Scope for substantial growth of the European tower sector. 6 . 36% 42%of telecom towers 2016. 2019. Penetration of commercial TowerCos and mobile network
Vantage Towers
Market drivers and commercial strategy
Sonia Hernandez, Chief Commercial Officer
17th November 2020
Market drivers and commercial strategy
2
Agenda
1 Introduction and key investment highlights 2 Portfolio overview 3 Contracts, organisation and operations 4 ESG 5 Market drivers and commercial strategy 6 Understanding our financials and growth drivers
Conclusion and Q&A
3
Market drivers and commercial strategy | Highlights
Clear and predictable drivers of data usage, 5G roll-out and coverage obligations result in attractive 1 demand growth. Germany is at the heart of this growth
Creation of Vantage Towers driving a switch in mindset: commercially-driven business with the right 2 incentive structures and a clear expansion strategy 3 Strong platform for sustainable growth, having already secured significant future demand
Well positioned to capture further tenancies in our footprint, leveraging the quality of our 4 infrastructure, and anticipating our customers' needs with geolocation tools and market intelligence 5 We will expand our service portfolio to become a 5G "superhost" and a key enabler of digital Europe
4
Market backdrop
5
Scope for substantial growth of the European tower sector
Europe
Penetration of commercial TowerCos and mobile network operator-led InfraCos (based on number of sites)
Commercialisation
of telecom towers
36%
42%
US
Penetration of commercial TowerCos in the US (based on
number of sites)
80%
90%
59% 51%
2016
2019
2001
2005
2016 1
2019
~1.5x Tenancy ratio
2 Significant headroom for growth
>2.0x3 Stable
US provides a roadmap for sector development in Europe, with scaled platforms well positioned to benefit
With the roll-out of each new generation of mobile technology, users have consumed more data
TowerCos are the infrastructure that holds the key to unlocking Europe's digital future
Source Company information, TowerXchange, broker research
Notes
1 Q2 FY16
2 Based on Cellnex, INWIT and Vantage Towers as of 30-Sep-20
3 As of 2019; based on US TowerCos generally per broker estimates
6
Our markets | Large and attractive markets
Country
Germany
Spain
Italy
Greece
Other markets1
Operating in some of Europe's largest markets
Sovereign debt rating (Moody's / S&P)
Aaa / AAA
Baa1 / A
Baa3 / BBB Ba3 / BB-
Baa1 / A-
Number of mobile network operators
42
4
4
3
3-4
4G LTE coverage3
94%
98%
97%
97%
93%
Large telecom markets with 3-4 operators in each of our markets
LTE coverage improvement potential in some of our markets underpins demand for tenancies to meet coverage obligations
5G auctions completed4
5
(Jun-19)
(Oct-18)
Rapidly growing data consumption
in all of our markets coupled with
2019-24 data usage CAGR
43%
30%
49%
41%
32%
high-band 5G network roll-outs drive tenancy demand and need for
Completed
densification
Source Company information, Moody's, S&P, Analysys Mason, 5G Observatory, press
Partial
Notes
Planned
1 Average of Portugal, Ireland, Czech Republic, Hungary and Romania
2 Includes 1&1 Drillisch
3 Germany, Spain and Other markets based on population coverage; Italy and Greece based on household coverage; Digi excluded from Hungary in Other markets
4 Germany: completed auctions in the 2.1GHz and 3.6GHz bands; consultations on 26GHz spectrum auction underway. Italy: completed auctions in the 700MHz, 3.7GHz and 26GHz bands;
Hungary: completed auctions in the 700MHz, 2.1GHz and 3.6GHz bands
5 Completed / partial auctions / auctions underway: Hungary, Ireland, Czechia, Romania
7
Strong data usage | Driving further densification requirements
Anticipated strong growth in data usage...
000s of PB / year, Europe1,2
194
161
131
103
81
61
42
10
17
28
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
...driven by ever-growing adoption of internet based applications...
EB / month
124.73
...will require additional sites to densify networks
Existing network cells have a capacity limit, even with improved technology
Effective size of cells decreases as usage increases
0.09
2010 total
1.96 Audio
2.36
12.86
Web browsing Social networks
2025
Source Analysys Mason, Ericsson Mobility Report, Company information Notes 1 Western, Central and Eastern European data usage 2 FY refers to fiscal year ending 31-Mar
Video
Existing cell
To ensure consistent coverage and meet rising demand, new sites macro or small cells will be needed
New cell
Existing site
New site
8
Accelerating 5G presence | Generating long-term growth
Accelerating 5G presence
% 5G share of mobile connections1,2
42%
Supportive government initiatives
Higher use of data during COVID-19 pandemic has prompted governments worldwide to take new measures to cater to customer demand:
30%
19%
2% 2020
9% 2021
2022
2023
2024
5G densification requirements expected to drive growth in demand for towers in the long term
European Commission proposed to create the Next Generation EU recovery fund of 750bn to invest in EU's digital transition (more and better connectivity driven by rapid deployment of 5G networks)
Individual European countries are providing ad-hoc funding to accelerate 5G network rollout (e.g. funds to support 5G network expansion in Germany as part of 130bn stimulus package)
Source Analysys Mason
Notes
1 Western European % 5G share of mobile connections
2 FY refers to fiscal year ending 31-Mar
9
Coverage obligations | Driving near-term growth
~36k incremental PoPs required by FY25 across our markets, growing to ~53k by FY30 Europe: incremental PoPs from coverage obligations ('000s)1,2
Operator coverage obligations4
53 +4 +2 +11 36 +9 +4
+24
6k new rural sites
MNOs to collectively reach coverage of 99.4% of the population within 4.5 years5
MNOs must meet 10 out of 39 obligations from 5 case groups
90% of population coverage within 6 years
95% population coverage of specified white spots by 2023
85% population coverage by 2023 and 95% by 2025 on 700MHz
Other FY2025 markets³
Announced
Expected
Other FY2030 markets³
Expected post auction Proposed obligation
Source Analysys Mason; 5G Observatory, press, company press releases
Obligations confirmed
Notes
1 Based on Analysys Mason PoPs forecast for all markets, including new entrants, where Vantage Towers is present (excluding Italy and the UK)
2 FY refers to fiscal year ending 31-Mar
3 Greece, Portugal, Ireland, Czech Republic, Hungary and Romania
4 List of coverage obligations not exhaustive, actual coverage obligations can vary significantly from industry expectations which in-turn significantly impacts estimated PoPs
5 Mobile network operators to reach 5G service coverage of 80% of the population within 3 years (4 years for new entrants) from the availability of the spectrum
Obligations expected
10
5G densification | Required to unleash high-band spectrum potential
