Vantage Towers inks Sigfox deal and boosts tenancy ratio ahead of IPO

Vantage Towers is attracting new customers from outside the Vodafone group, the latest being Sigfox Germany, with which it has just inked a 500-tenancy deal.

The towers business also indicated that it is making progress towards its medium-term tenancy ratio target when it published its nine-month financial results on Monday. However, those looking for more details on its forthcoming IPO were disappointed: Vantage Towers is keeping mum for now.

Sigfox Germany and Vantage Towers have signed a partnership deal that, in Vantage’s words, is “expected to deliver” more than 500 new tenancies for the towers firm by the end of 2023, including 350 in financial year 2022. The deal is designed to help Sigfox expand its 0G network, which is a low-bandwidth network for connecting low-powered and low-cost IoT devices that require the transmission of small amounts of data.

“With 15,000 rooftop sites, very deep and comprehensive coverage across Germany, competitive pricing, and customer specific roll out services, Vantage Towers is the partner of choice for Sigfox Germany,” the IoT specialist’s CEO Thomas Scheibel said, in a statement.

“The strong demand for Sigfox 0G network coverage and services is a driver of our expansion in our largest market, Germany,” added Sonia Hernandez, Vantage Towers’ Chief Commercial Officer.

Vantage Towers generated €357 million in revenue in Germany in the nine months to the end of December, almost half of its €723 million consolidated revenue. The market also accounted for €219 million of its €394 million adjusted EBITDA after leases.

The firm had 19,400 macro sites in Germany at the end of last year, but interestingly, its tenancy ratio there is low compared with its other markets at 1.21x. With Vantage Towers aiming for a ratio of 1.5x across its business in the medium-term, Germany is clearly an important growth market. At group level the firm report a tenancy ratio of 1.39x at end-2020.

That tenancy ratio is an important metric for Vantage Towers, because it shows it is extending its business beyond its anchor tenant and parent company, the Vodafone Group.

Vantage said it added around 1,400 new tenancies in the nine months to the end of December, 1,100 of which were from non-Vodafone customers. The figure included around 500 previously non-committed tenancies, “or approximately one quarter of the tenancies needed to deliver our medium-term tenancy ratio target of >1.5x,” Vantage Towers said, in its results statement. “This progress is expected to enable more focus on the upsides to our plan an on long-term growth opportunities.”

Ireland is proving to be a strong market for growth for Vantage Towers at present. The company signed 10-year framework agreements with Eir and Three, which could potentially lead to 250 and 200 new tenancies respectively in future. The firm also highlighted a 5-year deal with Spain’s AOTEC, an industry body representing 150 local operators, which covers new tenancies and network densification in rural areas.

Vantage added 450 new sites in the first nine months of its financial year, “putting our target of approximately 550 new sites for the full year well within reach,” it said.

It will be April or later before we know whether the company hits its full-year targets. Given that Vodafone is working towards a flotation in early 2021, surely we will have more information on the valuation of the Vantage by then.