Global infrastructure funds have approached Vodafone about investing in Vantage Towers, a $16 billion mast company, but the telecoms giant prefers an industry merger, according to sources familiar with the situation.
According to one of the sources, the bidders, which include investment firms Brookfield and Global Infrastructure Partners (GIP), have submitted unsolicited approaches in recent weeks valuing Vantage Towers at a premium to its existing valuation of 15 billion euros ($16.57 billion).
According to the source, the offers are for majority ownership in Vantage Towers, and Vodafone is considering them but has not made a decision.
Vodafone has been hesitant to participate in talks with financial investors as it looks to complete an industry merger for Vantage with either Deutsche Telekom’s towers subsidiary DFMG or Orange’s Totem, according to two separate sources, cautioning that no deal is near.
GIP was not immediately available for comment, while Vodafone, Orange, and Brookfield declined to comment.
Without elaborating, a Deutsche Telekom representative said the company was exploring strategic options for its infrastructure division.
Cevian Capital, Europe’s largest activist fund, is pressuring Vodafone to simplify its portfolio, improve its strategy in important regions, and increase returns.
If the transaction goes through, Vodafone’s strategy will be aligned with Cevian’s needs to look at strategic prospects for its tower assets.
The move would come after the London-listed company turned down an 11 billion euro offer for its Italian operations in February, and its plans to consolidate the Spanish market were thwarted in early March when Orange and MasMovil announced exclusive talks to merge their respective businesses in Spain.
Executives in the telecoms industry have regularly urged for market consolidation to reduce competition and increase profitability at a time when operators need cash to invest in the construction of 5G mobile telecom infrastructure.
“POTENTIAL PLAYERS”
Vodafone is now concentrating on maximizing the value of its Vantage Towers controlling interest, with CEO Nick Read considering Orange’s Totem or Deutsche Telekom’s tower assets as potential possibilities.
“The next stage (for Vantage) should be an industrial merger, bringing our towers together with another large player, a like-minded player, a like-minded operator,” Read told reporters last month, expressing interest in combining Vantage’s infrastructure assets with those of Orange or Deutsche Telekom.
While Vodafone was willing to sell its Vantage stake, he noted that there was “plenty of room for us to monetize down while remaining in co-control of that company with that like-minded player.”
Earlier this month Deutsche Telekom had started an auction for its towers business, with initial bids due in mid-March.
According to one of the sources while Vodafone is keeping a close eye on Deutsche Telekom’s tower sale, because of antitrust worries in Germany; it is more likely to seek a deal with Orange’s Totem.
This source ruled out a transaction with financial investors, noting that at this point, only an industry partnership is possible.
Telecom towers have been the focus of several large takeovers in recent years, owing to their massive debt and high expenditures.
As they scramble to expand in Europe for the roll-out of next-generation 5G technology, independent tower operators such as Spain’s Cellnex and American Tower Corp are on the lookout for infrastructure acquisitions.
