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By Douglas Busvine and Nadine Schimroszik
BERLIN, Dec 13 (Reuters) - 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, 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% 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."
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.
FILL-IN ACQUISITIONS
Badrinath said his plan did not require mergers and
acquisitions to work out, but added: "If we want to do something
bigger because it appears, that's something we would look at."
He would be interested in fill-in acquisitions in the
markets where Vantage is already either the number one or number
two player.
Badrinath would also consider bigger deals to go 'off
footprint' into new markets. He noted Orange CEO Stephane
Richard's comments to the Financial Times https://on.ft.com/2IItNh4
that he would be open to towers cooperation, while adding no
talks were taking place.
Relations with Deutsche Telekom's towers unit were also good
in Germany, Vantage's largest market and where the company is
headquartered.
Vantage is still working to fold CTIL, its UK joint venture
with Telefonica's O2, into the business, said
Badrinath: “I am optimistic of getting it in the right time
frame. But it’s not done until it’s done."
($1 = 0.8257 euros)
(Reporting by Douglas Busvine; editing by Philippa Fletcher)
