Brookfield, DigitalBridge Weigh Bid for Stake in Vodafone’s Vantage Unit

(Bloomberg) -- Brookfield Asset Management Inc. and DigitalBridge Group Inc. have expressed joint interest in buying a stake in Vodafone Group Plc’s wireless towers unit, people familiar with the matter said.

The infrastructure specialists are weighing making a binding offer for part of Frankfurt-listed Vantage Towers AG via their portfolio company GD Towers, the people said, asking not to be identified discussing confidential information. Brookfield and DigitalBridge agreed to buy a majority stake in GD Towers from Deutsche Telekom AG earlier this year.

Vodafone plans to sell part of its roughly 82% interest in Vantage and has invited suitors to participate in an auction process. US telecommunication infrastructure operator American Tower Corp., as well as private equity firms KKR & Co., Global Infrastructure Partners and EQT AB, are among those interested in the business, Bloomberg News has reported. Spain’s Cellnex Telecom SA has also studied the feasibility of an offer.

Shares in Vantage were trading at €25.76 at 10:02 a.m. in Frankfurt, giving the company a market value of around €13 billion ($12.6 billion). Berenberg analyst Usman Ghazi said he expected bids for at least half of Vodafone’s stake in Vantage to be in the range of €27 to €29.

“Vodafone’s desire to maintain joint control of Vantage Towers, alongside a likely requirement for infrastructure investors to re-lever the balance sheet of Vantage Towers to juice returns, means the base case should be for a bid by infrastructure funds for at least half of Vodafone’s equity stake,” Ghazi wrote in a note.

Deliberations are ongoing and there’s no certainty that GD Towers will decide to proceed with a binding proposal, according to the people. DigitalBridge is already Vantage’s second-largest shareholder with a roughly 4.4% holding, according to data compiled by Bloomberg. Representatives for Brookfield, DigitalBridge, Deutsche Telekom, Vantage and Vodafone declined to comment.

Europe’s phone carriers have started to sell off infrastructure assets to raise money for investments in costly fiber-optic rollouts and wireless network upgrades, as well as to cut their large debt piles. The assets, which carriers once saw as vital to their business models, are attractive to investment firms thanks to their steady, predictable returns. Cellnex also bid for a majority stake in Deutsche Telekom’s towers unit before dropping out.

(Updates with details from analyst note from fourth paragraph.)

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