Vantage Towers, the second-largest independent tower company in Europe, today announced its financial results for the half-year ending September 30, 2021 (H1 FY22, including Q2 FY22) through which it provided updates on its tower portfolio, newly signed agreements in Hungary, Ireland, Spain, and the Czech Republic, as well as a future potential opportunity with wireless carrier 1&1 in Germany.

Operational Performance in H1 FY22 – Vantage Towers

Vantage Towers’ consolidated portfolio includes its operations in Germany, Spain, Greece, the Czech Republic, Portugal, Romania, Hungary, and Ireland. In addition, Vantage Towers has a 33.2% stake in INWIT (Italy), and 50% stake in Cornerstone (UK) – see below.

Consolidated Portfolio

As of September 30, 2021, Vantage Towers’ macro sites totaled 45.6k, across 8 European markets. Specifically, this portfolio includes 19.4k sites in Germany and 8.6k sites in Spain – the company’s two largest markets.

Vantage Towers H1 FY22 Key Performance Indicators by Segment
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Vantage Towers delivered 370 net new tenancies during the quarter ending September 30, 2021 (Q2 FY22), resulting in a tenancy ratio of 1.42x. In turn, through H1 FY22, the company has added 570 net new tenancies over the past six months.

Overall, an increase in Vantage Towers’ new build-to-suit (BTS) sites was offset by decommissioning of sites from Vodafone’s active sharing agreement with Orange in Spain.

Signed Agreements – H1 FY22

Digi and Vodafone – Hungary

In Hungary, Vantage Towers signed a two-year agreement with the integrated mobile and fixed operator Digi and Vodafone, which will bring 100 tenancy additions.

Tetra – Ireland

In Ireland, Vantage Towers extended its existing contract with Tetra Ireland for another 10 years, which retains 51 existing tenancies.

Itelazpi – Spain (Basque Country)

In Spain, particularly Basque Country, Vantage Towers signed a hosting agreement with Itelazpi, a company that provides transportation and broadcasting services. Notably, Itelazpi offers television, radio broadcasting, data, and communication services in Spain’s Basque Country.

CRA – Czech Republic

In the Czech Republic, Vantage Towers signed a 5-year agreement with Cordiant-backed digital infrastructure provider CRA. Specifically, this agreement will deliver 300 new LoRaWAN tenancies over the next three years in the Czech Republic.

Opportunity – 1&1

Vantage Towers is currently in negotiations with 1&1, a wireless carrier in Germany, to provide tower infrastructure for its 5G network build-out in Germany. Overall, 1&1 has shared the following plans for its tower infrastructure deployments, by year-end:

  • 2022: build-out 1.0k wireless sites
  • 2025: build-out 6.5k wireless sites to satisfy its obligations to cover 25% of Germany’s population
  • 2030: build-out 13k wireless sites to satisfy its obligations to cover 50% of Germany’s population

Ultimately, Vantage Towers is competing with American Tower and Tillman Infrastructure to be a tower infrastructure partner chosen by 1&1. While Deutsche Funkturm, a subsidiary of Deutsche Telekom, has also previously been linked as seeking a partnership with 1&1.

For Vantage Towers, a deal with 1&1 would not only be financially beneficial but would also demonstrate the opportunity for network densification on its 19.4k sites in Germany. Indeed, as of H1 FY22 Vantage Towers’ tenancy ratio in Germany was 1.22x, well-below its consolidated tenancy ratio of 1.42x.

Financial Performance in H1 FY22 and Q2 FY22 – Vantage Towers

H1 FY22 – Six Months Ending September 30, 2021

Vantage Towers’ revenue (excluding pass through) for the half-year ending September 30, 2021 (H1 FY22) was €494m, which implies 2.5% year-over-year growth. Within this total, the company generated macro site revenue of €457m (92% of total), which increased by 1.3% year-over-year.

Additionally, for the half-year ending September 30, 2021, Vantage Towers generated revenue of €82m (16.5% of total) from customers other than Vodafone. Indeed, this implies that Vodafone still comprises 83.5% of Vantage Towers’ highly customer concentrated revenue base.

Q2 FY22 – Three Months Ending September 30, 2021

Vantage Towers’ revenue (excluding pass through) for the quarter ending September 30, 2021 (Q2 FY22) was €248m, which implies 0.8% quarter-over-quarter growth. Within this total, the company generated macro site revenue of €224m (90% of total), which decreased by ~4% quarter-over-quarter.

Geographic Segments

Vantage Towers’ two largest markets, Germany and Spain, both remained consistent during the quarter and half-year ending September 30, 2021. Particularly, Germany and Spain’s revenue (excluding pass through) was as follows:

  • Germany: revenue of €121m in Q2 FY22 (€241m for H1 FY22), an increase of 0.8% quarter-over-quarter
  • Spain: revenue of €42m in Q2 FY22 (€84m for H1 FY22), unchanged quarter-over-quarter

Co-Controlled Joint Ventures

Vantage Towers’ co-controlled joint ventures include INWIT (33.2% ownership) and Cornerstone (50%). The latest results available for these companies is as follows:

  • INWIT: total revenue of €383m for the half-year ending September 30, 2021
  • Cornerstone: total revenue of €176m for the half-year ending September 30, 2021

Guidance – FY22 (Financial Year Ending March 31, 2022)

Vantage Towers also reiterated its revenue and EBITDAaL guidance, while raising its RFCF guidance, for FY22 (financial year ending March 31, 2022), which is summarized below:

  • Revenue: €995m to €1,010m, which implies 3.8% growth, at the mid-point, over FY21
  • EBITDA after Leases (EBITDAaL): margin broadly stable (i.e., 54%), implying €537m to €545m
  • Recurring Free Cash Flow (RFCF): €405m to €415m
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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