Vodafone mulls £12bn phone mast sale to drive down debt
Vodafone is looking to sell off its phone mast division, just days after French telcos giant Xavier Niel snapped up a stake in the firm.
According to reports from This is Money, the £12bn sale could clear the company’s £36m debt, and ignite investor confidence in the beleaguered stock, which has tumbled nearly 14 per cent in the last six months.
Analysts at City firm Bernstein said that the sale of the mast business, Vantage Towers, which floated in Frankfurt last year, would allow the FTSE 100 firm to remove £2.2bn of debt from the balance sheet and provide more than £6bn in cash.
This is Money said that the most likely option would be a co-control’ deal, where Vodafone would sell half the holding to a private equity firm; KKR, Global Infrastructure Partners and EQT are all reportedly bidders.
The news crucially comes just days after French billionaire Xavier Niel bought a 2.5 per cent stake in Vodafone, heralding much-needed growth for the company.
His investment firm Atlas Investissement said in a filing on Monday that it saw “opportunities to accelerate both the streamlining of Vodafone’s footprint and the separation of its infrastructure assets,” including cost cutting and a greater push for profitability.
Niel, who is the founder and owner of the telecoms giant Iliad, confirmed that he backed Vodafone’s strategy for consolidation in the UK and Italy, which has also been pushed by Swedish activist investor Cevian Capital.
Amid increasing pressure from shareholders, Vodafone chief Nick Read has been on a mission to streamline the company’s operations.
In August, the telcos giant struck a deal with Hungarian tech company 4iG and state-backed Corvinus Zrt to sell off its operations in the country for £1.53bn (€1.8bn)
Like a Vantage deal, the agreement will help drive down Vodafone’s debt levels and spawn Hungary’s second largest telecoms operator, in which 4iG will hold a majority 51 per cent stake while the Hungarian state will hold 49 per cent.
Enders Analysis’ Karen Egan told Morning Wire that Niel’s swoop for Vodafone was undoubtedly driven by his firm’s failed bid to buy Vodafone’s Italian unit for more than €11bn (£9.6bn) in February.
She said this, combined with shareholder frustration, was a key driver for the businessman, who also has an expansive portfolio across Europe and Africa.
Vodafone were not immediately available to comment on these reports.