Vodafone Sells Further 10% Stake in Vantage Towers for €1.3bn

Vodafone Group (LON: VOD) announced Monday that it has completed the sale of another 10% stake in Oak Holdings, the joint venture controlling Vantage Towers, for €1.3 billion.

The company explained that the deal finalises the previously announced agreement to establish a 50:50 ownership structure with a consortium of long-term infrastructure investors led by Global Infrastructure Partners and KKR.

The sale price of €32 per share mirrors the initial transaction in November 2022, bringing Vodafone's total earnings from Vantage Towers to €6.6 billion.

Vodafone will use these proceeds towards debt reduction, aiming to lower Vodafone's Net Debt/Adjusted EBITDAaL ratio by 0.1x. This aligns with the company's strategy of maintaining a leverage ratio within the lower half of its target range of 2.25x to 2.75x.

By relinquishing further control of Vantage Towers, Vodafone focuses its resources on its core mobile network business. This strategic move allows them to streamline operations and improve their financial health through debt reduction.

Vantage Towers, meanwhile, benefits from the expertise of the established infrastructure investor consortium, who can leverage their experience to optimise tower operations and growth.

Vodafone shares have edged higher Monday, up 0.35% at 70.75p. The stock has gained around 3.3% in 2024. However, it has declined by more than 7% in the past 12 months.

Last month, Deutsche Bank resumed coverage of Vodafone with a Buy rating and a 140p price target. The investment bank said Vodafone shares have “recovered somewhat” and “are cheap.”

The bank's analysts noted that the company has a headwind in its German business, but it is well known. They believe a United Kingdom deal or asset monetisations should help ahead of trend improvement.