As 5G spectrum auctions are completed and MNOs begin roll-out of shorter wavelength, high band spectrum , a significant increase in sites/PoPs will be required to support ultra-fast, highly reliable 5G applications
Auctioned already
Auctions scheduled for 2020/21
3.4 3.6GHz
Across Europe, high-band spectrum recently awarded or will be in 2020/21
3.6 3.8GHz
>24GHz
Source Company information, 5G Observatory, press
Short cell radius associated with high-band spectrum generates a need for an increased number of new sites
5G use cases based on ultrareliable low-latency communication (e.g. factory automation, smart grid) and massive machine-type communication (e.g. smart logistics, connected cities) will drive long term demand for high band spectrum, which drives densification
11
Together driving sustained, ongoing growth in tenancies
Coverage requirements and densification needs to support rapid data growth forecast to drive a significant growth in tenancies across Europe
Europe PoPs forecast (`000s)1,2
FY20-30 growth: +41%
Significant growth driven by coverage obligations from FY20-25 as MNOs seek to meet population/area requirements
9
6
311
17
15 36
7
278
Rapidly-growing data usage driving need for densification to ensure consistent coverage
221
+26%
+12%
Source Analysys Mason Notes 1 Based on Analysys Mason PoPs forecast for all markets, including new entrants, where Vantage Towers is present (excluding Italy) 2 FY refers to fiscal year ending 31-Mar
Potential new entrants following recent and future spectrum auctions
Vantage Towers has relationships with all key mobile network operators and a strategically located portfolio, well positioned to capture expected growth
- also developing relationships with
non-MNO customers
12
Commercial strategy
13
Commercial strategy | Shift to a proactive approach
Shift from reacting to our competitors' requests to identifying and anticipating our customers' needs
Before:
Reactive response to competitor site requests
Competitors
Now:
Proactive identification of customer site requirements
Customers
- Reactive bilateral deals, often with a barter component - No designated commercial team to drive lease-up - Reaction to incoming requests for tenancies on a "best
efforts" basis, but limited incentive to accommodate
Source Company information
- Independent Tower Company, incentivised to drive tenancies beyond Vodafone
- Strong, dedicated commercial team - engaging with counterparties since May
- Proactive identification of customer site requirements using geo-analysis and market intelligence
- Clear strategy to drive tenancy and deliver growth
14
Our commercial setup | Fit-for-purpose, with a clear growth focus
Sales experts in each of our local markets are responsible for building a strong pipeline of opportunities with both existing and new customers
Local teams
Local Sales Hunting Expanding
14 FTEs
Local Sales Farming Upselling
Dedicated sales executives with extensive knowledge and experience of the markets in which they operate
Commercial team incentivisation linked to performance against the business plan
Supported by a lean, central team that is responsible for...
Central team
1 Commercial strategy Growing
2 Business
development Developing
3 Product
development Transforming
4 Marketing
Communicating
12 FTEs
Boosted by our own CRM tool to facilitate the tracking of the evolving and growing pipeline of opportunities
Empowered to sell by 4 centrally-led, key strategic objectives that promote business expansion
15 Source Company information
Commercial strategy | In practice
Our customers are actively engaging with us and reacting positively to our new commercial set-up
A
MNO customers
B
Non-MNO customers
Focused relationship management
>30
Local operators across our markets
Existing relationships
~400
Relationships with non-MNO customers
Commercial initiatives
Proactively engaging, strengthening relationships and anticipating demand
Commercial initiatives
Exploring opportunities such as local operators associations (e.g. AOTEC) to
increase customer base
Pipeline1
Multiple times greater
than required for mid-term target
Current developments
PPDR tender offer submitted
in Junta de Andalucía in Spain, alongside Vodafone and Minsait
Source Company information
Note
16
1 Opportunities the Company has identified, including current negotiations and future opportunities
Country deep dives
17
Growth roadmap | A phased approach to growing value
Expanding our portfolio offering so as to become one of Europe's 5G "superhosts" and a leading digital enabler
Focus
Digital future
5G super host
FTTS
Edge data centres
Outdoor small cells
IoT
Monetisation & efficiency
MNO coverage and densification needs
DAS / indoor small cells
Non-MNO customers
Regional rural networks
REALISE
Reflects the illustrative potential of market opportunity
Source Company information
EXPAND
Smart cities
EVOLVE
Phases
18
Market tenancies | Germany at the heart of our growth
Coverage obligations and densification needs forecast to drive significant growth in tenancies across our markets
~90k growth in market tenancies across our markets (`000s)1
Highlights
CAGR: 3.5%
22
311
57
12
221
FY20
Vantage Towers current footprint market share: 28%2
Other3
FY30
Attractive market growth in our footprint - ~90k incremental tenancies
expected over the next 10 years
Germany is the largest opportunity, mainly driven by coverage obligations, densification and new entrant - 63% of incremental tenancies
Spain is projected to grow at ~2% CAGR and other markets at >2.5% CAGR over the next 10 years, mainly driven by coverage obligations and densification needs
Coverage
Densification
Other
Source Analysys Mason
Notes
1 Based on Analysys Mason PoPs forecast for all markets where Vantage Towers is present (excluding Italy)
2 Market share based on Vantage Towers' tenancies in respect to total tenancies/PoPs in the markets where they operate as of the latest company information and 2020 Analysys Mason data
19
3 Includes Greece, and Other European Markets
Data-driven planning approach | In-depth analysis to assess future growth
Using geo-analysis of our sites and those of our competitors, MNO traffic forecasts, and spectrum obligations to forecast the demand for new sites and colocations on Vantage Towers'
portfolio
Illustrative examples
Key drivers underpinning our assessment
Co-tenancy attractiveness
Densification needs
Coverage obligations
Sites deemed attractive when beyond our competitors' reach
`Hot' and `Warm' PoPs in Hamburg To rapidly meet growing traffic
demand
Source Company information, Analysys Mason
Coverage of national roads and motorways in Spain
To fulfil current and expected spectrum obligations
Vantage Towers
Competing site
Threshold
20
Germany | Strong #2 player well positioned to capture new demand
#2 tower operator in Germany1
Attractive mobile market with a new entrant expected to drive significant co-location demand
Tenancy ratio2
1.5x
1.2x
1.2x
n.a.
n.a.
