Vodafone has finally published its intention to float document for Vantage Towers, pledging to complete the listing in Frankfurt before the end of March.
The trouble is, the towers company hasn’t really told us anything we didn’t already know. However, financial press reports suggest that the valuation of the listing will be lower than many had expected.
Sources cited by Bloomberg on Tuesday, who predicted the IPO document could come today, incidentally, put the value of Vantage Towers at around the €15 billion mark following the listing, the lower end of a widely circulating range of estimates.
Based on Vantage Towers’s pro forma EBITDA of €742 million last year, including contributions from its Italian and UK towers, that’s an earnings multiple of just over 20x. Obviously that’s a big number, but perhaps not as stellar as we could have expected, given the investment hype in the towers space at present. American Tower put its €7.7 billion acquisition of Telefonica’s Telxius Towers at an adjusted EBITDA multiple of just under 26x, for example.
Vodafone has made no comment on valuation.
Neither do we yet know how many of Vantage Towers’s shares will be up for grabs. Vodafone disclosed simply that it will undertake “a meaningful minority free float.”
The company is clearly hoping to draw in investors with a strong dividend policy. It said it will pay out €280 million for the current financial year, payable by July, and going forward will stick with its previously announced dividend target of 60% of recurring free cash flow, including dividends from joint ventures, per year. Again as previously announced, it is on track for a 4.0x leverage ratio by the end of March, which it said will enable it to balance growth, investments and returns.
“This capital structure and dividend policy will ensure Vantage Towers retains leverage capacity for organic growth beyond the business plan and/or strategic M&A, while providing for an attractive cash distribution policy for shareholders,” the company said.
Let’s not forget that Orange CEO Stéphane Richard named Vantage Towers as an ideal partner for his company’s newly created TOTEM towers business last week, as well as suggesting that there are a number of other telco towers firms out there that might be interesting in taking part in M&A. It will be interesting to see whether Vantage and TOTEM end up working together or competing to acquire rival towers outfits. That said, neither company is likely to allow itself to be drawn into a bidding war; both have pretty cautious hands on the tiller.
On which note…
“The IPO is an important milestone and sets the foundations for the next stage of our growth within the dynamic towers industry,” said Vantage Towers CEO Vivek Badrinath – who spent a number of years working under Richard at Orange, incidentally – in the IPO statement. “We will be looking to capture the exciting value-creating opportunities the sector has to offer and to build on our position as a leading tower infrastructure company in Europe.”
True to form, Badrinath is not giving much away.
In fact, the company as a whole is not giving much away. All we have really learnt today is that the IPO will happen before the end of next month…which we had guessed anyway, given that Vodafone had made it clear it was working towards an early 2021 listing.
It looks like we will have to wait a little longer for any real information on this listing, namely the size of the offer and the price.