Cornerstone owners plan to sell 25% of mobile mast firm

Telefonica and Liberty Global are preparing to invite bidders for a 25% stake in Britain’s largest telecoms tower company as they seek to cash in on part of their investment, according to two sources familiar with the matter.

While a decision on Cornerstone Telecommunications Infrastructure Limited’s (CTIL) valuation has not been made, the business could fetch a price tag of more than 3 billion euros ($3.21 billion), based on recent deals in the sector and analyst estimates, said the sources, who asked to remain anonymous.

CTIL is attracting interest from pension funds including Britain’s largest, the Universities Superannuation Scheme (USS), which has started preliminary work on a potential offer, two of the sources said.

Telefonica, Liberty Global and USS declined to comment.

A number of telecom towers deals in Europe have seen infrastructure investors compete for a slice of the continent’s largest towers networks partly because of their stable cash yield and long-term contracts.

CTIL’s adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) remained flat at 147 million euros in the six months ending September as it added more sites and tenancies, according to its most recent results published.

Telefonica and Liberty Global, through their joint venture Virgin Media O2, are working with JPMorgan Chase & Co. and Goldman Sachs Group Inc. on the sale of half their combined 50% stake in CTIL, said the people.

Vodafone owns 50% of CTIL through its Frankfurt-based subsidiary Vantage Towers, and is not planning to cut its holding, the people said.

Telefonica and Liberty Global do not plan to ask Vantage Towers to bid for the holding for competitive reasons, according to the sources.

A spokesperson for Vantage declined to comment.

Appetite from traditional global infrastructure funds is expected to be limited in CTIL as many of these larger players would have concentration issues as they already own competitors, one of the sources said.

CTIL, established in 2012, is the largest tower company in the UK, managing around 14,200 macro sites across the country, according to Vantage’s website.

CTIL’s EbitdaAL, which deduces the cost of the leases from EBITDA, reached 62.8 million euros in the six months to September.

EbitdaAL is typically used as a measure of underlying profitability for telecom towers companies. In recent deals, as Brookfield’s and DigitalBridge’s acquisition of a 51% stake in the telecom tower unit of Germany’s Deutsche Telekom, buyers have paid multiples of 27 times EbitdaAL.

USS, which has 82 billion pounds ($98.86 billion) in total assets under management, also owns a stake in London’s Heathrow Airport and Bruc Energy, which develops renewable energy projects in Spain and Portugal. Reuters