Virgin Media O2 has agreed to sell a 16.67 percent minority stake in its mobile tower joint venture, Cornerstone Telecommunications Infrastructure Limited (Cornerstone), to the U.K.-based infrastructure fund, GLIL Infrastructure LLP (GLIL). Virgin Media O2 will receive approximately $437 million payable in cash at closing of the transaction. The deal represents a multiple of 18.7 times Cornerstone’s Adjusted EBITDAaL for the year ended in March 31, 2023. Virgin Media O2 will retain a 33.33 percent stake in Cornerstone upon completion of the transaction.
Cornerstone is the U.K.’s largest tower company, with a nationwide network used by both Virgin Media O2 and Vodafone UK as anchor tenants, that together serve about 63 million mobile connections. Cornerstone has the highest tower density in the U.K., owning and managing around 20,000 sites across both urban and rural markets. The towerco was established in 2012, as a mobile network joint venture between Telefónica UK (now Virgin Media O2) and Vodafone UK. Since then, Vodafone transferred its 50 percent stake in 2021 to its Vantage Towers spinoff, with Virgin Media O2 retaining its 50 percent share, up to the GLIL sale.
The sale to GLIL has been structured through a Virgin Media O2 holding company (HoldCo), which owns 50 percent of the Cornerstone shares. After the transaction, GLIL will own 33.3 percent of HoldCo and Virgin Media O2 the remaining 66.7 percent. As the majority shareholder of HoldCo, Virgin Media O2 will continue co-controlling Cornerstone, together with Vantage Towers, and continue to proportionally consolidate Cornerstone in its financial accounts.
“Selling a minority stake in Cornerstone is a logical move for us. We are partially monetizing 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, says Lutz Schüler, Virgin Media O2 CEO. “This deal aligns perfectly with our core infrastructure and capital allocation strategy which sees Virgin Media O2 continue to invest in the U.K. to expand and upgrade our next generation fixed and mobile footprints. As a trusted U.K.-centric investor, GLIL is the best long-term partner for Virgin Media O2 at Cornerstone.”
Cornerstone will remain a critical infrastructure supplier to Virgin Media O2. Moreover, this transaction will not impact the existing commercial network sharing agreement between Vodafone UK and Virgin Media O2, known as Project Beacon, in which the MNOs share RAN equipment across certain areas of the country.
GLIL is a partnership of U.K. pension funds, designed to help pension fund members tap into the stable, inflation-linked returns that infrastructure investment offers. GLIL manages $4.4 billion of committed capital, with more than $3.2 billion deployed into a growing portfolio of infrastructure assets.
The transaction is expected to close in the next several weeks.
By John Celentano, Inside Towers Business Editor
Reader Interactions