GLIL acquires minority stake in mobile tower joint venture Cornerstone from Virgin Media O2

01 November 2023

Virgin Media O2 will receive approximately £360 million payable in cash at closing of the transaction, which represents a multiple of 18.7x on Cornerstone’s adjusted EBITDAL for the year ended in March 2023, and will retain a 33.33% stake in Cornerstone upon completion of the transaction.

The sale has been structured through a Virgin Media O2 holding company (“HoldCo”), which owns 50% of the Cornerstone shares. After the transaction, GLIL will own 33.3% of HoldCo and Virgin Media O2 the remaining 66.7%. As the majority shareholder of HoldCo, Virgin Media O2 will continue co-controlling Cornerstone, together with Vantage Towers, and continue to proportionally consolidate Cornerstone in its financial accounts.

Cornerstone is the UK’s largest mobile towers business, consisting of a nationwide network used by both Virgin Media O2 and Vodafone UK as anchor tenants. It has the highest density of network in the UK, owning and managing an estate of around 20,000 sites spread across both urban and rural locations.

Cornerstone will remain a critical supplier to Virgin Media O2, and this transaction will not impact the existing commercial network sharing agreement between Vodafone UK and Virgin Media O2, known as Project Beacon, which sees the two companies share radio equipment across certain areas of the country.

GLIL is a partnership of UK pension funds, specially designed to help pension fund members tap into the stable, inflation-linked returns that infrastructure investment offers. GLIL manages £3.6 billion of committed capital, with more than £2.6 billion deployed into a growing portfolio of infrastructure assets spanning renewable energy, battery storage, water utilities, ports and logistics, trains, hospitals and schools. The investment in Cornerstone will further diversify the fund portfolio. GLIL invests on behalf of Local Government Pension Scheme DB funds and pools including Local Pensions Partnership Investments, Greater Manchester Pension Fund, Merseyside Pension Fund, and West Yorkshire Pension Fund, as well as Nest, the government-established DC workplace pension provider.

The transaction is expected to close by 14 November 2023.

Lutz Schüler, CEO of Virgin Media O2, said:

“Selling a minority stake in Cornerstone is a logical move for us. We are partially monetising our tower infrastructure, while retaining operational and strategic co-control in a key asset as we roll out 5G to more of the country and boost 4G connectivity. This deal aligns perfectly with our core infrastructure and capital allocation strategy which sees Virgin Media O2 continue to invest in the UK to expand and upgrade our next generation fixed and mobile footprints. As a trusted UK centric investor, GLIL is the best long-term partner for Virgin Media O2 at Cornerstone.”

Simon Davy, an Investment Director at GLIL, said:

“GLIL is delighted to be partnering with Virgin Media O2, providing local capital to support the delivery of critical mobile infrastructure. We are attracted by Cornerstone's position as the owner of the UK's largest tower portfolio, which fits well within GLIL's existing portfolio of high quality, core infrastructure assets.”

Cornerstone was established in 2012 as a mobile network joint venture between Telefónica UK (now Virgin Media O2) and Vodafone UK. Since then, Vodafone transferred its 50% stake to Vantage Towers in 2021, with Virgin Media O2 retaining its 50% share prior to the partial indirect stake sale to GLIL announced today.