Vodafone Revenue Drops as It Prepares Its Phone Masts Business Unit for a $3.6 Billion IPO

By Luigi Wewege Wednesday, February 3, 2021

Vodafone’s cellphone masts unit Vantage Towers is preparing for an initial public offering (IPO) on the Frankfurt Stock Exchange next month in a stock offering worth roughly €3 billion ($3.6 billion), according to a report by Reuters.

Headquarters of Vodafone Romania.

Rising Demand for Telecom Infrastructure

The British telecom giant business has hired several banks to manage the IPO (initial public offering), including UBS, Morgan Stanley, and Bank of America, as well as Goldman Sachs, Deutsche Bank, Barclays, BNP Paribas, Berenberg, and Jefferies. The company is expected to use the raised IPO funds to reduce its debt.

Vantage Towers is expected to announce its IPO decision later this month and its plan to list on the Frankfurt stock exchange several weeks later.

Vantage became a standalone company in May last year, and two months later, it announced it wants to list a minority stake in Frankfurt in early 2021. The company’s IPO decision was inspired by an increasing appetite for telecoms infrastructure assets among investors, which can provide stable income flow due to increasing data volumes.

Last year, the phone masts company said it estimates to report pro forma adjusted core earnings of up to €540 million in the financial year ending in March 2021.

Phone masts are becoming a popular asset among investors as they offer long-term revenue streams that are closely connected to inflation. Furthermore, the industry is expected to expand significantly as the new 5G networks grow.

Also, telecom tower companies are able to support high debt, with Vantage going for a leverage ratio of four times and says it is able to extend up to €1 billion to make business deals.

In other news, Vodafone said its business revenues continued to fall in the third quarter. However, the British company said it is optimistic about reaching full-year profit targets.

The company reported its service revenue dropped 3.9% to €9.4 billion ($11.3 billion) in the three months to December in 2020, even though it reported record mobile data traffic helped by lockdown restrictions.

However, service revenues on an organic basis were up 0.4% outside of Europe during the same period. The business said its total revenue on a reported basis fell by 4.7%, while organic was down 0.3%.

Vodafone’s CEO Nick Read said the increase in organic revenue came as “a result of the continued commercial momentum across our business, including our largest market Germany.”

“We have made further progress on our strategic priorities, including the IPO of Vantage Towers in early 2021, which remains firmly on track and will now include our 50% shareholding in the UK towers joint venture with Telefonica,” Read said.

Summary

British telecom giant company Vodafone is preparing its phone tower business Vantage Towers for an IPO on the Frankfurt Stock exchange next month. The stock offering is valued at around €3 billion ($3.6 billion).

About the Author


Headshot for author Luigi Wewege

Luigi Wewege is the Senior Vice President, and Head of Private Banking at Caye International Bank. Outside of the bank, he serves as an Instructor at the FinTech School which provides online training courses on the latest technological and innovation developments within the financial services industry. Luigi is also the published author of: The Digital Banking Revolution.

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