Vodafone Seeks To Rake $2.4B From Vantage Towers IPO: Bloomberg

U.K. telecommunication major Vodafone Group PLC (NASDAQ: VOD) is planning to rake in $2.4 billion (€2 billion) from an IPO of its European mobile-phone towers unit in Frankfurt, touted as one of the region’s biggest listings in 2021, Bloomberg reports.

• Vodafone intends to sell 88.9 million shares in the unit at €22.50 to €29 per share, targeting maximum offering proceeds of €2.8 billion. At the top of the price range, Vantage is estimated to become the biggest European IPO since InPost SA in January.
• Two investment funds, Digital Colony and RRJ, have agreed to buy stock worth €500 million and €450 million, respectively, in the offering, which will run through March 17.
• The new stock is estimated to commence trading on March 18. The IPO values Vantage at €14.7 billion. The offering proceeds will be utilized to repay the parent company’s debt.
• Vantage has reportedly gathered enough investor demand to cover the full deal size of its offering.
• Vodafone and other European carriers are trying to unlock value from their mast and fiber assets amidst increasing competition, regulations, and the pandemic. The shift to the 5G network has further triggered a tower capacity demand spike resulting in industry consolidation and restructuring.
• These assets assure stable returns for yield-hungry investors as tower companies usually sign long-term contracts linked to inflation for the space rented out to mobile operators.
• Vantage intends to pay out 60% of recurring free cash flow in yearly dividends and distribute €280 million in July for FY21.
• However, mobile carriers looking to rent capacity from Vantage become direct opponents of the tower company’s majority shareholder and main customer across geographies, Vodafone. Independent European mast operators like Cellnex Telecom SA (OTC: CLLNY) don’t have this disadvantage.
• Vantage’s epic offering can reportedly put Germany’s IPO market on track for its best year since 2018. 
• Price action: VOD shares are up 3.6% at $18.12 in the pre-market session on the last check Tuesday.