ET Vodafone Home: Vodafone sell off mobile masts

August 7, 2019

2 min read

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What's going on here?

Vodafone to sell off 60,000 mobile masts for €20bn as it looks towards stock market action.

What does this mean?

Vodafone will sell off its European mobile mast business to fund a stock market floatation of the new business valued at €20bn in 18 months. Vodafone’s shares rose almost 10% as investors are attracted by the windfall of both a sale and an IPO from Europe’s largest tower company. Masts provide mobile coverage across Europe and allow users to make and receive calls and use mobile data. They make revenue by leasing space on the masts to other mobile companies. The new independent business, TowerCo, will 61,700 Vodafone masts across 10 countries. The business has been valued at €15-20bn.

What's the big picture effect?

This project has been in the works for a while. Vodafone began evaluating a spin-off of the towers business last year after receiving several offers for various parts of its portfolio. The company said it intends to monetise parts of TowerCo in the next 18 months. This may include a flotation on the stock market and, depending on market conditions, the sale of a minority stake in the whole business or in its mast operations in individual countries.

The sale will be used to pay off debts. They will have €48bn in debt when the company completes its €18.4bn deal to buy Liberty Global’s cable assets. This has turned Vodafone into a cable and broadband TV giant across Europe. This has all contributed to an increasing share price and happy investors. The share price rise will be a boost to Nick Read, Vodafone’s chief executive, who has seen the company’s value fall by more than a fifth since he took over the role in October. In May, Read was forced to cut Vodafone’s dividends for the first time since 1990, despite having initially said he would not do so.

Report written by Elizabeth Marshall

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