Vodafone Group published today its ITF (intention to float) document for Vantage Towers, its European towerco spinout. The doc essentially confirms what's already in the public domain.

Düsseldorf-based Vantage Towers will, "subject to market conditions," list on the Frankfurt Stock Exchange before the end of March.

No word yet on the proposed IPO share price, or how much equity Vodafone is willing to relinquish. The ITF doc only stated that the target free float was a "meaningful minority" in order to create a liquid market for Vantage Towers shares.

Figure 1: Blue skies: Vodafone says the Vantage Towers IPO is on track. (Source: Vantage Towers)

Vantage Towers CEO Vikek Badrinath, understandably keen to whip up investor support ahead of the IPO, talked once again about "inflation-linked revenue secure for the long term" and a strong balance sheet.

Vodafone, as a long-term and committed anchor tenant, along with an expected increase in site demand as operators expand 5G coverage – urged on in some cases by regulators – are key IPO selling points as far as Badrinath is concerned.

The IFT doc also referenced what it called "additional value creation potential" through diversification beyond the core cellular business into other areas, such as fiber backhaul, IoT and edge computing.

"Strategic M&A" was also fleetingly (and tantalizing) mentioned. A tie-up of some sort with Totem, the proposed tower spinout from Orange, can hardly be ruled out, not least because Orange CEO Stéphane Richard has alluded to this as a possibility.

Vantage by numbers

Vantage Towers currently has around 82,000 macro sites spread across ten European markets. Plans are already in the pipeline to increase that number.

A further 7,100 new macro sites, over the next five years, are slated to support Vodafone and Wind Hellas in Greece.

In the UK, Vodafone and Telefónica, through their 50-50 Cornerstone JV – Vodafone's 50% Cornerstone stake is now part of the Vantage Towers asset portfolio ‐ has plans for another 1,200 more macro sites by March 2024 (with both Vodafone and Telefónica as anchor tenants).

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The towerco's average tenancy ratio, as of December 31, 2020, was 1.39x (which excludes Cornerstone assets).

The aim is to increase that to beyond 1.5x in the medium term (again, this would seem to exclude Cornerstone's contribution, which has a comparatively high tenancy ratio compared to most of the company's other European tower assets).

Vantage Towers' revenue reached €723 million ($877 million) in the first nine months of FY21, which ends on March 31, 2021, while adjusted EBITDA amounted to €620 million ($752 million) and recurring free cash flow was €291 million ($353 million).

For FY21 as a whole, the towerco is forecasting revenue of €955 million-€970 million, adjusted EBITDA after leases (EBITDAaL) of €520 million-€530 million and recurring free cash flow of €375 million-€385 million.

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— Ken Wieland, contributing editor, special to Light Reading