Annual Report 2020/21 Key Data Vantage Towers
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We’re powering Europe’s digital transformation Annual Report 2020/21 Key data Vantage Towers Pro forma financial results summary FY20 FY21 Change €m €m % Macro sites (in thousand units) 45.4 45.7 0.7 Tenancy ratio (number of tenancies/ number of macro sites) 1.37x 1.40x 2.2 Group revenue (ex. pass through) 945 966 2.2 Adj. EBITDA 814 830 2.0 Adj. EBITDA margin 86% 86% — Capex recharge revenue — (4) n/a Ground lease expense (301) (302) 0.3 Adj. EBITDAaL 513 524 2.1 Adj. EBITDAaL margin 54% 54% — Recurring free cash flow (RFCF) 375 384 2.4 Leverage (net debt/adjusted EBITDAaL) n/a 3.8x n/a Vantage Towers AG —— Annual ReportVantage 2020/21 —— AG Towers 1 FY21 Highlights Sustained commercial momentum continues across the business: Delivered c.1,800 1 new tenancies in FY21 with a tenancy ratio of 1.40x, ahead of FY21 pro forma guidance Deployed c.600 1 sites against our target of 550 Two framework extension agreements signed in Q4 in addition to the new agreements announced at Q3 Successful listing on the Prime Standard segment of the Frankfurt Stock Exchange completed in March 2021 with a valuation currently implying a market capitalisation of over €13 billion €2.2 billion debut bond offering completed with very strong investor support Financial results in line with FY21 pro forma guidance Intention to propose a dividend of approximately €283 million, in line with guidance FY22 guidance announced: revenue €995 to 1,010 million, EBITDAaL margin broadly stable and recurring free cash flow of €390 to 400 million. Medium-term targets reaffirmed 1 Sites/tenancies added from 1 April 2020 to 31 March 2021 With 82k macro sites, we’ve got Europe covered 1.3k 14.2k Ireland UK** 1.6x* 2.0x* 19.4k 3.8k 1.9k 2.2k Germany Czech Rep. Hungary Romania 1.2x* 1.1x* 1.5x* 2.0x* 22.3k Italy** 4.8k Greece 3.5k 8.7k 1.9x* 1.7x* Portugal Spain 1.2x* 1.7x* * Tenancy ratio is the total number of tenancies (including virtual tenancies) on Vantage Towers' macro sites divided by the total number of macro sites. Virtual tenancies are when a customer shares its active equipment on a site with a counterparty under an active sharing agreement. ** Joint venture: Italy and UK * Tenancy ratio is the total number of tenancies (including virtual tenancies) on Vantage Towers ’ macro sites divided by the total number of macro sites. Virtual tenancies are when a customer shares its active equipment on a site with a counterparty under an active sharing agreement. ** Joint venture: Italy and UK 3 Who we are As a leading European towers 4 To our Shareholders infrastructure company, we serve 4 Your 5G superhost for Europe 6 Letter from our CEO mobile network operators (MNOs), 10 Management Team federal agencies and customers 14 Report of the Supervisory Board 23 Supervisory Board from the utilities and technology 24 Our strategy for truly sustainable sector. We are at the heart of connectivity 26 People the 5G rollout and enable new 28 Planet applications for the Internet of 30 Performance Things. Benefiting from strong 32 The Vantage Towers Share and resilient underlying demand 34 Voluntary Non-financial Report within a growing towers market, 48 Financial Performance we have a clear focus on strategic growth. Our experienced, inde- 52 Combined pendent and commercially-driven Management Report management team is dedicated to 160 Consolidated powering Europe’s digital trans- Financial Statements formation. 162 Consolidated Financial Statements 167 Notes to the Consolidated Financial Statements 222 Further Information 223 Responsibility Statement 224 Auditor’s Report 238 Unaudited Pro Forma Financial Information 252 Glossary 263 Financial Calendar, Imprint, Contact 4 Your 5G super host for Europe People and businesses across Europe need more and better connectivity. That is why we help to transform societies and economies. What do we bring to the table? A network of c.82,000 towers across ten countries, a next-generation sharing model and a suite of services. As densification and coverage expecta- tions across Europe continue to grow, MNOs can rely on the critical infrastruc- ture our portfolio delivers. No matter if it’s about more capacity, more coverage, or both — we help our customers grow their business. Our assets range from ultra-reliable, far-reaching macro sites to fast-install, flexible urban solutions for vital boosts to localised connectivity. We use these assets as efficiently as possible, allowing our customers to colocate across the same infrastructure. Well-balanced portfolio of macro sites: This shared tenancy model enables more efficient expansion, a minimised footprint and more sustainable operations. 