• A Vodafone towers spin-off  is in the works for 2021 
• Vodafone claims Vantage Towers will be the leading European towers company
• The Vodafone move follows a flurry of tower-related asset shuffling

Vodafone has announced the details of its towers spin-off on the occasion of its  Q1 trading update. It intends to spin off  its towers in an IPO and has announced itself the leading European towers company as it adds in its own towers and other tower properties and interests. 

The spinoff - named Vantage Towers -  (sounds as if John Cleese must be involved somewhere) will be listed in Frankfurt. Vodafone is to retain a majority shareholding. 

Neutral towers is a scale business and Vodafone has added extra tower properties to bulk up the move. Into the Vantage pot goes what is now Greece’s largest tower company through a deal with Crystal Almond, the controlling shareholder of Greek mobile operator Wind Hellas. 

Vantage will also include a 33.2% stake in INWIT, the Vodafone joint venture with Telecom Italia and it may add its 50% stake in UK masts company CTIL, its joint venture with Telefonica’s  O2.

The move by Vodafone comes hot on the heels of what can only be described as a flurry of tower-related deals in Europe going back over the past two years. Telcos that needed the cash - often to fund 5G investment - have been selling off their existing towers. Telcos and independent groups with strategic ambitions have been buying them up.  

One of the most prominent tower operators, Cellnex, has been busy assembling telco tower properties to establish a vast neutral tower network. Most recently we reported that it had paid out Euro 2.5 billion in the first six months of this year, now operates towers in eight countries in Western Europe and is on course to manage a portfolio of 61,000 sites by 2027.

The economics of neutral tower ownership  is well understood. In a market of rapidly expanding spectrum assets and wireless applications the value of  neutral towers grows apace as more densely sited antennas are deployed. For the telco tower owner, like Vodafone, allocating  towers to a neutral operator unlocks shareholder value - in this case through a lucrative IPO. 

The neutral business approach of the new owner underpins the attractions for third parties wanting to lease antenna space on the towers (there is no conflict of interest brewing), while the telco selling the towers is able to keep a minority interest and thus share the upside as the business grows. 

For Vodafone’s CEO, Nick Read, this spin-off is a valuable step towards his goal of improving asset utilisation. “Today’s launch of Vantage Towers marks significant progress of the strategy I established when I became Vodafone CEO,” he said.

Asset utilisation is one thing, but there are other strategic reasons why owning a bunch of neutral towers is a good idea. The trend of the moment is the ‘edge’ and there is an obvious, if mostly theoretical at this point, opportunity for towers to become edge sites from which operators could deploy ultra-low latency services for applications such as industrial IoT. 

Vodafone performance 

The big issue of the moment for all telcos is around  the impact of Covid-19 on financial  performance. Vodafone claims it’s got itself through relatively unscathed with organic service revenue declining by only 1.3%. Overall the revenue lost from reduced roaming and visitors, along with postponed business investment has been compensated for by lock-down induced extra spending on increased calling and data usage, it claims 

It also credits its myVodafone app with maintaining customer dialogue though the pandemic, enabling them to top-up, upgrade and receive help from the Vodafone virtual assistant Tobi.