Share of total 36%
34%
23%
8%
subscribers3
Market share1
43%
29%
19%
6%
3%
Subs/PoPs3 ('000)
1.4
1.7
1.2
n.a.
Towers ('000)1
28.0
19.1
Mobile network operator subscribers3 (m)
46
44
30
10
12.5
Deutsche Telefónica
1&1 Drillisch
Telekom
Deutsche Telekom
GD Towers
Telxius
3.9 2.2
O2
American
Tower
4 player market with 1&1 as a new entrant - 1&1 potential to roll-out ~15k PoPs over the next 15 years
(source: Analysys Mason)
4G population coverage of 94% vs. Government target of 98% coverage nationwide by 2020 - Resulting in coverage obligations driving demand for additional
tenancies
Source Company information, TowerXchange, Fitch Solutions, Analysys Mason and Bundesnetzagentur
Notes
1 Based on number of sites; data as of 30-Sep-20 for Vantage Towers, latest available for other operators from TowerXchange
2 GD Towers as of disclosure in Deutsche Telekom 2018 CMD, Vantage Towers as of 30-Sep-20
21
3 Data from Fitch Solutions as of latest available (2019) for DT and Telefonica and for 1&1 from H120 public reporting; number of PoPs as of 2020 Analysys Mason data
Germany | 57k new market tenancies expected over the next 10 years
Coverage obligations, densification needs and new entrant expected to drive new demand
Market tenancies evolution in Germany (`000)1
CAGR 5.4%
10
139
12
35
82
CAGR 20-25 7.5%
61%
21%
18%
FY20
Coverage New entrant Densification
FY30
FY20-25 FY25-30
Source Analysys Mason Note 1 Based on Analysys Mason PoPs forecast for Germany
% of incremental tenancies
Key highlights for Vantage Towers
Significant growth already contracted Preferred supplier to Vodafone, positioning Vantage Towers strongly to capture new sites demand above initial upfront commitment of ~5,500 sites Attractively located sites for new tenants
Low tenancy ratio providing lease-up potential
Potential for further upside to be unlocked on rooftop sites
22
Germany | Significant growth already contracted
Vantage Towers has already secured 9.5k tenancies from white spots coverage and new macro site commitments
FY20-30 market opportunity
Market tenancies ('000)1
57
A
B C
Uncontracted ~31
Contracted and white spot tenancies (~22k)
A +18k tenancies from white spots2
· 6k new macro sites for rural coverage
· 3 tenants on each macro site
Vantage Towers share
Telefónica Telekom
33%
B +3.5k committed new macro sites (2022-26, excl. white spots)
100%
9.5k contracted and
white spot tenancies
C +0.4k commitments to other
0%
Grey spots sharing
TowerCos3
4
agreements3
Source Company information, Analysys Mason Notes 1 Based on Analysys Mason PoPs forecast for Germany 2 Agreement between Vodafone, Deutsche Telekom and Telefonica Deutschland not yet finalised. Subject to change
but new sites commitment confirmed by Vodafone
3 50% on Vantage Towers footprint but not counted towards tenancy ratio as non-revenue generating.
Subject to competition approvals
23
4 Telefonica commitment to Telxius, excl. white spots
Germany | Well positioned to capture uncontracted tenancies
Portfolio representing 29% of German towers positions Vantage Towers strongly to compete for >30k uncontracted tenancies
FY20-30 market opportunity
Market tenancies ('000)1
Uncontracted tenancies (~31k)
57
Contracted and white
spot tenancies
~22
A
~19k expected densification and
coverage obligations
- ~11k tenancies expected from potential future coverage obligations such as railways and roads
- ~8k tenancies expected for MNOs'
Coverage and
densification needs
A
densification
needs
(~19k)
B
New entrant roll-out driven by coverage
1&1
B
Drillisch
(~12k)
requirements
- ~12k 1&1 potential PoPs to be rolled out by FY30 (source: Analysys
Grey spots sharing
4
agreements2
Mason)
Source Company information, Analysys Mason Notes 1 Based on Analysys Mason PoP forecasts 2 50% on Vantage Towers footprint but not counted towards tenancy ratio as non-revenue generating 3 Management view
Our market share and commercial focus position us to compete for a significant portion of uncontracted tenancies3
24
Germany | Attractive portfolio characteristics
Well balanced portfolio with significant co-location upside on rooftops
Vantage Towers' macro sites by geo-type1
Rural 53%
Urban 32%
Tenancy % of ratio1 portfolio1
GBT
1.8x
23%
Sub-urban 15%
RTT
1.0x
77%
Attractively located sites underpins co-location potential
Number of macro sites without a nearby competitor ('000)2,3
Share of
55%
total by
geo-type
3.6
20%
36%
3.5
0.6 >150m (urban) >600m (sub-urban) >1km (rural)
Lower tenancy ratios on rooftop towers
55% of macro sites in urban areas do not have a competing tower within 150m, with high share of macro sites in strategic locations which are particularly attractive for new entrants and densification needs
Attractively located sites with 47% of macro sites in urban and suburban areas, well positioned to capture demand from densification
Over one third of rural macro sites with no alternative infrastructure within 1km, well positioned to capture demand from coverage requirements
Source Company information, Analysys Mason
Notes
1 As of 30-Sep-20
2 As of 2020 from Analysys Mason data (produced by Analysys Mason based on company data, conclusions formed by the company)
25
3 Urban is >100k inhabitants, Suburban <35k and >100k inhabitants, Rural is <35k inhabitants
Germany | Driving rooftop tenancies lease-up
Significant upside from sharing of rooftops, many of which are well located to address densification needs
Historical barriers to entry under Vodafone ownership
Strategic
Strategic locations viewed as a source of competitive advantage
Status under Vantage Towers
Majority of portfolio with lease-up
potential under Vodafone MSAs
Cost / time effective vs building a new
site
Potential to share on a large portion of our portfolio1
Not allowed 20%
Allowed 13%
Contractual
Contractual limitations on subletting
Technical
Limited physical, structural and EMF capacity
Secure rights through lease
optimisation programme (renegotiation or buyout)
Negotiate rights where Vantage
Towers acts on behalf of its tenants
Optimise equipment footprint Passive antenna sharing (e.g. Spain)
~80%
Allowed under conditions2 67%
Rooftop co-location in other countries underpins ability to overcome technical barriers Vantage Towers rooftop physical tenancy ratio3 (x)
1.8 1.4 1.0
Source Company information Notes 1 Based on a sample of 14.3k RTT contracts 2 Conditions include: notice to landlord, landlord approval, sublease to Vodafone related companies only and Vodafone internal with additional payment 3 Incl. physical tenancies only
Germany
Spain
Romania
26
Germany | Key takeaways
1 Coverage obligations and densification driving >75% growth in new tenancies over the next 10 years, with a significant share secured by Vantage Towers
2 We have significant committed demand of 9.5k contracted and white spot tenancies 3 Our sites' strategic locations and physical capacities underpin the ability to attract new tenants 4 Significant upside from our focus on enabling rooftop sharing
27
Spain | #2 TowerCo, with #2 and #3 MNOs as anchor tenants
#2 tower operator in Spain1
Tenancy ratio2
n.a.
