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(Expands context on valuation)
By Arno Schuetze and Abhinav Ramnarayan
FRANKFURT, Feb 2 (Reuters) - Vodafone plans to float
Vantage Towers, its European mobile phone masts business, on the
Frankfurt stock exchange in March in a share offering worth
about 3 billion euros ($3.6 billion), three people close to the
matter said.
Vodafone has chosen a full bank syndicate including UBS
, Morgan Stanley and Bank of America to
organise the initial public offering with the help of Goldman
Sachs, Deutsche Bank, Barclays, BNP
Paribas, Berenberg and Jefferies, they said.
Vodafone, the world's second-biggest mobile operator,
declined to comment. The banks either declined to comment or
were not immediately available for comment.
Vantage, based at Vodafone Germany's Duesseldorf office, is
expected to publish its intention to float as early as late
February, if markets hold, with a view to listing on the
Frankfurt stock exchange a few weeks later, the sources said.
Vodafone made Vantage Towers a standalone company in May and
said in July it planned to list a minority stake in Frankfurt in
early 2021. Vodafone plans to use the proceeds to reduce its
debt.
The move is designed to take advantage of investor appetite
for telecoms infrastructure assets, which offer reliable income
streams tied to growing data volumes.
Vodafone CEO Nick Read told analysts in July 2019 that
discussions with investors indicated the assets could achieve
values north of 20 times earnings. That would have implied a
value of more than 18 billion euros at the time.
Vantage said late last year that it expects to report pro
forma adjusted core earnings of up to 540 million euros in the
financial year to the end of March 2021.
'YEARS OF GROWTH AHEAD'
Rival telecom mast companies such as Cellnex,
American Tower, Crown Castle and SBA
Communications trade at 25 to 30 times their core
earnings, which would imply a valuation of 13.5 billion to 16
billion euros for Vantage.
In a sign of the attractiveness of European tower assets,
U.S. heavyweight American Tower bought Telefonica's
mobile phone masts in Europe and Latin America for 7.7 billion
euros in cash earlier this year.
In Europe, Spain's Cellnex has led the charge, buying
24,600 towers from Hong Kong's CK Hutchison for 10
billion euros in November and striking a venture with Deutsche
Telekom in the Netherlands.
Vantage which owns 68,000 masts across nine European
countries, is ready to join the dealmaking fray in Europe, Chief
Executive Vivek Badrinath told Reuters in December.
Europe lagged the United States by 20 years in reshaping its
telecoms industry to split infrastructure from mobile operators,
with just 42% of its towers run by specialist companies compared
to 90% in the United States.
"There is 10 years of growth ahead," Badrinath said. "So
it's a good time to build, structure, strengthen and invest."
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.
Telecom masts companies can also support high debt. Vantage
it targeting a leverage ratio of four times and says it has
"headroom" of a further 1 billion euros to do deals.
($1 = 0.8313 euros)
(Additional reporting by Paul Sandle in London; Editing by
Douglas Busvine, David Clarke and Cynthia Osterman)
