Yahoo Finance Broadcast monopoly Arqiva seeks £1.5bn in stock market debut
Britain’s TV and radio mast monopoly Arqiva has signalled plans for a stock market debut to raise £1.5bn and pay off some of its heavy debt pile.
The company, which is also the biggest independent owner of mobile masts, had been in talks with funds about a private sale.
Its owners, a consortium led by a Canadian pension fund and the Australian investment bank Macquarie, chose to float the business after discussions with the last interested party, a group of investors led by Brookfield, broke down on Friday.
The float, scheduled for next month, will test market appetites for a two-sided business that has been loaded with debt. Equity valuations of £4bn have been discussed.
Arqiva plans to use £900m of the proceeds to refinance and reduce the cost of its interest rate swaps. It will also pay back a £600m bond.
The company made a pre-tax loss last year of £427m, but said on Monday that after the float it will be profitable and able to pay a £195m dividend this year. Outside interest costs are due to come down by £155m and non-cash interest on shareholder loans, which was £317m last year, will be wiped out as the debt is converted to shares.
Arqiva is also reducing its capital expenditure and forecasting a £50m earnings boost from higher demand, for mobile masts especially.
The company will still have debts of around £2.4bn, or five times its forecast earnings. It is understood that potential private buyers baulked at the liabilities as well as the contrast between Arqiva’s fast-growing mobile mast business and its slower broadcast arm, which faces long-term uncertainty as more audio and video is consumed over the internet.
Chief executive Simon Beresford-Wylie, a telecoms veteran, said Arqiva’s broadcast business was highly robust thanks to long contracts and rising demand for Freeview signals.
He said: “We cover 98.5pc of the population and allow the public service broadcasters to meet their universal service obligations. That is different from anywhere else in the world.
“Broadcast is approaching half of the business today. It will gradually become a smaller part simply because the telecoms side is growing.
"We will have plenty of cash to pay a very generous dividend."
