United Group’s tower sale opens Europe’s door to Saudi towerco

The past few weeks have brought further strategic moves in the European tower chess game as mobile network operators (MNO) continue to turn these valuable assets into much-needed cash to repay debt, fund network rollouts and acquisitions, and more.

The latest operator to jump onto the tower spin-off bandwagon is Netherlands-based United Group, a highly acquisitive group that has been steadily expanding ownership of telecoms, broadband and TV operators in Southeast Europe.

United Group has just reached an agreement to sell its more than 4,800 towers in Bulgaria, Croatia, and Slovenia to Tawal, the towerco subsidiary of Saudi Arabian operator STC, for €1.22 billion (US$1.34 billion). According to a Bloomberg report from October 2022, United Group appointed Goldman Sachs Group to sell some of its tower assets in a bid to shore up liquidity and repay its near-term bond maturities.

Figure 1: Many European companies are selling tower assets to raise cash.
(Source: dpa picture alliance / Alamy Stock Photo)

Notably, the move also marks the first investment by Tawal and STC in the European telecoms market. The Saudi towerco, which currently owns more than 16,000 towers in Saudi Arabia, has also agreed to build an additional 2,000 sites over the next 20 years.

United Group, which is majority owned by investment firm BC Partners, said it would use some of the proceeds from the tower sale to invest in its portfolio of operators throughout Southeast Europe. The Group’s most recent acquisition was Wind Hellas in Greece, which is now being integrated with pay-TV Nova to create a new converged player on the market.

United Group is now active in eight countries across the region and operates telecoms services under SBB in Serbia; Telemach in Bosnia and Herzegovina, Croatia, Montenegro, and Slovenia; and Vivacom in Bulgaria.

Towering changes

Meanwhile, the Financial Times also reported this week that converged operator Virgin Media O2 has begun the sale of part or all of its 50% stake in Cornerstone, the UK’s largest mobile tower network.

According to the FT, the operator hopes to raise money from the deal – possibly around £750 million ($932 million) – to help fund both its fiber rollout and its mobile aspirations. Vantage Towers, the Vodafone-backed towerco, owns the other half of Cornerstone.

As for Vantage Towers itself, Vodafone finally entered into a previously announced co-control partnership that will see its stake in the towerco diluted to around 50%. Last year, the group agreed a tie-up with Global Infrastructure Partners (GIP) and KKR, creating what will ultimately be a 50:50 joint venture with the two investors that in turn will hold Vodafone’s 81.7% stake in the towerco.

It was subsequently agreed that Vantage Towers would be delisted from the Frankfurt stock exchange this year. Following a voluntary public takeover offer, the joint venture, called Oak Holdings GmbH, now owns 89.3% of the shares in Vantage Towers. Under a public delisting tender offer, all remaining minority shareholders of Vantage Towers now have the option to sell their shares at a price of €32 per share by May 3, 2023.

A change of leadership is also pending this year: citing personal reasons, Vantage Towers CEO Vivek Badrinath said he will not renew his contract that runs until the end of 2023. Although Badrinath said he is making the move in order to be closer to his family in France, the changes at the towerco may have swayed his decision. The search is now underway for a new CEO.

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