Vodafone to raise €2.8bn via Vantage tower IPO

Vodafone has set the price range for a float of its mast company Vantage Towers that could value the business at about €17bn, as well as selling a near €1bn stake in the company.

Vantage, which is one of Europe’s largest tower companies with 82,000 masts across 10 markets, has been priced between €22.50 and €29 a share ahead of its float in Frankfurt later this month.

That puts the Vantage equity in a range between €11.4bn and €14.7bn ahead of the book building process. The tower company will have debt of €2.1bn, meaning it could potentially have an enterprise value of almost €17bn. 

The entire book, comprising €2.8bn worth of shares, has already been covered according to a banker involved in the process. Vodafone will therefore sell a stake of almost 25 per cent in the company.

The float is equal in size to the largest European float so far this year — that of InPost, the parcel locker company floated by Advent. This also raised €2.8bn, according to Refinitiv data.

Digital Colony, the digital infrastructure investor, will buy €500m of shares in Vantage while Singapore fund RJR will acquire a stake worth €450m.

“The Vantage Towers IPO is moving ahead at pace,” said Vivek Badrinath, chief executive of Vantage.

Analysts last year projected that Vantage could command an enterprise value of €20bn based on the valuations of listed rivals such as Spain’s Cellnex and Italy’s Inwit, but the share prices of those companies have fallen by roughly a fifth since December which has lowered expectations.

Vodafone shares rose 2 per cent to 129p although the stock is still trading below the 170p level hit in September 2018 when the Financial Times reported that Nick Read, the then-incoming chief executive, was considering a sale or monetisation of its towers.

Shares in Vantage will begin trading in Frankfurt on March 18. 

The British telecoms company has spent more than two years carving out its tower company to take advantage of a sharp rise in the value of telecoms infrastructure assets.

The float is a landmark moment for the sector with rivals including Deutsche Telekom and Orange yet to monetise their mast estates. 

So-called captive tower companies, which are still controlled by the telecoms company that built them, generate lower growth rates than independent players such as Cellnex, but are still expected to perform better as carved-out assets.

Vantage has been primed both as an organic growth company, which will invest in building new towers and open itself up for other telecoms operators to use its masts for their equipment, and as a consolidating force in the market. It will target acquisitions using a war chest of about €1bn and its shares to take over rivals.

Cellnex has consolidated the European towers market in the past five years while American Tower, the world’s largest tower company, has emerged as another significant player after paying €7.7bn for Spain’s Telxius this year.

FinnCap said in a note that Vantage’s equity would initially be valued at €13.3bn on a discounted cash flow basis.