Virgin Media O2 to offload stake in mobile tower network

Virgin Media O2 has reportedly agreed to offload roughly eight per cent of Britain’s biggest mobile tower network as the telecoms group looks to fund the expansion of its fibre broadband and mobile operations.

The stake in Cornerstone Telecommunications Infrastructure, a joint venture of more than 15,000 sites with Vodafone UK, has been valued at somewhere between £150m and £160m, the Financial Times reported.

Virgin Media O2, jointly owned by Liberty Global and Spain’s Telefónica, is said to have agreed the sale with infrastructure investor Equitix. It would mark a continuation of M&A in the telecoms sector as firms look to fund investment and deleverage.

Vodafone announced in July that it was selling a further 10 per cent of its stake in European mobile phone masts business Vantage Towers for €1.3bn (£1.1bn) to help cut its debt.

Last October, Virgin Media O2 sold 16.67 per cent of its stake in Cornerstone to London-based GLIL Infrastructure, a partnership of British pension funds, for around £360m.

For its latest deal, Virgin Media O2 has reportedly been seeking a multiple along the lines of the 18.7 times EBITDAAL – earnings before interest, tax, depreciation and amortisation, but after lease obligations – it achieved with GLIL.

Virgin Media O2, Liberty Global, Telefónica, Equinix and Cornerstone declined to comment.

Lutz Schüler, Virgin Media O2’s chief executive, said last year after the GLIL deal that the group was “partially monetising our tower infrastructure while retaining operational and strategic co-control in a key asset as we roll out 5G to more of the country and boost 4G connectivity”.

Virgin Media O2 is set to retain a stake of more than 25 per cent, currently owning around a third of Cornerstone. Vantage Towers owns 50 per cent.

In July, Virgin Media O2 and Vodafone announced they had reached a deal to extend their current network agreement for more than a decade, which the firms said would “ensure quality mobile connectivity, choice and competition is enhanced”.

Subject to the completion of a proposed mega-merger between Vodafone and Three’s UK units, which is currently being investigated by the UK compeition regulator, the deal would see Virgin Media O2 purchase spectrum from the combined business.