Vodafone, GIP, KKR in Vantage Towers partnership
November 10, 2022
A consortium of funds led by Global Infrastructure Partners (GIP) and KKR has entered into a strategic co-control partnership with telco Vodafone for Vodafone’s c. 81.7 per cent stake in Vantage Towers, a leading telecoms tower company in Europe.
Vodafone will transfer its stake in Vantage Towers to a holding company (Oak BidCo), which will be indirectly co-controlled by Vodafone and the Consortium. The Consortium will obtain a shareholding of up to 50 per cent. Oak BidCo will launch a voluntary public takeover offer for all outstanding free float shares of Vantage Towers AG comprising c. 18.3 per cent of the share capital.
GIP and KKR will be investing through their core infrastructure strategies. Tower Bridge Infrastructure Partners1will be part of the Consortium as a co-investor, with additional funding for the transaction provided by the Public Investment Fund (PIF).
Together, GIP, KKR and Vodafone will provide deep infrastructure expertise to help advance the company’s strategic plans. The Consortium and Vodafone share a joint ambition to accelerate the company’s growth trajectory through additional investments by Vantage Towers in its network and expansion into fast-growing adjacent markets. The Consortium and Vodafone aim to expand Vantage Towers’ business to create a leading pan-European telecoms tower business.
Already a leader in its core markets, Vantage Towers has a large footprint of approximately 83,000 sites in ten countries, long-term agreements with high-quality tenants and a deep and dense network in the markets in which it operates. The company benefits from consistent organic growth, stable margin development and strong cash generation driven by significant revenue visibility and enhanced commercialization of its tower footprint. In 2021, Vantage Towers signed a landmark agreement with 1&1 Mobilfunk GmbH to support the company in the rapid roll-out of its 5G network, covering potentially up to 5,000 existing sites throughout Germany for the next 20 years.
“We’re delighted to join forces with Vodafone and KKR to invest in Vantage Towers, a high-quality European tower portfolio with strong upside potential,” declared Will Brilliant, Partner and Head of Digital Infrastructure at GIP. “We are looking forward to capturing the exciting value-creating opportunities in the European telecoms infrastructure sector by advancing Vantage Towers’ strategy and supporting its capacity to build new sites. As strategic partners with Vodafone and KKR, we will bring our deep infrastructure expertise and resources to help the company deliver the best data connectivity for individuals and businesses and contribute to enabling Europe’s digital future in the interest of all stakeholders,”
“Together with our strategic partners Vodafone and GIP, we believe Vantage Towers’ high-quality footprint and network across the region ideally position it to meet the ever-growing demand for mobile connectivity in Europe,” added Vincent Policard, Partner and Co-Head of European Infrastructure at KKR. “We have a shared goal of creating a pan-European telecoms champion by continuing to grow and develop the business, leveraging the Consortium’s significant telecoms infrastructure investment experience and global resources. At KKR we are long-term conviction investors in Europe’s digital infrastructure and at Vantage Towers we intend to pursue value-creating investments to capitalise on the growth in this sector and to help drive consolidation in a fragmented market,”
“This is a landmark moment for both Vodafone and Vantage Towers,” stated Nick Read, Vodafone Group Chief Executive. “This transaction successfully delivers on Vodafone’s stated aims of retaining co-control over a strategically important asset, deconsolidating Vantage Towers from our balance sheet to ensure we can optimise its capital structure and generate substantial upfront cash proceeds for the Group to support our priority of deleveraging. We are excited to partner with GIP and KKR, both world-class investors who bring significant expertise in digital infrastructure and share our long-term vision for Vantage Towers as we collectively take the business to the next stage of its growth.”
Together, the strategic partners plan to support Vantage Towers’ multibillion investment programme over the next five years in order to improve existing infrastructure and to expand as well as upgrade the network. Through their strategic co-control partnership, the Consortium and Vodafone intend to support Vantage Towers to:
- Accelerate the company’s ambitious programme to build new sites for existing clients (Build-to-suit, ‘BTS’) that helps them to meet their coverage obligations and densification requirements.
- Enhance Vantage Towers’ commercial capabilities and drive the utilization of existing assets by capturing additional co-location opportunities from new and existing third-party customers.
- Expand the company’s activities beyond its core business into fast-growing adjacent markets such as 5G private networks, data centres, edge computing, small cells and the internet-of-things (“IoT”), and deploying fibre to the tower ecosystem.
- Further drive consolidation in the European tower sector.
This European growth strategy is expected to allow Vantage Towers to further diversify its tenant base, increase the size and depth of its tower portfolio, while also creating further cost efficiencies and improving its profitability.
With further investments into Vantage Towers’ network, the Consortium and Vodafone are supporting Europe’s digitalization efforts and ensuring that mobile telecommunications infrastructure can keep up with the rapidly rising demand for data traffic and connectivity. Emerging trends such as autonomous driving, telemedicine, virtual/augmented reality, smart farming and IoT depend on the data services and infrastructure that enable them. Vantage Towers has the DNA of a carrier-neutral infrastructure provider, which will play a key role in empowering a sustainably connected Europe. The Consortium is aware of its responsibility to provide access to communications services for the community. It also recognizes the importance of sustainably stewarding these critical assets and is committed to ensuring that Vantage Towers remains a highly attractive employer in the industry.
Both GIP and KKR are leading global infrastructure investors. Together, they form a Consortium with unique experience and expertise in global infrastructure investing, particularly in the digital and communications sector. Both companies share a longstanding institutional relationship and have a proven track record of acting together within one consortium. The Consortium is a strong financial partner for Vantage Towers with access to ample liquidity and long-term value creation objectives to support the business and the necessary investments at this pivotal moment for the industry.
As part of their strategic co-control partnership, the Consortium and Vodafone will launch a voluntary public takeover offer to the shareholders of Vantage Towers through Oak BidCo. Vantage Towers’ shareholders will be offered €32.0 per share in cash. Vantage Towers’ shareholders will benefit from a 19 per cent premium to the 3-month volume-weighted average share price.
The voluntary takeover offer will be subject to various customary offer conditions, including the receipt of regulatory antitrust and FDI approvals, with closing expected in the first half of 2023.
As part of the transaction, Oak BidCo and Vantage Towers have entered into a Business Combination Agreement in which Vantage Towers undertook to support the takeover offer. Subject to their review of the offer document, the management board and supervisory board of Vantage Towers welcome and support the offer and intend to recommend that Vantage Towers’ shareholders accept the offer. The current management board members of Vantage Towers will continue to lead the company.
Furthermore, the Consortium and Vodafone intend to implement a domination profit and loss transfer agreement (DPLTA) if the final shareholding of Oak BidCo in Vantage Towers is below 95 per cent, or a squeeze-out of non-Oak-BidCo minority shareholders if the aggregate shareholding of Oak BidCo in the company is 95 per cent or higher. Post-closing, Vodafone and the Consortium will consider removing Vantage Towers’ public listing from the Frankfurt Stock Exchange.