1.6x
1.9x
n.a.
n.a.
Market share1
29%
24%
24%
21%
2%
Towers ('000)1
10.7
8.8
8.6
7.7
Anchor tenant relationship with Vodafone and Orange
Share of total subscribers (%)4
34%
29%
24%
13%
Subs/PoPs ('000)4
0.9
1.0
0.7
1.5
Mobile network operators subscribers (m)4
19
16
14
7
Telefónica
Orange
Anchor tenants
MÁSMÓVIL
98% 4G population coverage 0.6
- Additional coverage obligations expected with 5G auction
Telxius
Cellnex
Orange
Others3
Network sharing means Vantage Towers is a critical
infrastructure provider to both Vodafone and Orange,
Source Company information, TowerXchange, Analysys Mason, Fitch Solutions
together representing >50% mobile market share
Notes
1 Based on number of macro telco sites; data as of 30-Sep-20 for Vantage Towers, 2Q20 public reporting for Cellnex and latest available for other operators from TowerXchange
2 Vantage Towers as of 30-Sep-20 and Cellnex as of 3Q20 company reporting
3 Includes Axion
28
4 Data from Fitch Solutions as of latest available (2019); number of PoPs as of 2020 Analysys Mason data
Spain | Well positioned to capture a large portion of market tenancies
Densification needs expected to drive new demand
Market tenancies evolution in Spain (`000)1
CAGR 1.8%
5 4 60
3
72
CAGR 20-25 2.4%
FY20
Coverage Densification Network sharing
FY20-25 FY25-30
Source Analysys Mason Note 1 Based on Analysys Mason PoPs forecast for Spain
FY30
Key highlights for Vantage Towers
Significant growth already contracted Catering to Vodafone and Orange as co-anchor tenants under network sharing agreement Preferred supplier to Vodafone, positioning Vantage Towers to capture new sites demand Attractively located sites for new tenants
29
Spain | Future demand partly secured through sharing agreements
Portfolio representing 24% of Spanish macro sites positions Vantage Towers strongly to compete for 8.6k uncommitted tenancies
FY20-30 market opportunity
Market tenancies (`000)1
12
1A.2
B
Contracted (~3.4k)
Contracted tenancies
A · +3.3k active sharing agreement B · ~150 new macro sites commitment
Vantage Towers share
/ Other MNO
36%
100%
1.1k2 secured
Uncontracted (~8.6k)
C
Uncontracted tenancies
C · Potential road coverage obligations expected to drive additional tenancies
· Natural partner for our anchor tenants in red zone3
· Target to achieve lease-up in exclusion zone4
Leverage relationship with anchor tenants
and attract other MNOs
Source Company information, Analysys Mason, TowerXchange
Notes
1 Based on Analysys Mason PoPs forecast for Spain
2 Net of decommissioning of 0.9k sites in total, of which 0.7k related to the active sharing agreement
4 Exclusion zone is cities >175k inhabitants
30
3 Zone where Vodafone and Orange are actively sharing equipment
Spain | Vodafone/Orange active sharing partnership on our towers
Agreement summary
Orange
1 In April 2019 Vodafone and Orange agreed to an active sharing partnership in Spain
2 Spanish territory to be split into Red and Orange Zones, where each of the MNOs is the anchor on Vantage Towers sites
3 Extension of current coverage area from cities with <25k population to cities with <175k; cities with >175k population excluded for active sharing
4 Technologies: 2G/3G/4G/5G
Key highlights for Vantage Towers
2 anchor tenants: Vodafone and Orange
+1.2k new net tenancies1 by FY23 for Vantage Towers
Portfolio fee for all sites Based on sites pro-forma for decommissioning1 All sites priced at MSA rate Vantage Towers receives active sharing premium on
relevant sites Decommissioning costs paid by Vodafone
Source Company information
Notes
31
1 Including ~0.7k sites decommissioned as part of the active sharing agreement. Does not include additional ~0.2k sites to be decommissioned in Spain
Spain | Attractively located portfolio
Significant lease-up potential across ground based towers and rooftops
Vantage Towers' macro sites by geo-type1
Rural 48%
Urban 30%
Tenancy % of ratio1 portfolio1
GBT
1.7x
46%
Sub-urban 21%
RTT
1.6x
54%
Attractive geo-location underpins co-location potential
Number of macro sites without a nearby competitor ('000)2,3
Share of
32%
14%
20%
total by
geo-type
0.8
0.8
0.3
>150m (urban) >600m (sub-urban) >1km (rural)
Tenancy ratio of 1.4x excluding active sharing, allowing for substantial tenancy lease-up and upgrade potential
Approximately one third of macro sites at least 150m away from competing macro sites in urban locations, including exclusion areas4
Well positioned to capture demand from densification
c.50% of sites in urban and sub-urban areas, with high share of sites in Spain's main cities
~20% of rural macro sites with no alternative infrastructure within ~1km
Source Company information, TowerXchange, Analysys Mason
Notes
1 Company data as of 30-Sep-20
2 As of 2020 from Analysys Mason data (produced by Analysys Mason based on company data, conclusions formed by the company)
3 Urban is >100k inhabitants, Suburban <25k and >100k inhabitants, Rural is <25k inhabitants
32
4 Exclusion zone is cities >175k inhabitants
Greece | Only independent TowerCo, opening up the market
Tenancy ratio2
#1 tower operator in Greece1
1.6x
n.a.
