Vodafone boosts e21 billion phone masts IPO with O2 deal to put UK sites into Vantage Towers

Voda and Telefonica to aggressively pursue new customers for UK towers in deal struck despite executives being busy with O2-Virgin Media

Vodafone and O2 will commercialise their joint venture on masts

Jim Armitage @ArmitageJim

11 January 2021

Vodafone’s e20 billion flotation of its international phone masts business took a step closer today as it threw its 15,000 UK masts into the deal.

Adding the UK towers will take Vantage from nine to 10 countries and make the hotly anticipated float more appealing when it launches some time in the first quarter of 2021.

Vodafone owns the UK towers in a joint venture with O2-Telefonica.

Until today, their collaboration, known as Cornerstone, existed just to service the two companies’ tower needs.

However, the duo have today agreed to turn it into a more aggressive commercial business, seeking to sign up other mobile companies to take space on its masts and pursue more cost savings and profits.

Vodafone is putting its 50% share of Cornerstone into Vantage, gifting the soon-to-be-floated business £62 million of annual underlying profit.

Vantage has agreed to build 1200 new UK masts for Cornerstone by 2025.

The IPO is expected to be valued at somewhere between e15 billion and e21 billion, and today’s deal should give hope to those pursuing a higher valuation.

Vantage is to float on the German stock exchange because its German operations are by far its biggest.

Under today’s deal, Vodafone and O2 will operate separate kit in urban areas where demand is increasing exponentially and the two side wanted to retain complete control over their equipment.

Vodafone shares gained half a penny to 129p.

If Vantage Towers achieves the kind of valuations some analysts have put on it, the IPO will represent a large chunk of its current £34 billion stock market valuation.

Some analysts say Vantage’s value is not reflected in the current share price.

The deal was welcomed in the City because some had feared Telefonica’s attention would be distracted by its attempts to merge O2 with Liberty’s Virgin Media.

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