Vantage Towers, the second-largest independent tower company in Europe, today announced its financial results for the three- and nine-months ending December 31, 2021 (Q3 FY22 and 9M FY22) through which it provided updates on its tower portfolio, supply chain impacts on its macro site build-to-suit (BTS) program, and newly signed agreements in Germany, Hungary, and the Czech Republic.

Operational Performance in Q3 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).

Consolidated Portfolio

As of December 31, 2021, Vantage Towers’ macro sites totaled 45.7k, 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 delivered 600 net tenancy additions during the three months ending December 31, 2021 (Q3 FY22), resulting in a tenancy ratio of 1.43x. In turn, through 9M FY22, the company has added 1.17k net new tenancies over the past nine months.

Build-to-Suit (BTS) Program

Through FY26, Vantage Towers intends to construct a total of 7.1k new sites via a build-to-suit (BTS) program with Vodafone. Of this total, Vantage Towers will build 5.5k sites (77% of total) in Germany.

During the three months ending December 31, 2021 (Q3 FY22), Vantage Towers constructed ~130 BTS macro sites. As such, for the nine months ending December 31, 2021 (9M FY22) the company completed 320 total BTS macro sites.

However, Vantage Towers notes that the execution timing of its “BTS program is currently being impacted mainly by supply chain challenges”. Moreover, the company expects “these challenges to persist beyond Q4 FY22 into FY23”. Finally, Vantage Towers indicates that its overall planned delivery of 7.1k new BTS sites through FY26 remains unchanged.

Signed Agreements – Q3 FY22

1&1 – Germany

In Germany, Vantage Towers signed a 20-year contract with 1&1, a wireless carrier in Germany, to provide 1&1 with access to colocation on at least 3.8k and up to 5.0k existing sites throughout Germany. Specifically, 1&1 is gaining access to Vantage Towers’ passive infrastructure, including ground-based towers and rooftop sites, as part of its build-out of Germany’s fourth wireless network.

LiteNet – Hungary

In Hungary, Vantage Towers signed a new agreement with LiteNet, a LoRaWAN (Long Range Wide Area Network) operator, which will bring 130 new tenancies by the end of FY22.

Miracle Networks – Czech Republic

In the Czech Republic, Vantage Towers signed a framework contract with Miracle Networks that will add 100 tenancies over the next three years.

450connect – Germany

In Germany, Vantage Towers signed a new master service agreement (MSA) with 450connect, a radio network operator, that will support the digitization of Germany’s energy and water industry. Also, Vantage Towers’ infrastructure will host 450connect’s 4G/5G technology and add 150 tenancies over the next three years.

Financial Performance in Q3 FY22 and 9M FY22 – Vantage Towers

Q3 FY22 – Three Months Ending December 31, 2021

Vantage Towers’ revenue (excluding pass through) for the three months ending December 31, 2021 (Q3 FY22) was €252m, which implies 1.6% quarter-over-quarter growth. Within this total, the company generated macro site revenue of €231m (92% of total), which increased by ~3% quarter-over-quarter.

Overall, Vantage Towers’ macro site revenue is growing due to increased tenancies and contractual inflation escalators that are built-in to its customer agreements.

9M FY22 – Nine Months Ending December 31, 2021

Vantage Towers’ revenue (excluding pass through) for the nine months ending December 31, 2021 (9M FY22) was €746m, which implies 3.1% year-over-year growth. Of this total, the company produced macro site revenue of €687m (92% of total), which increased by 1.8% year-over-year.

Additionally, for the nine months ending December 31, 2021, Vantage Towers obtained revenue of €125m (~17% of total) from customers other than Vodafone. Indeed, this implies that Vodafone still represents ~83% of Vantage Towers’ revenue base, which is highly customer concentrated.

Geographic Segments

Vantage Towers’ two largest markets, Germany and Spain, both grew their revenues during the three- and nine-months ending December 31, 2021. Particularly, Germany and Spain’s revenue (excluding pass through) was as follows by region:

  • Germany: revenue of €122m in Q3 FY22, an increase of ~1% quarter-over-quarter, and €362m for 9M FY22
  • Spain: revenue of €44m in Q3 FY22, an increase of ~4% quarter-over-quarter, and €127m for 9M FY22

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 €581m for the nine months ending September 30, 2021
  • Cornerstone: total revenue of €339m for the nine months ending December 31, 2021

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

Vantage Towers reiterated its revenue, EBITDAaL, and 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

Vantage Towers’ colocation agreement with 1&1 (see above) underpins the company’s ability to deliver its mid-term tenancy ratio target of >1.5x. Indeed, this target is highly secured, as a result of the minimum additional 3.8k tenancies contracted with 1&1.

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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