Market share1
53%
47%
Towers ('000)1
4.9 4.4
Cosmote
Source Company information, TowerXchange, Fitch Solutions, Analysys Mason Notes 1 Based on number of sites; as of 30-Sep-20 for Vantage Towers, based on Vodafone and Cosmote only 2 As of 30-Sep-20 3 Data from Fitch Solutions as of 2019; number of PoPs as of 2020 Analysys Mason data
Critical infrastructure provider to 2 out of 3 MNOs
Share of total subscribers3
47%
29%
24%
Subs / PoPs ('000)3
1.7
1.2
n.a.
Mobile network operator subscribers (m)3
7.4
4.6
3.7
Cosmote
Wind
Anchor tenants
Network sharing means Vantage Towers is a critical infrastructure provider to Vodafone and Wind Hellas, together representing ~53% mobile market share
As part of the merger, Vantage Towers has secured a commitment of 500 new macro sites (split evenly between operators)
33
Greece | Urban centric portfolio with co-location growth potential
Well positioned to benefit from growing coverage and densification requirements
Vantage Towers' macro sites by geo-type1
Tenancy % of ratio1 portfolio1
Rural 40%
Urban 35%
GBT
2.0x
42%
Sub-urban 25%
RTT
1.3x
58%
Attractive geo-location underpins co-location potential
Number of macro sites without a third party site nearby ('000)2,3
Share of
89%
total by
geo-type
1.3
66%
74%
1.4
0.8
>150m (urban) >600m (sub-urban) >1km (rural)
Low tenancy ratio on rooftop towers, allowing for substantial tenancy lease-up and upgrade potential
Ample capacity on the macro sites given low tenancy ratio on GBT of 1.1x excluding actively shared tenancies
Attractively located portfolio with ~60% of macro sites in urban and sub-urban locations
c.90% of macro sites in urban locations at least 150m away from third party sites
Well positioned to capture demand from expected coverage and quality requirements, away from third party sites across all geotypes
Source Company information, Analysys Mason
Notes
1 As of 30-Sep-20
2 As of 2020 from Analysys Mason data (produced by Analysys Mason based on company data, conclusions formed by the company)
34
3 Urban is Athens and Thessaloniki, Suburban <35k and >100k inhabitants, Rural is <35k inhabitants (this was renamed from dense urban, urban and rural respectively)
Other European Markets | #2 in 4 out of 5 other markets
Well positioned to capture tenancy upside
Portugal
Ireland
Czech Republic
Hungary
Romania
Number of sites ('000)1
Geographic distribution1,2
Market position3 Market share3
1.4x 1.0x
1.9
1.6
2.0x 1.1x
0.6
0.6
1.3x 1.0x 2.8
1.0
1.8x 1.0x
0.8
1.2
2.2x 1.8x
1.2
1.0
PT 12% 1%
EIR
GBT
RCTZT
Tenancy HraUtio1
RO
30%
43%
36%
36% 49%
35% 48%
44%
87%
2 1
~35%
24
21%
33%
Urban
Suburban
2 1
2 2
23%
35
31%
26
16% Rural
2
35%
16
8% 4
16%
· Well balanced nationwide portfolios
· Substantial physical capacity across all markets underpinned by low tenancy ratio
· Partnered with #1 or #2 mobile network operators in each market
27% average market share4
Key market dynamics
· Network sharing · Proposed road
coverage
obligations · Potential new
entrant
· Expected road coverage obligations
· Expected threshold for minimum coverage
· Expected coverage obligations including road coverage
· 5G coverage obligations to be selected individually from set list by the MNOs by 2023 & 2025
· 1.7x tenancy ratio excl. actively shared tenancies
Source Company information, TowerXchange, broker reports, companies reporting Notes 1 Company information as of 30-Sep-20. Excl. barter tenancies; Hungary 1.2x RTT including barter agreements 2 Inhabitant thresholds vary for each of urban, suburban and rural categories for each country with Portugal
having a materially different threshold for urban (>3k), for example Romania >25k, Ireland >20k for urban
3 Based on number of sites; data as of 30-Sep-20 for VT, Cellnex latest available, TowerXchange and broker
reports for others. Hungary excl. CETIN as figures not available. Management estimate for Portugal
35
4 Based on blended average
Other European Markets | 20k incremental market tenancies
Coverage requirements expected to drive new demand
Market tenancies evolution in Other European Markets (`000)1
CAGR 2.6%
13
5
67
2
87
CAGR 20-25 3.8%
FY20
Coverage Densification Other 2020-25 2025-30
FY30
Key highlights for Vantage Towers
Vantage Towers is the preferred supplier to Vodafone, well positioned to capture uncontracted demand ~950 new macro sites committed by Vodafone (202226)
Attractively located sites for potential new entrants (e.g. Portugal)
Low tenancy ratio providing lease-up potential
Source Analysys Mason
Note 1 Based on Analysys Mason PoPs forecast for Portugal, Ireland, Czech Republic, Hungary, Romania
36
Other European Markets | Future demand partly secured through sharing agreements
FY20-30 market opportunity Market tenancies (`000)1
20
A B
C
Contracted (~4k)
Contracted tenancies
A
~950 committed new macro sites (2022-26)
B +1.7k active sharing agreement
Vantage Towers share
/ Other MNO / Other MNO
100% 44%
1.7k3 secured
Uncontracted (~16k)
D
C +1.4k commitments to other TowerCos2 Uncontracted tenancies
D· Ambition to secure a significant portion of the uncontracted demand in our Other European Markets
Source Company information, Analysys Mason Notes 1 Based on Analysys Mason PoPs forecast for Portugal, Ireland, Czech Republic, Hungary, Romania 2 0.8k Cellnex agreements with NOS and MEO in Portugal. 0.6k Cellnex agreements with Cignal and CK Hutchison in Ireland 3 Net of decommissioning of ~0.5k sites related to the active sharing agreement
