Virgin Media O2 divests 17% stake in Cornerstone to GLIL Infrastructure for £360m

Virgin Media O2 has reached a significant deal, selling a 16.67% minority stake in its mobile tower joint venture, Cornerstone Telecommunications Infrastructure Limited, to GLIL Infrastructure LLP. The agreement will result in a cash transaction of approximately £360 million for Virgin Media O2, reflecting an 18.7x multiple on Cornerstone’s adjusted EBITDAaL for the year ended March 2023. Post-transaction, Virgin Media O2 will maintain a 33.33% stake in Cornerstone.

Transaction Details and Impact

The sale has been facilitated through a Virgin Media O2 holding company, owning 50% of Cornerstone shares. Following the transaction, GLIL will own a 33.3% share of this holding company, while Virgin Media O2 will retain the majority with 66.7%. Despite the partial sale, Virgin Media O2 will continue co-controlling Cornerstone with Vantage Towers, ensuring its consolidation in Virgin Media O2’s financials.

Cornerstone’s Role and Business Scope

Cornerstone, recognized as the UK’s largest mobile tower business, boasts a high-density network of approximately 20,000 sites. These sites provide essential infrastructure for Virgin Media O2 and Vodafone UK. This deal will not affect the existing commercial network sharing agreement, known as Project Beacon, between Vodafone UK and Virgin Media O2, ensuring continued cooperation and infrastructure sharing in the telecom sector.

GLIL’s Investment Strategy

GLIL, a UK pension funds partnership, focuses on investments offering stable, inflation-linked returns. Managing £3.6 billion with over £2.6 billion already deployed, its diverse portfolio includes renewable energy, transport, and utility assets. The Cornerstone investment will add significant value to GLIL’s portfolio, indicating a strategic move into the telecommunications infrastructure.

Executives’ Perspectives on the Deal

Lutz Schüler, CEO of Virgin Media O2, commented on the deal’s strategic fit, noting the monetization of tower infrastructure while retaining crucial operational and strategic control. Schüler emphasized the alignment with Virgin Media O2’s core infrastructure and capital allocation strategy, reflecting their ongoing investment in expanding mobile and fixed networks in the UK.

Simon Davy, Investment Director at GLIL, expressed enthusiasm for the partnership, highlighting Cornerstone’s fit within GLIL’s portfolio of high-quality infrastructure assets and the role of local capital in supporting essential mobile infrastructure development.

Conclusion and Future Outlook

This transaction, expected to close soon, marks a pivotal move for Virgin Media O2, signifying a smart strategic shift in monetizing and managing telecom infrastructure assets while fostering collaboration with a well-aligned investment partner like GLIL. Cornerstone’s journey, from its establishment in 2012 to becoming a key player under Virgin Media O2 and Vodafone UK, and now this partial acquisition by GLIL, showcases the evolving dynamics and investment interests in the UK’s telecommunication infrastructure industry.