Vodafone looking to sell off large stake in its £12bn phone masts division in what could be one of biggest deals on stock market this year
Powerful riposte: A sale would enable chief executive Nick Read to reduce the company’s huge debt pile
Vodafone is looking to sell off a large stake in its £12billion phone masts division in what could be one of the biggest deals on the stock market this year.
A sale would enable chief executive Nick Read to reduce the company’s huge debt pile, which stands at around £36billion. It would also be a powerful riposte to activist investors who have been critical of his performance and want to see sweeping change at the FTSE100 giant.
Vodafone floated its masts business, Vantage Towers, last year on the Frankfurt stock market.
The most likely scenario is a ‘co-control’ deal under which it would sell half of its 82 per cent holding, probably to a private equity purchaser. That would allow it to remove £2.2billion of Vantage’s debt from its balance sheet and bring in more than £6billion in cash proceeds, according to analysts at City firm Bernstein. It could add 13.2p to the share price, currently £1.08, Bernstein said.
There is no timetable, but a deal could take place before the end of the year. Potential buyers include US buyout barons KKR, Global Infrastructure Partners and Swedish investment firm EQT.
Read has been streamlining his rambling global empire in order to focus on core European markets including the UK. He recently agreed the sale of the Hungarian business for £1.6billion and has previously sold off operations in Malta, Qatar and New Zealand.
Offloading a multi-billion pound stake in Vantage would dwarf those transactions. It could also help to placate Read’s detractors, including activist investor Cevian, which believes he moves too slowly.
Another potential thorn in Read’s side emerged last week when French billionaire Xavier Niel bought 2.5 per cent of Vodafone through one of his investment funds.
Read, who took the helm in 2018, has been under pressure to turn the tide after years of disappointing share price performance.
Initially he had hoped to merge Vantage with Deutsche Telekom’s masts division, but the German operator ended up plumping for a deal with Canadian and US buyers.
As well as the Vantage Towers deal, there has been speculation of a merger between Vodafone’s UK operations and mobile operator Three UK.
Read is understood to want to spin out the company’s internet-of-things business and there are suggestions he could hive off the M-Pesa African mobile money service.