Vodafone to spin off European towers business as revenues slide

Vodafone has revealed plans to spin off and potentially list its mobile towers business, as it saw first quarter revenues slide due to poor exchange rates.

The telecoms giant said it will create Europe’s largest cellular tower business through the move, with the possibility of floating the new infrastructure business on the stock market in the next 18 months.

It said it will deliver significant value for shareholders by creating the new TowerCo business, after slashing its dividend for the first time at the end of last year.

The tower company will bring together an infrastructure arm comprising 61,700 towers across 10 countries, with potential revenues of 1.7 billion euro (£1.5 billion) and earnings before tax and interest of 900 million euro (£806 million).

The announcement comes after Vodafone launched a string of network sharing announcements, including plans to share its UK 5G network with O2.

Plans to split the business came as Vodafone reported a 2% fall in total revenue to 10.7 billion euro (£9.6 billion), as the company said it was impacted by negative foreign exchange effects.

Despite posting a year-on-year decline in sales, group chief executive Nick Read said the quarter to June was a turning point in the recovery of its service revenue growth after a poor last quarter of the 2018-19 financial year.

Group service revenues fell by 0.2% to nine billion euro (£8.1 billion) during the period, driven by a 1.7% decline in Europe.

Nick Read, group chief executive, said: “Our service revenue growth improved during the first quarter, led by Italy, and mobile churn fell to another record low.

“We will capture industrial efficiencies through network sharing agreements signed in multiple markets, and today we are announcing the decision to create Europe’s largest tower company.

“We believe there is a substantial opportunity to unlock the embedded value of our towers, and we have started preparations for a range of monetisation options over the next 18 months, including a potential IPO.”

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