KKR, GIP Near Deal for Vodafone’s $15 Billion Tower Unit

Aaron Kirchfeld, Dinesh Nair and Ruth David, Bloomberg News

A Vodafone Group Plc logo on a telecommunications mast in Berlin, Germany, on Wednesday, Feb. 24, 2021. Vodafone plans to float a minority stake of its European towers unit Vantage Towers AG in Frankfurt, setting up what could be one of the region’s biggest initial public offerings this year. Photographer: Liesa Johannssen-Koppitz/Bloomberg , Bloomberg

(Bloomberg) -- KKR & Co. and Global Infrastructure Partners are nearing a deal for Vodafone Plc’s listed towers arm, providing a rare bright spot for dealmakers in an otherwise slow market, people familiar with the matter said.

The investment firms could announce a deal for a stake in Frankfurt-listed Vantage Towers AG as soon as Wednesday, the people said, asking not to be identified discussing confidential information.

The consortium also includes Saudi Arabia’s Public Investment Fund as a minority investor, according to the people. The sovereign wealth fund, which is keen to invest in telecom infrastructure, will help fund a deal, they said.

Vantage shares were broadly flat in early trading Wednesday, giving the company a market value of €14.8 billion ($14.9 billion). Vodafone’s stock was also little changed in London.

Vodafone holds 82% of the towers group. The British carrier’s Chief Executive Officer Nick Read said in February that it could sell down part of its stake while retaining “co-control.”

KKR and GIP have been competing with a host of other financial and strategic bidders for Vantage, including a consortium of Spanish telecommunications group Cellnex Telecom SA and Singapore’s sovereign wealth fund GIC Pte.

While talks are advanced, they could still be delayed or fall apart, they said. Spokespeople for KKR, Cellnex, PIF, Vodafone and Vantage declined to comment, while a representative for GIP didn’t immediately comment.

Network towers are helping dealmakers defy a near-30% slowdown in global mergers and acquisitions activity this year. Telecom operators are shifting the assets to help raise funds for fiber-optic rollouts and wireless upgrades, and are finding willing buyers in the form of investment firms seeking predictable returns in volatile markets.

Bloomberg News reported this week that PIF is among suitors weighing a final bid for network towers being sold by Qatari telecom firm Ooredoo QPSC that could be valued at as much as $5 billion. And in Europe, private equity firm EQT AB is seen as the frontrunner to acquire a stake in French tower owner TDF.

Earlier this year, KKR and GIP missed out an investment in Deutsche Telekom AG’s tower business, with a stake eventually being sold to Brookfield Asset Management Inc. and DigitalBridge Group Inc.

(Adds details on PIF in third paragraph.)