Vantage Towers started trading in Frankfurt on Thursday as planned, priced at €24.00 per share, towards the lower end of parent Vodafone’s initial price range.
As of mid-afternoon on day one, the company’s share price stood at around €24.25, having peaked at just above €25.00 shortly after trading commenced.
The flotation price means that Vodafone will make €2.3 billion, assuming its greenshoe is exercised in full. In total, Vodafone placed just over 95.83 million shares, including 12.5 million to cover that over-allotment and now owns 81.1 % of its towers business. Or to put it another way, investors have snapped up 18.9% of Vantage Towers, giving it a market cap of €12.1 billion.
While that’s lower than we might have expected, given some of the valuation hype around other recent towers deals in Europe, it still underscores the value of these passive infrastructure assets that the majority of telcos are looking to monetise, one way or another.
For its part, Vodafone said it will use the net proceeds from the placement to pay down debt. Vodafone’s reported net debt at the end of September last year was €43.98 billion, with some exclusions, or 3x adjusted EBITDA.
“Eighteen months ago we started the carve out of Vantage Towers as part of our strategy to improve returns on our assets,” said Vodafone Group CEO Nick Read. “We have moved at pace and today’s successful IPO is the culmination of all that hard work.”
Meanwhile, Vantage Towers chief executive Vivek Badrinath made the usual remarks about the firm’s ability to capture growth opportunities within the towers sector, thanks to its “superior grid and strong balance sheet.” His comment served as a reminder that the company has made no secret of its plans to grow through M&A as well as organically. With a number of smaller operators still to make final decisions on the future of their own towers and big guns like Orange and Deutsche Telekom openly touting for towers partners – Orange chief executive Stéphane Richard named Vodafone as a possible towers partner just last month – there could be more to come from Vantage Towers in the near future.
Indeed, on Thursday Reuters quoted Badrinath as saying that Vantage has received “a lot of interest” from mobile operators and others, including companies in the IoT space, who want to hold discussions in the coming months. Whether these meetings lead to big towers tie-ups or simply new customer relationships remains to be seen, but both would be good news for the operator.