The telecoms infrastructure business spun out by Britain’s Vodafone is ready to join the dealmaking fray in Europe, but even with its existing asset base sees a decade of promising growth ahead, its CEO told Reuters. Vantage Towers, which owns 68,000 masts across nine European countries, is eyeing a spring listing in Frankfurt that would arm CEO Vivek Badrinath with the firepower to pay for takeovers with its own shares. In an interview, Mr Badrinath said his primary focus would be to strengthen Vantage’s position in its existing markets.
But the former Orange executive suggested a tie-up with the leading French operator would also make sense. Europe lagged the United States by 20 years in reshaping its industry to split infrastructure from mobile operators, with just 42 per cent of its towers run by specialist companies compared to 90 per cent in the United States.”There is 10 years of growth ahead,” Mr Badrinath said.
“So it’s a good time to build, structure, strengthen and invest.”Vodafone, Europe’s largest mobile player with 116 million customers, is the first big operator to float a towerco and hopes that Vantage could fetch a market valuation of more than 18 billion euros ($21.8 billion). Because towers generate long-term revenue streams that are tied to inflation and expected to grow as new 5G networks expand, they are gaining favour as an asset class in a world of low investment returns. They can also support high debt – Vantage targets a leverage ratio of four times and says it has ‘headroom’ of a further 1 billion euros to do deals.
Spain’s Cellnex is already rolling up regional tower assets in deals backed by debt and equity issuance, recently buying 24,000 towers from Hong Kong’s CK Hutchison for 10 billion euros.