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Is Vodafone’s European mobile mast is a company with IPO potential

LONDON (Reuters) – the uk’s Vodafone announced plans on Friday to separate its mobile-mast business in Europe into a new company that would be able to call it that, in a move that it said would unlock value for the shareholders.

FILE PHOTO: A woman holds a phone and they go down to a Vodafone store in London, Britain, 16 May, 2017. REUTERS/Neil Hall/File Photo

Shares in the world’s second-largest mobile phone operator, a jump of 8% in the early trade, up to and including a total of 143 pence, and the recovery of the ground lost when the company, less the dividend for the first time in May.

Vodafone said that in the tower, the unit would be composed of 61,700 sites in 10 markets, the annual proportionate revenue of more than € 1.6 billion ($1.8 billion), and the core of the income of the 900 million euro per year.

It would have to catch up Cellnex, but now it is one of Europe’s largest tower of the group, which is estimated at a little over 17 times earnings. Similar to the Vodafone towers, it would mean that there is a value of more than € 15 billion in assets, according to Reuters calculations.

Vodafone Chief Executive Nick Read said that the tower company would be operational by May of 2020, with a 75% or more of its subsidiaries in the three largest markets of Germany, Italy, netherlands, Spain and the united Kingdom.

Mobile operators in Europe to sell parts of their network infrastructure and cut the debt, tapping into the appeal of assets with stable cash flows to investors.

“In view of the size and the quality of our infrastructure, we believe that there is a substantial opportunity to unlock value for the shareholders, as the record of the major benefits of a network for the digital society,” Read said in a statement.

He said that the proceeds from the listing of a minority stake in the tower company, or the attraction of other investors and was to be used for the cutting of Vodafone’s debt.

Vodafone and all of the shares of the network infrastructure, Telefonica’s O2 in Britain and Orange in Spain, and is close to finalizing an agreement in Italy with Telecom Italia’s tower-a unit of Inwit.

Cellnex reported a 10% rise in first-half core profit on Friday and said that it was looking to make more deals.

Read the words: the creation of a stand-alone towers, a company would be open to the high value of the infrastructure at a time when the tower steps are very, very attractive”.

Along with all the other operators, it would also be possible 5G services will be rolled out faster and at a lower cost.

“This is an opportunity to 5G is to launch in the market,” he told reporters.

Vodafone would have to look at the attraction of investors, including those from partner operators, in local markets for the cast of the assets to a European holding company, with the purpose of the listing of a minority stake, ” he said.

A TURNING point

Vodafone has announced plans to split its towers, the company reported that first quarter group service revenue fell by a smaller-than-expected 0.2%. It is said to be a gradual recovery in the weak top-line is here to stay.

“We are now at a turning point in our service revenue, after the low point in the 4th quarter of the previous fiscal year,” Read told reporters. “We are confident that this improvement in the service revenues will continue as the year goes on.”

Analysts at Citi, who has a “buy” rating on Vodafone, said that the improved top line and make the decision to separate it from the window and take a look at how to generate revenue should be looked at.

Vodafone said that conditions in Italy continued to improve and the growth in the retail sector in Germany continued to be strong, which in part was offset by the intense competition in Spain.

The company has launched new price plans and products in the area than any that he could remember, including the next-generation 5G services in its major markets.

He said Vodafone was confident about its outlook for the year to adjusted core income of 13.8 billion euro to 14,2 billion euro ($15.4 billion and$15.8 billion and free cash flow, before spectrum costs from a minimum of 5.4 billion euros, ‘ Read said.

Editing by Guy Faulconbridge/Mark Potter and Susan Fenton

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