Arqiva, the behemoth British TV, radio and mobile phone mast owner is set to float in what many believe will be year's largest listing. The company, with a projected value of between £4.5bn and £6bn, carried the BBC’s first ever television broadcast back in 1936 and has grown substantially under various private owners since.
Employing more than 2,000 people and boasting an incredible footprint in the broadcasting space, Arqiva’s masts connect more than 19m homes in Britain in addition to supporting the mobile phone operators with over 8,000 mobile phone masts. Furthermore – and to silence those that doubt it’s growth potential – Arqiva has exclusive rights to install equipment on 350,000 lamp posts that will cover a tremendous number of counties, including ten of the 14 London boroughs. These masts are believed to be critical to the rollout of 5G networks across the UK.
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The company is seeking to raise £1.5bn in the float with almost half the funds raised being used to pay down £600 million of debt.
In addition to the cash raised to pay down debt, private shareholders will convert loans and interest worth more than 2.5 billion pounds into equity and further reduce the massive costs the company has incurred in servicing the debt, a cost savings estimated at around £155m per year and made up around half of the £427m in losses posted last year.
Shareowners will continue to enjoy generous dividends post float. These dividends are expected to total £195m this financial year equating to around 4% of the posted revenue of £944m (for tax year ending 30th June).
When asked about the potential threat of a reduction in TV broadcasting, the industry has flatlined in the US as a result of digital competition from the likes of Netflix, Amazon, and other players in the space, Arqiva’s CEO has stated that 'it is arrant nonsense. People are over simplifying,' he told the Financial Times, adding that Netflix and Amazon Prime have not driven 'cord cutting' in the UK as they have in the US.
While the UK may be behind in the digital switch, only time will tell if these statements will come back to haunt the company.
Goldman Sachs, HSBC and J.P. Morgan are acting as joint global co-ordinators and joint bookrunners on the Arqiva IPO. The IPO comes about as sale talks recently broke down. If the float goes ahead Arqiva will enter the FTSE 100 when admitted to the market. The business is currently owned by Canada Pension Plan Investment Board and Australia’s Macquarie, who will only sell some of their holdings if their is an over-subscription for the shares.
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