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(Alliance News) - Telecommunications company Vodafone Group PLC on Tuesday announced the 2021 financial year guidance for its soon-to-be listed Vantage Towers arm.
Vodafone Vantage Towers is a mobile tower owner focused on Europe. London-listed Vodafone expects Vantage Towers to float early in calendar 2021 on the Frankfurt Stock Exchange.
Vodafone said Vantage Towers plans to have a payout ratio of 60% of its recurring cash flow.
"Vantage Towers is well positioned to benefit in each of its markets from the compelling structural growth drivers of increasing data usage, 5G roll-out and coverage obligations. The company is a commercially driven business with a clear strategy to increase tenancies and deliver growth by leveraging its comprehensive capabilities."
Going forward, Vantage Towers expects a tenancy ratio for the 2021 financial year, which ends March 31, of around 1.38x. The company expects to grow this to a medium-term target ratio of greater than 1.50x.
Vodafone said: "In order to meet its medium term target of in excess of 15,500 new tenancies, Vantage Towers needs to secure an additional 2,100 new tenancies to reach a tenancy ratio of approximately 1.50x. The company already has an identified pipeline 14 of opportunities that is multiple times greater than that to support driving a tenancy ratio greater than 1.50x."
Consolidated revenue, excluding pass through, is expected to be between EUR955 million and EUR970 million in financial 2021, up from EUR945 million in financial 2020. Vantage Towers recorded revenue of EUR479 million by the same measure in the first half.
Consolidate figures include a proportionate share of Infrastrutture Wireless Italiane Spa, known as Inwit, in which Vantage Towers holds a one-third stake.
Consolidated adjusted earnings before interest, tax, depreciation and amortisation, after leases, is expected to be EUR530 million to EUR540 million, up from EUR523 million in financial 2020. Adjusted Ebitdaal was EUR267 million in the first half.
Recurring free cash flow is expected to be between EUR375 million and EUR385 million, up from EUR373 million last year. RFCF was EUR190 million in the first half.
"There is also further organic growth potential beyond the core. Vantage Towers is already in discussions with customers regarding numerous other services across its markets. These opportunities include fibre to the site, through wholesaling of existing fibre to the site capacity or investment in new fibre to the site infrastructure, in-building solutions, outdoor small cells, and Internet of Things, edge computing and smart cities. These provide opportunities to deploy capital at attractive rates of return," Vodafone added.
Vodafone on Monday said Vantage Towers' initial public offering was on-track for early 2021.
The company back in July said it will list the newly formed unit on the Frankfurt stock exchange, and that a senior management team is fully in place, led by Chief Executive Officer Vivek Badrinath and Chief Financial Officer Thomas Reisten.
Vodafone shares were down 3.0% at 123.94 pence each in London on Tuesday morning. Inwit was down 0.4% in Milan at EUR10.13.
By Greg Roxburgh; gregroxburgh@alliancenews.com
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