Vodafone spins off its European tower business into a separate company

TowerCo will own Europe’s largest tower portfolio, with 75% of its sites in Germany, Italy, Spain and the UK. (Vodafone UK HQ Newbury, FierceWireless)

Vodafone Group is spinning off its European tower business into a separate entity named TowerCo, which will be operational by May 2020. Vodafone says TowerCo will have its own dedicated team to manage its 61,700 towers in 10 markets.

The company said that ultimately, it may price TowerCo for an IPO within the next 18 months, depending on market conditions. Or Vodafone may dispose of a minority stake in TowerCo or potentially dispose of minority or majority stakes at an individual country level. Proceeds from any sales or other monetization schemes will be used to reduce the debt of Vodafone Group.
Nick Read, CEO of Vodafone, said in a statement, “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 focused on executing this strategic priority over the next 18 months."

Vodafone has been analyzing its European tower portfolio since November 2018, evaluating the potential opportunities and risks associated with tower monetization in all of its major European markets. Consequently, it decided to legally separate its passive tower assets in order to create a new TowerCo organization.

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TowerCo will own Europe’s largest tower portfolio, with 75% of its sites in Germany, Italy, Spain and the UK. Vodafone is estimating that TowerCo could generate annual revenue of around $1.9 billion. And, it says TowerCo’s attributable annual maintenance and expansion capex could be up to $222 million.

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Vodafone is also working to boost its network-sharing agreements in major European markets. It wants to line-up those agreements in anticipation of any sale of tower assets or a possible IPO.

In that regard, Vodafone also said today it had finalized a network-sharing partnership with Telecom Italia.


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