* Mobile operator will list 'meaningful minority' stake
* Vantage Towers could achieve valuation of up to $22 bln
* Company aims to tap investor appetite for infrastructure
(Adds largest European telecoms IPO in 17 years)
By Paul Sandle and Arno Schuetze
LONDON/FRANKFURT, Feb 24 (Reuters) - Vantage Towers, the
mobile masts company spun out of Vodafone Group, plans
to float in Frankfurt by the end of March in a deal that could
value it at up to 18 billion euros ($22 billion), making it
Europe's largest listing so far this year.
Duesseldorf, Germany-headquartered Vantage operates 82,000
towers across 10 countries, where it is usually the leading or
second largest supplier. Germany is its largest market.
Vodafone said on Wednesday it would sell a "meaningful
minority" stake to create a liquid market in Vantage Towers'
shares. It will use proceeds to cut debt, which totals around 69
billion euros, according to Refinitiv data.
No new shares will be sold, meaning Vantage will not make
money from the deal.
People familiar with the matter said stock worth about 3
billion euros would be sold, possibly giving the company a
valuation of 15-18 billion euros.
That would make Vantage the largest European listing of the
year in a busy season that has seen $12 billion Polish firm
InPost, $10 billion German used-car trading platform
AUTO1 and $5 billion British boot brand Dr. Martens
join stock markets.
The deal would also be the largest European telecoms IPO
since that of Belgacom in 2014, and Germany's largest listing
since that of Knorr Bremse in 2018, both of which raised $4.4
billion, according to Refinitiv data.
Vantage's CEO Vivek Badrinath said growth in data traffic,
the roll-out of 5G and tougher coverage requirements, for
example in Germany and Britain, underpinned its prospects.
"These three factors will drive demand for new tenancies and
new tower sites," he said, adding he aimed to increase the
average number of mobile operators using each mast from 1.39 to
more than 1.5.
MOVING MARKET
The value of mobile infrastructure - masts, energy supply
and backhaul connections - has surged as investors look for
secure long-term income.
Vodafone rival Orange launched its own towers unit
this month, while Spain's Cellnex, Europe's biggest
towers company, is raising 7 billion euros for expansion.
Despite recent deals, room for more consolidation remains,
as about 170,000 towers in Europe are still owned by telecoms
companies and not by specialized tower firms, Badrinath said.
Vantage will also have 1 billion euros of leverage for
deals, he added, and the ability to issue more equity.
Its focus on listing meant it was not in talks at the
moment, he said, "but the market is moving, so we expect that
there'll be action in the latter part of the year for sure".
Vantage said late last year it expected to report pro forma
adjusted core earnings of up to 540 million euros in the
financial year to the end of March.
Rivals such as Cellnex, American Tower, Crown Castle
and SBA Communications trade at 25-30 times
their core earnings.
Vantage said it would pay 60% of recurring cash flow in
dividends, and intended to pay out 280 million euros this
financial year.
It is on track for a leverage ratio of four times core
earnings at the end of March, allowing it to balance investment,
acquisitions and returns, it added.
Bank of America, Morgan Stanley and UBS
are organising the IPO with the help of Barclays
, Berenberg, BNP Paribas, Deutsche Bank
, Goldman Sachs and Jefferies.
($1 = 0.8224 euros)
(Reporting by Paul Sandle and Arno Schuetze; Editing by Louise
Heavens, Mark Potter and Jan Harvey)
Barclays (BARC)
Vodafone (VOD)
