Infra’s proprietary funds circle Vodafone for $16bn deal with Vantage Towers – sources

The bidders, which include investment firms Brookfield and Global Infrastructure Partners (GIP), have submitted unsolicited proposals in recent weeks valuing Vantage Towers at a premium to its current valuation of 15 billion euros (16.57 billion), one of the sources said, speaking on condition of anonymity.

The offers are for a majority stake in Vantage Towers, the source said, adding that Vodafone was studying the proposals and had not made any decision.

Shares of Vantage Towers were up 11.4% at 0926 GMT after gaining 5% in early trading following Reuters report on redemption interest.

Vodafone shares rose 1.4%, outperforming their peers in the broadly flat telecoms sector.

Vodafone, which listed Vantage Towers in Frankfurt last year and still owns 81% of the company, has been reluctant to enter into talks with financial investors as it seeks to strike an industry merger for Vantage with the unit of Deutsche Telekom DFMG or Orange Totem towers, two separate sources said, warning no deal was imminent.

Vodafone, Orange and Brookfield declined to comment while GIP was not immediately available for comment.

A Deutsche Telekom spokesperson said the company was reviewing strategic options for its infrastructure business, without giving further details.

Vodafone is facing pressure from Europe’s largest activist fund, Cevian Capital, to simplify its portfolio, improve its strategy in key markets and increase its returns.

If materialized, a deal for its towers business would align Vodafone’s strategy with Cevian’s demands to examine strategic opportunities for its towers assets.

Such a move would come after the London-listed company turned down an 11 billion euro approach for its Italian operations in February, while its ambitions to consolidate the Spanish market hit a snag in early March after Orange and MasMovil have announced exclusive talks to combine their respective businesses. companies in Spain.

Telecom executives have repeatedly called for market consolidation to reduce competition and increase operators’ profitability at a time when they need cash to invest in rolling out 5G mobile telecommunications infrastructure.

“PLAYER AS SPIRIT”

Vodafone is now focused on extracting value from its majority stake in Vantage Towers, with boss Nick Read repeatedly mentioning Orange’s Totem or Deutsche Telekom assets as suitable candidates.

“The next step (for Vantage) should be an industry merger, bringing our towers with another big player, a like-minded player, a like-minded operator,” Read told reporters last month, noting his interest. to explore a combination with the infrastructure assets of Orange or Deutsche Telekom.

He added that while Vodafone was willing to reduce its stake in Vantage, there was “plenty of room for us to monetize while remaining in co-control of this entity with this like-minded player”.

Earlier this month, Reuters reported that Deutsche Telekom had launched an auction for its tower business with indicative bids expected in mid-March.

One of the sources said that while Vodafone is closely monitoring the sale of the Deutsche Telekom towers, it is more likely to pursue a deal with Orange’s Totem due to antitrust concerns in Germany.

This source ruled out a deal with financial investors, saying at this stage only an industry tie-up was being considered.

Burdened with heavy debt and huge costs, the telecommunications towers have been the target of several major takeovers in recent years.

Independent tower operators such as Spain’s Cellnex and America’s American Tower Corp are also seeking infrastructure deals as they race to expand in Europe for the rollout of next-generation 5G technology. .

($1 = 0.9054 euros)

(Reporting by Anshuman Daga, Pamela Barbaglia and Andres Gonzalez, Additional reporting by Paul Sandle, Mathieu Rosemain and Nadine Schimroszik, Editing by Kim Coghill and Jason Neely)

Edward K. Thompson