Vantage Towers (VTWR.DE) added new tenants and built more new towers in its Q3FY22 compared to prior quarters. The company reported top line revenue growth of $850 million for the nine-month period ending December 31, 2021. That figure is up 3 percent on a year-over-year basis.
VTWR wants to become a “5G superhost” in Europe and demonstrate its ability to attract new mobile network operators and non-MNO customers across its markets. To that end, the company signed in the quarter a landmark agreement with web hosting company 1&1 in Germany (formerly 1&1 IONOS) to provide at least 3,800 sites by the end of calendar year 2025, and potentially up to 5,000 existing sites throughout the country for the next 20 years.
Like DISH Network in the U.S.,1&1 aims to become the fourth national MNO in Germany, behind Vodafone (VTWR’s former owner and prime tenant), Deutsche Telekom and Telefonica O2. 1&1 is working with Rakuten of Japan to deploy the Germany’s first 5G Open RAN network.
In Q3FY22, VTWR added approximately 130 built-to-suit (BTS) sites compared to 100 in Q1 and 90 in Q2. The company acknowledges that its BTS program is being impacted mainly by supply chain challenges. Nonetheless, VTWR reaffirmed its overall planned delivery of 7,100 BTS sites by the end of FY26.
VTWR ended Q3FY22 with a base of 45,700 macro sites across eight European countries, essentially flat on a YoY basis. The increase in new site builds were offset by the decommissioning of sites associated with VTWR’s active sharing agreement in Spain and other European markets.
Germany is its largest market with 19,400 macro sites, followed by Spain at 8,600 sites and Greece with another 4,800 sites. The Czech Republic, Portugal, Romania, Hungary and Ireland together account for another 12,800 sites. VTWR has access to 36,700 sites through joint ventures and joint operations with INWIT (33.2 percent) in Italy and Cornerstone (10 percent) in the U.K, bringing its total pan-European operation to over 82,000 sites.
VTWR added, through nine months of FY22 ending on December 31, about 1,170 tenancy additions, raising its overall tenancy ratio to 1.43, compared to 1.39 at the end of the same period a year earlier. The company is progressing towards its medium-term target of more than 1.5 tenants per tower.
To control costs and the ground under its towers, the company accelerated its ground lease buyout (GLBO) program with more than 360 signed contracts in Spain and Germany and over 100 signed contracts in Other European Markets since the program’s inception. VTWR confirmed it has 390 GLBO commitments in the pipeline across its eight-country footprint.
For the nine months of FY22, VTWR’s macro site and other rental revenues grew 2 percent YoY to $819 million, including a 6 percent YoY increase in non-Vodafone tenant revenue which totaled $143 million. Energy and Other revenue grew by more than 63 percent to $31 million, driven by site services charged to MNOs.
Germany, VTWR’s largest segment, grew 3 percent YoY in Q3FY22, spurred by non-Vodafone MNO revenue and other non-MNO contracts. In Spain, revenue increased by over 4 percent during the quarter through the active sharing agreement and tenancy growth. Greece showed the strongest growth in Q3FY22 with revenue increasing 8 percent YoY, mainly driven by tenancy growth and increased service revenue chargeable to MNOs. Other European Markets’ total revenue increased by over 5 percent YoY.
VTWR reaffirmed performance guidance for full-year fiscal 2022 guidance with revenue of $1.134-1.151 billion, Adjusted EBITDAaL margin in the mid-50 percent range, and recurring free cash flow of $462-473 million.
By John Celentano, Inside Towers Business Editor
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