--Vodafone plans to float its European towers business early next year

--The new company, called Vantage Towers, will seek a listing in Frankfurt

--Vodafone said the coronavirus pandemic hurt revenue for the first quarter of fiscal 2021

 

By Adria Calatayud

 

Vodafone Group PLC said Friday that it is on track for an initial public offering of its new European towers company, called Vantage Towers, early next year, and that the coronavirus pandemic hurt revenue in the first quarter of fiscal 2021.

The U.K. telecommunications group said Vantage Towers, with 68,000 towers across nine markets, is targeting a prime-standard listing in Frankfurt in early 2021. Vodafone said it intends to retain a majority stake in the business after the IPO, given its strategic nature.

Vantage will own Vodafone's stake in Infrastrutture Wireless Italiane SpA, while Vodafone's U.K. infrastructure joint venture with O2 Cornerstone Telecommunications Infrastructure Ltd. may be added in the future, the company said.

Among the assets housed by Vantage will be Vodafone's towers business in Greece, which the company is merging with Wind Hellas Telecommunications SA to create the leading tower infrastructure company in the country.

Vodafone will pay 25 million euros ($29 million) to Crystal Almond SARL, the controlling shareholder of Wind Hellas, and will own a 62% interest in the combined entity upon completion. The U.K. company will have an option to acquire the remaining 38% interest.

Chief Executive Nick Read said Frankfurt, and not London, was the chosen venue for the IPO of Vantage because the company's German towers are its largest asset. Vantage, which has been operating as a separate entity since May and is led by Vivek Badrinath, is headquartered in Dusseldorf, also in Germany.

Vodafone hasn't yet decided how much it will sell in the IPO, as that will partly depend on market demand, Mr. Read said in a call with reporters. At the moment, demand looks very strong, he said.

Earlier this week, rival telecommunications infrastructure company Cellnex Telecom SA outlined plans to raise EUR4 billion to invest in growth projects via acquisitions.

Mr. Read said early next year is a good time to hold an IPO, despite coronavirus concerns, as the telecom industry is at the start of the 5G investment cycle and experiencing and increasing demand for connectivity from consumers. Vantage is well positioned across each of its markets to capitalize on those trends, Mr. Read said.

Separately, Vodafone said revenue for the three months to June 30 fell to EUR10.51 billion from EUR10.65 billion for the year-earlier period.

Quarterly organic service revenue--a closely-watched metric that tracks revenue generated from telecommunications services on a comparable basis--was down 1.3% for the quarter, following a 1.6% rise in the previous quarter.

The company attributed the revenue decline to the impact of the coronavirus pandemic, which resulted in lower revenue from roaming and visitors, project delays and lower automotive activity in its business segment, and lower prepaid revenue in some smaller markets.

Vodafone said its first-quarter performance was in line with its expectations and reiterated its fiscal 2021 outlook for adjusted earnings and cash generation.

 

Write to Adria Calatayud at adria.calatayud@dowjones.com

 

(END) Dow Jones Newswires

July 24, 2020 07:32 ET (11:32 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
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