnamed or otherwise, in its story, so we could be looking at pure speculation here. But such a move is clearly not an unlikely outcome.

It suggests that the most likely scenario would see Vodafone broker a co-control deal, offloading half of its remaining 82 percent stake to a private equity buyer. It quotes Bernstein analysts as saying that that would bring in north of £6 billion in cash proceeds and enable Vodafone to remove £2.2 billion worth of Vantage Towers debt from its balance sheet. The analysts predicted that a sale of that ilk could also add 13.2 pence to Vodafone’s share price, which stood at £1.08 when the This is Money story came out, but has since dropped below the £1.07 mark.

The news outlet predicts a deal could take place before the end of the year, but cautions that there is no actual timetable.

It names the usual suspects – KKR, Global Infrastructure Partners, EQT – as potential buyers, and doubtless there are other big names that could be added to that list. Interest in Vantage Towers will be strong.

Offloading a big piece of the asset, while presumably retaining operational control, would be a good move for Vodafone CEO Nick Read, who has been feeling the pressure from disgruntled shareholders for some time. It might also take some of the heat out of the Atlas Investissement buy-in, but only temporarily. The company’s links to expansionist telco Iliad mean that M&A will remain firmly on the agenda.

Atlas Investissement insists it is independent from the France-based telco group, but given that both have Niel in the driving seat, talk of a merger of some sort will persist.

As it stands, it’s all about the Italian market, Iliad having made a failed bid for Vodafone Italia earlier this year. But Vodafone’s other European operations, particularly in Spain and the UK, have also been the subject of a lot of consolidation speculation.

A towers deal would buy the chief executive some time, but alone it would not suffice.

 

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About the Author

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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