Quarterly Report • Jul 21, 2022
Quarterly Report
Open in ViewerOpens in native device viewer
21 July 2022
| Performance summary | Q1 FY22 (unaudited) |
Q1 FY23 (unaudited) |
Movement |
|---|---|---|---|
| Macro sites | 45.6K | 45.8k | +0.2k |
| Tenancy ratio | 1.41x | 1.44x | +0.03x |
| Group Revenue ex. pass through (€m) | 245.8 | 262.1 | +6.6% |
The financial year 2023 is an important year for Vantage Towers. We are focusing on further investing and accelerating our business to ramp up of our new site build programme and facilitate 1&1's access on our existing sites. In the first quarter, we have seen consistent revenue growth supported by our continued commercialisation of our business and inflation escalators in our contracts. We remain on track to deliver our guidance for the current financial year and our medium-term targets.
Investor Relations Media Relations
www.vantagetowers.com/investors www.vantagetowers.com/media [email protected] [email protected]
1 Tenancy net additions from 1 April 2022 to 30 June 2022.
| Fully owned segments | DE | ES | GR | Other European Markets |
Consolidated2 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 30 June 2022 | Q1 FY22 |
Q1 FY23 |
Q1 FY22 |
Q1 FY23 |
Q1 FY22 |
Q1 FY23 |
Q1 FY22 |
Q1 FY23 |
Q1 FY22 |
Q1 FY23 |
| Macro sites | 19.4k | 19.5k | 8.7k | 8.5k | 4.8k | 4.8k | 12.7k | 12.9k | 45.6k | 45.8k |
| Tenancy ratio | 1.21x | 1.23x | 1.74x | 1.81x | 1.66x | 1.69x | 1.40x | 1.43x | 1.41x | 1.44x |
The decrease in number of sites is mainly driven by the decommissioning of sites in connection with our active sharing agreements
In FY23, we continue to concentrate on our key focus areas: the acceleration of our BTS programme, the rollout of 1&1, the continued commercialisation, and our GLBO efficiency programme.
2 Consolidated refers to our reporting segments Germany, Spain, Greece, and Other European Markets, in which we have a controlling interest, excluding our joint ventures in Italy and the UK.
3 Tenancy net additions from 1 April 2022 to 30 June 2022.
4 Non-committed refers to tenancies that were not already committed in November 2020 at the Capital Markets Day.
| Total Revenue Breakdown in €m |
Q1 FY22 (unaudited) |
Q1 FY23 (unaudited) |
Movement |
|---|---|---|---|
| Macro site revenue | 228.3 | 236.0 | +3.4% |
| Other rental revenue | 11.0 | 10.6 | |
| Energy and other revenue | 6.5 | 15.6 | |
| Revenue (ex. pass through) | 245.8 | 262.1 | +6.6% |
| Capex recharge revenue | 2.2 | 4.8 | |
| Revenue | 248.0 | 266.9 | +7.7% |
Revenue development accelerated in Q1 FY23, generating a total revenue (ex. pass through) of €262.1m. The respective increase of 6.6% was mainly driven by 'Macro site' and 'Energy and other' revenue. Macro site revenue grew 3.4% YoY in Q1 driven by tenancy growth and our contractual inflation escalators. As previously disclosed, over 95% of our revenue is linked to inflation.
Energy and other revenue grew from €6.5m to €15.6m, mainly driven by other chargeable services to MNOs and a €3m non-recurring energy revenue in Spain.
Moreover, non-Vodafone revenue continues to grow and saw an increase of 16.1% YoY to €51.8m in Q1 FY23 (Q1 FY22: €44.6m).
| Segmental Revenues (ex. pass through) in €m | Q1 FY22 (unaudited) |
Q1 FY23 (unaudited) |
Movement |
|---|---|---|---|
| Germany | 120.0 | 126.4 | +5.3% |
| Spain | 42.3 | 46.3 | +9.5% |
| Greece | 31.9 | 34.0 | +6.6% |
| Other European Markets | 51.6 | 55.4 | +7.3% |
| Consolidated (ex. pass through) | 245.8 | 262.1 | +6.6% |
In Q1 FY23, we saw consistent revenue growth across all markets driven by other chargeable services to MNOs and the contractual inflation escalators.
In addition, Germany witnessed revenue growth from non-MNO contracts, and Spain from the active sharing agreement and a €3m non-recurring energy revenue.
The Group's co-controlled joint ventures include INWIT (33.2%) and Cornerstone (50%). The financial performance of our equity investments in INWIT and Cornerstone are in line with expectations.
INWIT has again delivered strong revenue growth in the first quarter of 2022, increasing 8.8% YoY to €207.0m. The acceleration of INWIT's organic growth continues with approximately 850 new tenancies added, representing a 9% YoY growth.
Cornerstone delivered a Q1 total revenue5 of €114.8m6 (Q1 FY22: €108.5m), an increase of 5.8% YoY, driven by an increase in macro sites and tenancies.