35%ground- based towers Vantage Towers AG —— Annual ReportVantage 2020/21 —— AG Towers 65%rooftop towers 5 We offer comprehensive solutions for further-reaching, faster, more reliable, and higher quality connectivity. Some of our solutions include: Macro sites DAS/Small cell Boost your macro coverage and Our Distributed Antenna capacity with Europe’s largest Systems (DAS) boost coverage tower portfolio. Our ground- and capacity in large and busy based tower (GBT) sites and indoor spaces with high con- rooftop tower (RTT) sites have centrations of mobile users, the physical and EMF space such as stadiums, arenas, required to accommodate even and shopping malls. Our small the most demanding 4G and 5G cells are an ideal way to meet deployment needs. growing high-bandwidth data demands in very busy indoor and outdoor areas. 6 Letter from our CEO Dear Shareholders, to make it a journey worth taking. Thanks to considerable growth opportunities in I am proud to present to you our first Europe, our Group has a promising future Annual Report following our listing on the ahead and we want all stakeholders Frankfurt Stock Exchange on 18 March to benefit from our current and future 2021. Our journey in the last twelve economic success. months has been a remark able one: After long and thoughtful preparations, I am pleased that we have fully delivered this journey began with the carve-out on our financial year 2021 (FY21) opera- from the Vodafone Group. We assem- tional and financial targets and we remain bled a strong executive team to lead and focused on commercialising our business manage a new entity in the middle of an and delivering our medium-term targets. unprecedent Covid-19 crisis. The business We are working to grow our revenues and continued to grow as a leading European deliver our efficiency programmes to pro- tower infrastructure company and vide attractive returns for our sharehold- despite lockdowns across Europe with ers and make a significant contribution to unparalleled challenges, we met all our better connectivity and the sustainable milestones for the initial public offering digitisation of Europe. (IPO). This also highlights the importance of connectivity and digital transformation Europe’s digital transformation is accel- across Europe — we were able to build erating, and we are central to its growth. some thing new from our homes. And on As a 5G super host we are a key enabler the 18 March 2021, we made our debut in for the 5G roll-out. Mobile operators are the public markets with a successful IPO expanding their networks to manage at the Frankfurt Stock Exchange, raising increasing data traffic, and they value approximately €2.2 billion. This was one the quality of our grid. This underscores of Europe’s largest IPOs of the year as our confidence in the future. In the past well as the largest IPO in Germany in financial year, we have made strong pro- over two years in offer size at the time gress across our commercial, operational of listing, which attracted a wide range and strategic levers. Please allow me to of global institutional investors to our point out some highlights: shareholder base. ⏹ Our portfolio has increased to c.82,000 This is just the beginning of our journey. macro sites in 10 European markets — We are excited to have you at our side, with leading positions of #1 or #2 in 9 dear shareholders, and we are committed of them. Vantage Towers AG —— Annual ReportVantage 2020/21 —— AG Towers 7 “ We have made strong progress across our commercial, operational and strategic levers.” 8 ⏹ In FY21, we added c.1,800 1 new tenan- cies. This includes 660 1 tenancies that were previously non-committed — a number worth noting, as these new contracts represent approximately one- third of the non-committed tenancies that we need to deliver our medium- term tenancy ratio target of >1.50x. ⏹ We expanded our ground lease optimi- sation programme, which will reduce costs and deliver commercial upsides. Our Ground Lease Buyout (“GLBO”) programmes or pilots are now underway in six countries, showing encouraging results from lease buyouts and renego- tiations with landowners. ⏹ Results from our co-controlled joint ventures, Cornerstone and INWIT, were in line with expectations with good operational performance. INWIT declared a dividend of €0.30 per share for CY20, meeting their guidance. ⏹ With a confirmed investment grade rat- “ The best part ing and secured external financing, our leverage ratio was 3.8x which was better than our guidance of 4.0x. We are on track to maintain our improved leverage of our journey is position through this current financial year. This allows us to create value for our stakeholders and balance our targets of growth, investments and returns with yet to come.” a 60% RFCF dividend payout ratio. ⏹ In the last months, we have also been able to sign important agreements. These include a 10-year framework agreement with Eir and Three in Ireland, a 5-year collaboration agreement with the Spanish industry body AOTEC, and a 10-year framework agreement with Sigfox in Germany to scale the infra- structure for the IoT.