0%
Leverage our attractive portfolio and leading position to capture uncontracted tenancies in Other European Markets
37
Our medium-term tenancy potential | Key drivers
Significant visibility on key drivers of tenancy growth in the medium-term, with key upsides linked to rooftop lease-up programme for hosting of new tenants
Commitments and white spots obligations represent a significant portion of tenancy growth
(# of tenancies)
Tenancy ratio
+13.4k very high visibility tenancies
>1.50x
>2.1k
>77.6k
1.7k
4.0k
7.1k
62.1k
0.6k
FY20 total tenants 1 FY21 new sites2
Committed new sites3
White spots obligations (Germany)
Committed Additional lease-up tenancies (net of needed to achieve decommissioning)4 medium-term
target
Medium-term target
Source Company information
Note
1 Excl. Italy
2 Expected to be commissioned. Not included in analysis of contracted demand for Germany, Spain, Greece or Other European Markets market opportunity review in Section 5.3 of this presentation
3 6,850 committed sites from Vodafone and 250 from Wind Hellas
38
4 Decommissioning includes c.900 sites in Spain and c.500 sites in Other European markets, mostly related to active sharing agreements
INWIT | Italy's tower infrastructure champion
Clear #1 TowerCo with 2 market leaders as its anchor tenants
The Italian tower leader1 with two leading anchor tenants2
Tenancy ratio1
1.9x
1.5x
Towers ('000)1 22.1 19.3
Diversified customer base secured by network sharing
INWIT tenancies ('000)4
32.2
Wind Tre Iliad
Open Fiber Fastweb
Linkem EOLO
8.8
Committed new macro sites1,2
Committed new macro PoPs
Combined anchor market share3
INWIT 2.4k 12.7k 63%
Cellnex 3.5k n.a. 37%
/ TIM
Other tenants
INWIT benefits from long term nationwide passive and active sharing agreement between Vodafone and TIM
Active sharing agreement in areas with less than 100k inhabitants
Preferred supplier for new macro sites for both Vodafone and TIM
Source TowerXchange, INWIT and Cellnex reporting, companyinformation, Fitch Solutions, companies reporting
Notes
1 Data as of 3Q20 for INWIT. 3Q20 for Cellnex pro forma for CK Hutchison towers acquisition of new existing 3 Based on Fitch Solutions market share by subscribers
sites at closing
4 Number of tenancies, names and split as of 3Q20 reporting
39
2 Cellnex new sites commitment includes commitment obtained through CK Hutchison acquisition
Growth beyond the core
40
Growth roadmap | A phased approach to growing value
Expanding our portfolio offering so as to become one of Europe's 5G "superhosts" and a leading digital enabler
Focus
Digital future
5G super host
FTTS
Edge data centres
Outdoor small cells
IoT
Monetisation & efficiency
MNO coverage and densification needs
DAS / indoor small cells
Non-MNO customers
Regional rural networks
REALISE
Reflects the illustrative potential of market opportunity
Source Company information
EXPAND
Smart cities
EVOLVE
Phases
41
Non-MNO customers | Market demand to increase as technology evolves
Bringing new focus and managerial intensity to a fast growing market
Non-MNO customers
Opportunity select examples
Public protection and disaster relief ("PPDR")
Fixed wireless access ("FWA")
· 450MHz potentially to be awarded to the PPDR or utility sector in 2020
Up to 5,000 new sites by 2030
Utilities / private networks
IoT
· Roll-out of electricity smart meters to cover at least 80% of all consumers between 2021 and 2025
~550 new sites to provide nationwide
coverage
· Public tenders to develop PPDR in Spanish regions
· Joint tender submitted
>200 new sites for 95% coverage
of Andalusia
· 3bn government investment in national broadband plan rollout and the provision of 300 broadband connection points 200 points and 75 schools to be connected in 2021
· Hungary - Development of PPDR post 2022, 2x5 MHz plus 3 MHz spectrum on the 700 MHz band set aside
· Czech Republic - Further development of FWA network (current penetration of ~26%)
· Romania - 2x5MHz of 700MHz spectrum put aside to be allocated PPDR in 2021
Source Company information, Analysys Mason
42
FTTS | Maximising the current portfolio potential
Increase portfolio attractiveness by providing wholesale services in fiberised areas and roll-out FTTS elsewhere
Existing FTTS Portugal case study
New FTTS
Business model
Reselling fibre capacity
from Vodafone Portugal
Investment in FTTS roll-out
and subsequent lease of own capacity
Perimeter
~65% of sites fiberised
>75% in urban areas
Complement current networks
based on appropriate returns
Products
Ethernet circuit
for customers with fast deployment needs
Source Company information
Leased dark fibre
for customers with a transmission network already in place
43
DAS / indoor small cells | Small but fast growing
Vantage Towers is targeting market share in the rapidly evolving indoor small cells market as a host to serve
indoor coverage needs
Our commercial strategy
DAS
For large and high venues e.g. arenas, stadiums, large buildings
Focusing on 3 customer segments...
Indoor small cells
For smaller and lower footfall venues and office buildings
MNO
Mid / large enterprises
Small enterprises
Repeaters
For small buildings e.g. small office buildings and retail stores
Business model
MNOs
Landlords
Vantage Towers
Partners
Host-neutrality and multi-lateral agreements to position Vantage Towers at the heart of the DAS / indoor solutions
Source Company information
Following a phased approach...
