Sýn, formerly Vodafone Iceland, today announced an agreement for a 20-year sale and leaseback for 200 of its towers to undisclosed international investors. The company expects to realize a capital gain of $47.3m (ISK 6bn) on the sale of its towers, which had a book value of $23.7m (ISK 3bn) at year-end 2020. Therefore, the total purchase price for Sýn’s tower assets is estimated to be $71.0m (ISK 9bn). Overall, this equates to a valuation of $355k per tower, on the 200 tower sites.

Notably, Sýn is only selling 200 towers of its total 600 owned mobile sites. Additionally, all active mobile equipment will continue to be owned and operated by Sýn post-transaction. Overall, the company notes that it has active mobile equipment on 800+ sites across Iceland.

Transaction Process

Sýn notes that the sale and leaseback agreement is subject to the approval of the Icelandic Competition Authority. Additionally, final documentation will take place prior to the company’s announcement of its Q1 2021 results.

Overall, Sýn discloses that it began to explore the sale of its tower assets in March 2020, with guidance from Vodafone Group. In particular, Sýn worked with the management team of Vodafone’s newly created tower company Vantage Towers.

Prior to today’s announcement, Sýn held initial informal talks and then launched a process with four strong investor participants.

Transaction Rationale – Sýn (Vodafone Iceland)

Sýn, formerly Vodafone Iceland, is one of Iceland’s three largest wireless carriers, which also includes Síminn and Nova.

Debt Repayment

The company notes that it will use the proceeds from the sale of its 200 towers to strengthen its balance sheet and improve its liquidity position. As of year-end 2020, Sýn had interest-bearing debt of $82.6m (ISK 10.5bn). Therefore, the $71.0m (ISK 9bn) of proceeds received from the tower sale can substantially reduce the company’s debt burden.

A portion of the company’s debt load is from its prior acquisition of the telecoms and media businesses of 365 Media in December 2017. Indeed, at the time, Vodafone Iceland paid $75.8m (ISK 8bn) for these assets.

5G Network Deployment

Sýn, formerly Vodafone Iceland, states that the separation of its passive tower infrastructure will lead to more efficiency within the company. Additionally, by having neutral-host infrastructure, the company expects to pursue more opportunities for joint construction of its 5G network.

Adam Simmons is the Founder & CEO of Dgtl Infra. He started his career with an S&P 500-listed big box retailer, in an operations management role. Adam's entrepreneurial "itch" led him to start a 5G-driven company, focused on innovative retail solutions using augmented reality and shoppable videos, which was eventually sold to an advertising and consulting group. After, realizing the potential of 5G, Adam shifted his efforts towards investing in the "building blocks" of 5G - known as digital infrastructure, completing a number of strategic investments, buying cellular towers, data centers and fiber networks.

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