5 In Q1 FY23 the Cornerstone total revenue includes a pass through revenue of €24.0m (Q1 FY22: €22.6m) in total, which consists of recovery of business rates passed through to the tenants and capital expenditure recharges.
6 An average GBP/EUR exchange rate of 1.179376 used for the period of 1 April 2022 to 30 June 2022.
| Measure | FY23 guidance | Medium-term Targets7 |
|---|---|---|
| Tenancy Ratio for Consolidated Vantage Towers | - | >1.50x |
| Group Revenue (ex. pass through) | 3.0%-5.0% YoY | Mid-single digit CAGR |
| Adj. EBITDAaL | €550m-€570m | High 50s percentage margin (based on Revenue (ex. pass through) |
| Recurring free cash flow (RFCF) | €405m-€425m | Mid to high single digit CAGR |
| Net Financial Debt to Adjusted EBITDAaL | - | Flexibility to exceed for growth investment |
| Net Financial Debt | - | >€1bn leverage capacity 8 |
We expect to continue to drive forward the commercialisation of our business in FY23. Whilst leveraging on our strong infrastructure network, we will focus on the execution of our BTS programme and attracting incremental third-party tenants.
In FY23, we will further invest €10-15m in our business, incurring costs to facilitate 1&1's access on our existing sites, accelerate the ramp up of our BTS programme and build out our supporting teams, all ahead of the corresponding revenue contribution from FY24.
We reaffirm our unchanged FY23 Group outlook for Revenue (ex. pass through), adj. EBITDAaL, and RFCF and confirm our medium-term targets underpinned by the BTS programme, strong momentum in tenancy growth, and progress being made in GLBO programme.
7 Medium-term targets of the consolidated group excluding the UK and Italy.
8 Assuming capacity to invest in organic or inorganic opportunities up to leverage of 5.5x Net Financial Debt / Adj. EBITDAaL to maintain investment grade rating.
The Group presents financial measures, ratios and adjustments that are not required by, or presented in accordance with, IFRS, German GAAP or any other generally accepted accounting principles on a consolidated basis ("Non-IFRS Measures") and on a pro forma basis ("Alternative Performance Measures" or "APMs").
These Non-IFRS Measures on a consolidated basis and Alternative Performance Measures on a pro forma basis should not be considered as an alternative to the consolidated financial results or other indicators of the Group's performance based on IFRS measures. They should not be considered as alternatives to earnings after tax or net profit as indicators of the Group's performance or profitability or as alternatives to cash flows from operating, investing, or financing activities as an indicator of the Group's liquidity. The Non-IFRS Measures on a combined basis and Alternative Performance Measures on a pro forma basis, as defined by the Group, may not be comparable to similarly titled measures as presented by other companies due to differences in the way the Group's Non-IFRS Measures on a combined basis and Alternative Performance Measures on a pro forma basis are calculated. Even though the Non-IFRS Measures on a consolidated basis and Alternative Performance Measures on a pro forma basis are used by management to assess ongoing operating performance and liquidity and these types of measures are commonly used by investors, they have important limitations as analytical tools, and they should not be considered in isolation or as substitutes for analysis of the Group's results or cash flows as reported under IFRS
| Measure | Definition | Relevance of its Use |
|---|---|---|
| Adjusted EBITDA |
Adjusted EBITDA is operating profit before depreciation on lease related right of use assets, depreciation, amortization and gains/losses on disposal for fixed assets, share of results of equity accounted joint ventures, and excluding impairment losses, restructuring costs arising from discrete restructuring plans, other operating income and expense and significant items that are not considered by management to be reflective of the underlying performance of the Group. |
Management uses Adjusted EBITDA to assess and compare the underlying profitability of the company before charges relating to capital investment, capital structure, tax, and leases. The measure is used as a reference point for cross-industry valuation. |
| Adjusted EBITDAaL |
Adjusted EBITDAaL is Adjusted EBITDA less recharged capital expenditure revenue, and after depreciation on lease-related right of use assets and deduction of interest on lease liabilities. Recharged capital expenditure revenue represents direct recharges to Vodafone of capital expenditure in connection with upgrades to existing sites. |
Management uses Adjusted EBITDAaL as a measure of underlying profitability to support the capital investment and capital structure of the Company after the cost of leases, which represent a significant cost for Vantage Towers and its peers. The measure is also used as a reference point for valuation purposes across the broader telecommunication sector. |
| Adjusted EBITDAaL margin |
Adjusted EBITDAaL margin is Adjusted EBITDAaL divided by revenue excluding recharged capital expenditure revenue. |
Management uses Adjusted EBITDAaL margin as a key measure of Vantage Towers' profitability and as a means to track the efficiency of the business. |
| Recurring Operating Free Cash Flow |
