The U.K.’s Vodafone Group has confirmed that it will create a separate business to house its tower infrastructure in Europe.
Vodafone said the new entity, dubbed TowerCo, woill be the largest tower company in Europe. Its assets include 61,700 towers across ten markets, with 75% of these sites in Germany, Italy, Spain and the U.K.
TowerCo is expected to be operational by May 2020 with Vodafone pursuing the “potential of monetization opportunities” for it over the next 18 months. Proceeds will be used to cut the operator group’s debt. Vodafone said that these potential opportunities includes an IPO of TowerCo.
“Having secured network sharing agreements in several key markets, Vodafone Group Plc announces that it is proceeding with plans to monetize a substantial proportion of its European tower infrastructure during the next 18 months, including the previously announced intention to combine Vodafone Italy’s passive tower infrastructure with Inwit,” the company said.
“Vodafone has recently announced active and passive network sharing agreements in Italy, Spain and the UK, and will continue to pursue similar arrangements across its European footprint in order to capture the sizeable industrial benefits prior to monetization of its tower infrastructure. These sharing agreements ensure that Vodafone can benefit from a faster roll out of 5G technology across a wider geographic area at a lower cost, and are expected to deliver substantial annual recurring savings in opex and capex,” Vodafone added.
In November 2018, Vodafone announced that it had started a review of its European tower portfolio with a view to improving asset utilization. Since then, Vodafone said it has conducted extensive due diligence and evaluated the formation of a European tower company.
“During the course of this process, Vodafone has received several offers for various parts of its tower portfolio, which have highlighted that its tower assets would command an attractive valuation, reflecting TowerCo’s superior asset quality, strong market positions and higher anchor tenant credit rating,” the company said.
Vodafone said that the new entity could generate annual revenue and EBITDA of around EUR 1.7 billion ($1.89 billion) and EUR 900 million ($1 billion), respectively.
“Building on our position as Europe’s largest converged operator, we are now creating Europe’s largest tower company,” said Nick Read, CEO of Vodafone. “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.”
In a separate statement, Italian telco TIM and Vodafone announced that they have signed agreements for an extension of their existing passive network sharing agreement with tower company Inwit and for an active mobile network-sharing partnership.
The two telcos said that the agreement will enable TIM and Vodafone to jointly roll out 5G infrastructure, enabling more efficient deployment of the new technology over a wider geographic area and at a lower cost.
“The two companies will look into the best technical and commercial solutions for the joint deployment of active 5G equipment, excluding major cities, ensuring a broader and more widespread rollout of the new technology across the country. Both companies will continue to separately control their spectrum assets and network quality and functionality, ensuring the flexibility needed to innovate and compete in the market in order to meet the needs of their respective customers,” TIM said.
