Vodafone Group is looking to raise as much as €2.58-billion from an initial public offering of its European mobile-phone towers unit in Frankfurt, in what will be one of the region’s biggest stock market listings this year.
The UK telecommunication giant plans to sell 88.9 million shares in the unit at €22.50 to €29 apiece, according to a statement on Tuesday. At the top of the price range, Vantage would be the biggest European IPO since InPost’s in January.
Two investment funds, Digital Colony and RRJ, agreed to buy €500-million and €450-million of stock, respectively, in the offering, which will run through to 17 March. The new stock will start trading on 18 March. The IPO values Vantage at as much as €14.7-billion. Proceeds will go towards paying down the parent company’s debt pile, Vodafone has said.
Vodafone and other European carriers, hit by increasing competition, regulations and the Covid-19 pandemic, are looking to squeeze value from their mast and fibre assets. The push to roll out 5G networks is also driving demand for more tower capacity, fuelling a wave of consolidation and restructuring.
And for yield-hungry investors, these assets promise steady returns as tower companies typically sign long-term contracts, linked to inflation, for the space they rent out to mobile operators. Vantage plans to pay out 60% of recurring free cash flow annually in dividends, and intends to distribute €280-million in July for this financial year, the company said last month.
Direct competitors
Still, mobile carriers looking to rent capacity from Vantage are direct competitors of the tower company’s majority shareholder and main customer across geographies: Vodafone. Independent European mast operators like Cellnex Telecom don’t have this drawback.
At the high end of the price range, the IPO would raise €2.58-billion. Vodafone has the option to sell another 22.2 million shares, while the underwriters can sell another 13.3 million shares to cover possible over-allotments. If all of those shares were sold at the top of the range, the offering would raise €3.6-billion. — Reported by Swetha Gopinath, (c) 2021 Bloomberg LP