1 Upgrade to 5G for existing DAS and small cells infrastructure
2 Defining a standard product catalogue for large scale deployment
3 Building a pipeline of mid-size and smaller venues historically not addressed
44
IoT, Edge Computing, Smart Cities | Enabling a digital Europe
We will serve all the steps in Europe's digital journey
IoT
IoT
Sensing-as-a-service (SaaS) Network-as-a-service (NaaS)
Edge computing
IoT
IoT
Smart cities
Solutions
Sensor hosting, data aggregation and storage
Planning, installation, and O&M of IoT network equipment
Hosting of edge computing hardware and edge
computing-as-a-service
Smart city solutions for all verticals
Customers
Public entities and enterprises
IoT network operators
MNOs, public entities and enterprises
MNOs, public entities and enterprises
45 Source Company information
Towers are at the centre of the 5G digital ecosystem
0 Equipment · Secured space · Power · Cooling
1 MNO antennas · Hosting
2 FWA antennas · Hosting
3 mMIMO antennas · Hosting
4 Fibre backhaul · FTTS
5 DAS · Indoor, denser cov.
6 Outdoor small cells
Towers -- key attributes
Towers guarantee secure space, with presence of power
Equipped and cooling
Towers host connectivity antennas as well
Connected as fibre
5G
1 MNO
7 11
6 4
2 3
8 10 10 0 11
Source Company information, INWIT Q3 results presentation
Towers are welldistributed across urban, sub-urban
Everywhere and rural areas
7 Drones · Hosting & recharging · Navigation support · Inspection services
8 IoT sensors / gateways · Hosting · LPWA networks · Data collection
9 Edge and BS hotel · Hosting infrastructure · Infra-as-a-Service
10 Satellite Infra
· Hosting ground
9
5
infrastructure · Backhauling
11 Campus infrastructures
· Licensed / Unlicensed networks
46
Market drivers and commercial strategy | Highlights
Clear and predictable drivers of data usage, 5G roll-out and coverage obligations result in attractive 1 demand growth. Germany is at the heart of this growth
Creation of Vantage Towers driving a switch in mindset: commercially-driven business with the right 2 incentive structures and a clear expansion strategy 3 Strong platform for sustainable growth, having already secured significant future demand
Well positioned to capture further tenancies in our footprint, leveraging the quality of our 4 infrastructure, and anticipating our customers' needs with geolocation tools and market intelligence 5 We will expand our service portfolio to become a 5G "superhost" and a key enabler of digital Europe
47
Disclaimer (1/3)
IMPORTANT: The following applies to this document, which consists of the sections "Introduction and key investment highlights", "Portfolio overview", "Contracts, organisation and operations", "ESG", "Market drivers and commercial strategy" and "Understanding our financials and growth drivers", and which has been prepared by Vantage Towers GmbH (the "Company" and together with its subsidiaries and those entities to become its subsidiaries, the "Group") solely for use at this meeting, to the oral and video presentation of the information in this document by members of the Company's management, to any question-and-answer session that follows the oral and video presentation and any material distributed in connection with this presentation (collectively, the "Information"), each of which should be considered together and not taken out of context. By attending the oral and video presentation and/or accessing or reading a copy of the Information you agree to be bound by the following limitations and conditions.
The Information has been prepared for information and background purposes only and may not be reproduced, published or transmitted, in whole or in part, directly or indirectly, to any person (whether within or outside such person's organization or firm) other than its intended recipients. This document is not, and should not be construed as, a prospectus or offering document, and has not been reviewed or approved by any regulatory or supervisory authority. The Information does not constitute or form part of, and should not be construed as an offer for sale or subscription of or a solicitation or invitation of any offer to subscribe for or purchase any loans or securities of or make an investment in the Company or any other member of the Group or Vodafone Group Plc or any of its subsidiaries (together, "Vodafone") or any other entity in any jurisdiction, and nothing contained therein shall form the basis of or be relied on in connection with any contract or commitment whatsoever, in particular, it must not be used in making any investment decision. Any decision to invest in securities should be made solely on the basis of the information to be contained in a prospectus and on an independent analysis of the information contained therein.
The Information does not purport to contain all information required to evaluate the Company or the Group and/or its financial position. Financial information in this document is preliminary and unaudited and certain financial information (including percentages) has been rounded according to established commercial standards. In addition, the Company is currently still in the process of establishing capital markets readiness by expanding the scope of management reporting, financial accounting as well as forecasting and budgeting processes through the hiring and training of additional resources and rolling out market standard policies and procedures. As a result, some of the financial and/or operational information set forth in this document remains subject to change and/or completion.
This document contains pro forma financial information of the Group for the financial year ended March 31, 2020 and for the six-months ended September 30, 2020 (together, the "PF Financial Information") as well as financial information from Infrastrutture Wireless Italiane SpA ("INWIT"). For a description of the basis of preparation of the pro forma financial information of the Group for the financial year ended March 31, 2020, please refer to the slide entitled "Understanding our FY20 PF financials | Basis of preparation" included in the section "Understanding our financials and growth drivers". The PF Financial Information has been prepared for illustrative purposes only and, by its nature, addresses a hypothetical situation and does not, therefore, represent the Group's actual results of operations. Such information may not, therefore, give a true picture of the Group's results of operations nor is it indicative of its results. The PF Financial Information is subject to change. This presentation also includes summary historical financial information from Vantage Towers Greece and INWIT. For a description of this information, please refer to the appendix section of this presentation. In this document, the Company utilises certain alternative performance measures, including but not limited to adjusted EBITDA, adjusted EBITDAaL, recurring operating free cash flow, recurring free cash flow, aggregated recurring free cash flow, return on capital employed, that in each case are not recognized under International Financial Reporting Standards ("IFRS"). These non-IFRS measures are presented as the Company believes that they and similar measures are widely used in the markets in which it operates as a means of evaluating a company's operating performance and financing structure. They may not be comparable to other similarly titled measures of other companies and are not measurements under IFRS or other generally accepted accounting principles, nor should they be considered as substitutes for the information contained in the financial statements included in this document.
