Vantage Towers today announced its third quarter update, for the nine months ended December 31, 2020, whereby its portfolio increased to 82.0k tower sites, with a presence in 10 markets in Europe. Indeed, this increase follows Vantage Towers’ addition, in January 2021, of a 50% stake in Cornerstone Telecommunications Infrastructure Limited (CTIL), the UK’s largest tower company. Notably, Vantage Towers’ fully-owned operations, excluding INWIT in Italy and Cornerstone in the UK, comprise 45.7k towers as of the end of December 2020.

Vantage Towers Segment Metrics

Operational Updates – Vantage Towers’ Sites in Europe

Over the past nine months, Vantage Towers has added over 1.4k new tenancies to its tower portfolio. In turn, this enables Vantage Towers to progress towards its medium-term target of a >1.50x tenancy ratio. Importantly, of these 1.4k new tenancies, 1.1k are from non-Vodafone customers.

Additionally, over the past nine months, Vantage Towers has built 450 new tower sites, with 100 additional tower sites targeted to be built by the end of March 2021. Indeed, this will bring Vantage Towers’ newly built tower sites to 550, over the trailing 12 months.

New Customer Agreements

Within its December quarter end update, Vantage Towers announced it signed a number of new agreements to enhance the utilization of its tower portfolio.

Firstly, Eir and Three, two of Ireland’s largest wireless carriers, signed 10-year agreements with Vantage Towers. Specifically, these agreements govern 250 new tenancies from Eir and 200 future tenancies from Three, on Vantage Towers’ infrastructure in Ireland.

Secondly, AOTEC, the industry body representing 150+ local operators in Spain, entered into a 5-year agreement with Vantage Towers. Specifically, this agreement will add tenancies and densify coverage in rural locations on Vantage Towers’ infrastructure in Spain.

Thirdly, Sigfox, a network operator, signed a 10-year agreement with Vantage Towers in Germany. Specifically, this partnership was formed to help Sigfox scale its Internet of Things (IoT) platform using Vantage Towers’ infrastructure in Germany. Indeed, this agreement will generate 350+ tenancies by March 2022 and 500+ new tenancies by December 2023. Overall, the Internet of Things (loT) represents a significant opportunity for Europe and Vantage Towers intends to enable IoT’s growth and adoption, through the use of its towers.

M&A Updates – Vantage Towers

During the quarter ended December 31, 2020, Vodafone agreed to transfer their 50% stake in Cornerstone Telecommunications Infrastructure Limited (CTIL), its co-controlled tower joint venture in the UK, to Vantage Towers. Specifically, the acquisition adds 14.2k tower sites to Vantage Towers’ footprint.

Furthermore, Cornerstone has commitments for new sites and tenancies from its two anchor tenants, Vodafone and O2 (owned by Telefónica). Indeed, these two wireless carriers account for 56% of UK subscribers and have an active network sharing agreement in-place.

Additionally, during the quarter, Vantage Towers completed the merger of Wind Hellas and Vodafone Greece’s towers, creating Vantage Towers Greece. Specifically, Vantage Towers now represents the largest tower company in Greece, with 4.8k towers.

Finally, in Italy, Vantage Towers’ 33.2% stake in INWIT, has been contributed. Therefore, INWIT’s 22.1k towers are now within the consolidated 82.0k tower perimeter of Vantage Towers.

Financial Performance and Position – Vantage Towers

Vantage Towers today also reported its financial performance for the nine months ended December 31, 2020, on a pro forma basis. Specifically, the company generated €723m of revenue (excluding pass through) and €291m of Recurring Leveraged Free Cash Flow (RLFCF) in its consolidated markets, on a pro forma basis.

In addition, Cornerstone contributed a further €39m of RLFCF for the nine months ended December 31, 2020, pro forma, based on Vantage Towers’ 50% share. Subsequently, Vantage Towers’ other co-controlled joint-venture, INWIT, will report its full-year results on March 4th.

Balance Sheet

Today, Vantage Towers also reported on its balance sheet for the first time. This includes the company’s operations, with the exception of Cornerstone, which was only part of the portfolio from January 2021. Overall, Vantage Towers targets Net Financial Debt-to-Adjusted EBITDA, after leases (EBITDAaL) of 4.0x by the end of March 2021. To this end, the company has secured external bank debt financing to replace its existing intercompany facility with Vodafone Group.

Additionally, the third quarter update highlighted that Vantage Towers’ investment grade rating was confirmed by S&P and Moody’s. Indeed, S&P has a rating of BBB- (stable) and Moody’s has a rating of Baa3 (strong) on Vantage Towers.

Dividends and Acquisition Capacity

In terms of capital deployment, Vantage Towers targets a 60% dividend payout ratio, including a €280m dividend for FY 2021. Furthermore, in terms of M&A, the company has €1.0bn in leverage capacity for inorganic growth, beyond its strategic plan.

Strategy – Vantage Towers’ Sites in Europe

Vantage Towers is seeking to capitalize on the considerable growth opportunity in Europe. Specifically, the company will benefit as the roll-out of 5G accelerates. Indeed, with 5G, wireless carriers will expand their networks to manage increasing data traffic rates.

Vantage Towers has the goal of becoming a 5G superhost in Europe. Indeed, the company will offer bespoke solutions which enable 5G connectivity using its towers. These solutions will be applicable across various industries, including manufacturing, healthcare, gaming, and agriculture.

Finally, the company is also making rapid progress on 5G indoor coverage solutions. To this end, the company announced the deployment of the first 5G Distributed Antenna System (DAS) solution for a building complex in the Czech Republic. Indeed, Vantage Towers will act as a neutral host to deliver efficient connectivity solutions in this indoor environment.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


Please enter your comment!
Please enter your name here