Recurring Operating Free Cash Flow is Adjusted EBITDAaL plus depreciation on lease-related right of use assets and interest on lease liabilities, less cash lease costs and Maintenance capital expenditure. On a pro forma basis cash lease costs are calculated based on the sum of depreciation on lease-related right of use assets and interest on lease liabilities that were incurred by the Group excluding the effects from lease reassessment of the IFRS 16 lease liability and right of use asset on the sum of the associated depreciation on lease related right of use assets and interest on lease liabilities, which have a non-cash impact in the respective period. Maintenance capital expenditure is defined as capital expenditure required to maintain and continue the operation of the existing tower network and other Passive Infrastructure, excluding capital investment in new Sites or growth initiatives ("maintenance capital expenditure"). |
Management uses Recurring Operating Free Cash Flow as a measure of the underlying cashflow available to support the capital investment and capital structure of the Company. |
| Recurring Free Cash Flow |
Recurring Free Cash Flow is Recurring Operating Free Cash Flow less tax paid and interest paid and adjusted for changes in operating working capital. |
Management uses Recurring Free Cash Flow to assess and compare the underlying cash flow available to shareholders, which could be |
distributed or reinvested in Vantage Towers for growth as well as reference point for cross
industry valuation
| Cash Conversion | Management uses Cash Conversion to assess |
|---|---|
| Cash Conversion is defined as Recurring Operating Free Cash Flow | and compare the capital intensity and efficiency |
| divided by Adjusted EBITDAaL. | of Vantage Towers. |
| Net Financial | Management uses Net Financial Debt to assess |
| Net Financial Debt is defined as long-term borrowings, short-term | the capital structure of Vantage Towers without |
| Debt | including the impact of lease liabilities which |
| borrowings, borrowings from Vodafone Group companies and mark | typically have different types of rights to |
| to-market adjustments, less cash and cash equivalents and short | financial debt and can be impacted by the |
| term investments and excluding lease liabilities. | Company's accounting policies. |
| "Active Equipment" | The customers' equipment used to receive and transmit mobile network signals. |
|---|---|
| "BTS" | Build-to-suit arrangements which corresponds to committed new build site programs and related services that have been contracted. |
| "Company" | Vantage Towers AG |
| "Consolidated Vantage Towers" | The European tower infrastructure business in Germany, Spain, Greece, Portugal, Romania, Czech Republic, Hungary, and Ireland in which Vantage Towers has a controlling interest. |
| "Cornerstone" | Cornerstone Telecommunications Infrastructure Limited |
| "DAS" | Distributed Antennae System |
| "FY22" | Financial year ended 31 March 2022 |
| "FY23" | Financial year ending 31 March 2023 |
| "FY24" | Financial year ending 31 March 2024 |
| "GLBO Programme" | Ground Lease Buy Out Programme |
| "H2 FY22" | Half-year ended 30 September 2022 |
| "INWIT" | Infrastructure Wireless Italiane S.p.A |
| "Macro sites" | The physical infrastructure, either ground-based ("Ground Based Tower" or "GBT") or located on a building ("Rooftop Tower" or "RTT") where communications equipment is placed to create a cell in a mobile network including street works and long-term mobile sites. |
| "Maintenance capital expenditure" | Capital expenditure required to maintain and continue the operation of the existing tower network and other Passive Infrastructure, excluding capital investment in new Sites or growth initiatives. |
| "MNO" | Mobile network operator |
| "MSA" | Master services agreement |
| "Passive Infrastructure" | An installation comprising a set of different elements located at a Site and used to provide support to the Active Equipment. |
| "PPDR" | Public Protection Disaster Relief |
| "Q1 FY22" | First quarter ended 30 June 2021 |
| "Q1 FY23" | First quarter ended 30 June 2022 |
|---|---|
| "Site" | The Passive Infrastructure on which Active Equipment is mounted as well as its physical location. |
"Tenancy ratio" The total number of tenancies of Vantage Towers divided by the total number of Macro sites.
This announcement contains "forward-looking statements" with respect to Vantage Towers' results of operations, financial condition, liquidity, prospects, growth, and strategies. Forward-looking statements include, but are not limited to, statements regarding objectives, targets, strategies, outlook and growth prospects, including guidance for the financial year ending March 31, 2023, medium-term targets, new site builds, tenancy targets and the tenancy pipeline; Vantage Towers' working capital, capital structure and dividend policy; future plans, events or performance, economic outlook and industry trends.
Forward-looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "will", "could", "may", "should", "expects", "intends", "prepares" or "targets" (including in their negative form or other variations). By their nature, forward-looking statements are inherently predictive, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. All subsequent written or oral forward-looking statements attributable to Vantage Towers or any member of the Vantage Towers Group, or any persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. No assurances can be given that the forward-looking statements in this document will be realised. Any forward-looking statements are made of the date of this announcement. Subject to compliance with applicable law and regulations, Vantage Towers does not intend to update these forward-looking statements and does not undertake any obligation to do so.
References to Vantage Towers are to Vantage Towers AG and references to Vantage Towers Group are to Vantage Towers AG and its subsidiaries unless otherwise stated.
Due to rounding, numbers presented may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
Building tools?
Free accounts include 100 API calls/year for testing.
Have a question? We'll get back to you promptly.