(Alliance News) - Vodafone Group PLC on Friday said will separate its European tower infrastructure business into a new entity, as it posted a drop in first quarter revenue.
Shares in Vodafone were up 8.0% at 142.62 pence each in early morning trade.
The telecoms company said its European tower infrastructure will be legally separated into a new company. Vodafone then either plans an initial public offering for the new company or else disposal of a minority stake - with potential to disposal of "minority or minority stakes at an individual country level".
Vodafone will use the sale programme proceeds to reduce debts.
The newly created company "will own Europe's largest tower portfolio" according to Vodafone, with around 61,700 towers across 10 countries. Its annual revenue could be approximately EUR1.70 billion with earnings before interest, depreciation, taxation, and amortisation of EUR900 million.
Vodafone Chief Executive Nick Read said: "Building on our position as Europe's largest converged operator, we are now creating Europe's largest tower company. Given the scale and quality of our infrastructure, we believe there is a substantial opportunity to unlock value for shareholders while capturing the significant industrial benefits of network sharing for the digital society. We are focussed on executing this strategic priority over the next 18 months."
Vodafone also posted revenue figures for the first quarter ended June 30, showing a EUR200 million drop in group revenue for the three months to June 30 to EUR10.7 billion due to foreign exchange movements.
Organic service revenue dropped 0.2%, but was up versus the fourth quarter of its prior financial year which saw a 0.7% decline.
The company said service revenue in Europe was down 1.7% versus a 2.1% fourth quarter decline and Rest of the World was up 5.3%, slowed from 5.7% growth in the fourth quarter as regulation in South Africa was offset by growth in other markets.
Read said: "Our service revenue growth improved during the first quarter, led by Italy, and mobile churn fell to another record low. Following a significant quarter of commercial activity, we expect the gradual recovery in our service revenues to continue, underpinning our financial outlook for the year."
"With the completion of the Liberty Global acquisitions, Vodafone will become Europe's leading converged operator, with growing fixed and converged services contributing around half of our European service revenues. We have developed a detailed plan to deliver the customer benefits and capture the substantial synergies from the deal, which we will start to execute immediately."
Vodafone (VOD)
