Vodafone gets another €1.3 billion from Vantage stake sale

The telecoms group has agreed to sell the stake in Oak Holdings, which owns almost 90% of Vantage Towers, to a consortium led by Global Infrastructure Partners (GIP).

There's nothing new or surprising in this deal; it was baked into an agreement inked between Vodafone and the GIP-led group a couple of years ago. But it is noteworthy because it indicates that things have gone to plan for Vodafone with regard to the sale of its towers assets. And because €1.3 billion is a fair amount of cash that the telco needs to shore up its financial position.

Monetising its towers has been a lengthy process for Vodafone. It's around four years since Vodafone spun out its tower assets and created Vantage, doubtless after much internal planning, and more than three years since it listed the unit in Frankfurt. It took the business private again in late 2022, brokering a co-control deal with GIP and KKR, that centred on the transfer of Vodafone's 81.7% holding in Vantage to a new joint venture vehicle.

Monday's announcement represents that final element of that deal.

The joint venture vehicle, which we now know as Oak Holdings, has an 89.3% stake in Vantage Towers. With Vodafone ceding 10% of Oak Holdings to GIP, thereby evening up the ownership to 50/50 as planned, it is left with a 44.7% indirect stake in Vantage.

Vodafone sold the 10% stake at €32 per share, which is the same price as the November 2022 transaction. The latest deal will bring its total net proceeds from the towers sale to €6.6 billion, Vodafone confirmed.

That's slightly below the headline figure of "up to €7.1 billion" in cash proceeds it was bandying about back in 2022, but it’s still a significant sum of money and one that should help with an ongoing debt-reduction initiative.

Vodafone said that it will use proceeds from the sale for deleveraging, reducing its net debt/EBITDAaL ratio by 0.1x, which it notes is in line with its target of operating within the lower half of its 2.25x - 2.75x leverage range.

Like many of its peers, debt reduction has been an element of Vodafone's strategic planning of late, although selling assets – right-sizing the portfolio, the telcos itself called it – has grabbed more headlines.

Those asset sales have also extended beyond its European footprint, the telco announcing the sale of most of its stake in Indus Towers – its Indian towers venture with Bharti Airtel and other investors – just last month. Vodafone is bringing in 153 billion rupees ($1.8 billion/€1.7 billion) from that deal, which leaves it with a small stake of just 3.1% in the Indian towers firm.

In that case, Vodafone said it will use the proceeds to pay off outstanding bank borrowings of $1.93 billion secured against its Indian assets, another move that will keep its accountants happy.