No representation, warranty or undertaking, express or implied, is made by the Company, Vodafone or any their respective affiliates or any of its or their respective directors, officers, employees, agents or advisers ("Representatives") or any other person as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the Information or the opinions contained therein or any other statement made or purported to be made in connection with the Company, the Group or Vodafone, for any purpose whatsoever, including but not limited to any investment considerations. No responsibility, obligation or liability whatsoever, whether arising in tort, contract or otherwise, is or will be accepted by the Company, Vodafone or any of their respective Representatives or any other person for any loss, cost or damage howsoever arising from any use of the Information, or for information or opinions or for any errors, omissions or misstatements contained therein or otherwise arising in connection therewith.
48
Disclaimer (2/3)
The Information is provided at the date of this document and is subject to change without notice. In providing access to the Information, none of the Company, Vodafone or any of their respective Representatives or any other person undertakes any obligation to provide the attendee or recipient with access to any additional information or to update the Information or to correct any inaccuracies in any such Information, including any financial data or forward-looking statements. The Information should be considered in the context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date thereof. The information contained in this document has not been independently verified. The Information may constitute or include forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as "plans", "targets", "aims", "believes", "expects", "anticipates", "intends", "estimates", "will", "may", "continues", "should" and similar expressions. These forward-looking statements reflect, at the time made, the Company's beliefs, intentions and current targets/aims concerning, among other things, the Company's or the Group's results of operations, financial condition, liquidity, prospects, growth and strategies. Forwardlooking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth concerning, among other things, growth trends in the market for macro sites (which can be affected by a number of factors, including operator consolidation, network sharing (including roaming and slicing) and spectrum trading), and growth trends in the DAS and small cell market (some industry analysts believe the small cell market still in the nascent stage of its development and could be affected by factors including changes in the behaviour of MNOs); lease-up potentials; economic outlook and industry trends; developments of the Company's or the Group's markets; the impact of regulatory initiatives; and the strength of the Company's or any other member of the Group's competitors. Forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The forward-looking statements in the Information are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management's examination of historical operating trends, data contained in the Company's records (and those of other members of the Group) and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Forward-looking statements are not guarantees of future performance and such risks, uncertainties, contingencies and other important factors could cause the actual outcomes and the results of operations, financial condition and liquidity of the Company and other members of the Group or the industry to differ materially from those results expressed or implied in the Information by such forward-looking statements. No assurances can be given that the forward-looking statements will be realised. The forward-looking statements speak only as of the date of this document. The Company expressly disclaims any obligation or undertaking to release any updates or revisions to any forwardlooking statements to reflect any change in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any forward-looking statements are based. No representation or warranty is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved. Undue influence should not be given to, and no reliance should be placed on, any forward-looking statement. To the extent available, the industry, market and competitive position data contained in the Information come from official or third party sources. Third party industry publications, studies and surveys generally state that the data contained therein have been obtained from sources believed to be reliable, but that there is no guarantee of the accuracy or completeness of such data. While the Company believes that each of these publications, studies and surveys has been prepared by a reputable source, neither the Company nor any of its respective Representatives has independently verified the data contained therein. In addition, certain of the industry, market and competitive position data contained in the Information come from the Company's own internal research and estimates based on the knowledge and experience of the Company's management in the markets in which the Company and the other members of the Group operate. While the Company believes that such research and estimates are reasonable, they, and their underlying methodology and assumptions, have not been verified by any independent source for accuracy or completeness and are subject to change and correction without notice. Accordingly, reliance should not be placed on any of the industry, market or competitive position data contained in the Information.
49
Disclaimer (3/3)
In addition, certain industry and market data in this document is based on third-party data provided by Analysys Mason Limited ("Analysys Mason"). Analysys Mason's data is derived from publicly available information released by independent industry analysts and other third-party sources, as well as data from Analysys Mason's internal research, and is based on assumptions made upon reviewing such data, and experience in, and knowledge of, such industry and markets, which the Company believes to be reasonable. Although Analysys Mason has obtained such information from sources it believes to be reliable, Analysys Mason has not verified such information. You are cautioned not to give undue weight to these estimates and assumptions. Analysys Mason's estimates are subject to the same qualifications and uncertainties as the other forward-looking statements in this document. The Information is not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation of such jurisdiction or which would require any registration or licensing within such jurisdiction. Any failure to comply with these restrictions may constitute a violation of the laws of any such jurisdiction. The Information is not an offer of securities for sale in the United States. Any securities described herein have not been and will not be registered under the under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and may not be offered or sold in the United States absent registration under the U.S. Securities Act or an available exemption from it. There will be no public offer of securities in the United States. Neither this document nor any copy of it may be taken or transmitted into the United States, Australia, Canada or Japan or to any securities analyst or other person in any of those jurisdictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of the United States, Canada, Australia or Japan. This document is also not for publication, release or distribution in any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction nor should it be taken or transmitted into such jurisdiction and persons into whose possession this document comes should inform themselves about and observe any such restrictions. The Information is only addressed to and directed at persons in member states of the European Economic Area and the United Kingdom (each a "Relevant State") who are "qualified investors" within the meaning of Article 2(e) of Regulation (EU) 2017/1129 ("Qualified Investors"). In addition, in the United Kingdom, the Information is being distributed only to, and is directed only at, Qualified Investors who are (i) "investment professionals" within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (ii) high net worth companies, and other persons to whom it may otherwise lawfully be communicated falling within Article 49(2)(a) to (d) of the Order, or (iii) persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as "Relevant Persons"). The Information must not be acted on or relied on (i) in the United Kingdom, by persons who are not Relevant Persons, and (ii) in any Relevant State, by persons who are not Qualified Investors.
50
Key contacts
https://www.vantagetowers.com/investors www.vodafone.com/investors
ir@vodafone.co.uk
1 Kingdom Street, London, W2 6BY
Matthew Johnson · Director · Group IR · matthew.johnson@vodafone.com
Daniel Morris · Deputy Director · Group IR · daniel.morris@vodafone.com
Adobe PDF Library 20.9.95