Vantage Towers AG (OTCPK:VTWRF) Q2 2023 Results Conference Call November 14, 2022 5:00 AM ET
Company Participants
Vivek Badrinath – Chief Executive Officer
Thomas Reisten – Chief Financial Officer
Conference Call Participants
David Wright – Bank of America Merrill Lynch
Jerry Dellis – Jefferies
Andrew Lee – Goldman Sachs
Emmet Kelly – Morgan Stanley
Robert Grindle – Deutsche Bank
Jacob Bluestone – Credit Suisse
Sam McHugh – Exane
Usman Ghazi – Berenberg
Nick Delfas – Redburn
Luigi Minerva – HSBC
James Ratzer – New Street
Vivek Badrinath
Good morning, everyone, and welcome to our analyst call that follows our half year results announcement that went out this morning. So we’ll make this a Q&A session as usual. But before that, I just thought I’d share a quick update on, first of all, current events and also some highlights of H1 fiscal 2023.
So as you’ve seen on the 9 of November, there was an announcement by Vodafone with the GIP and KKR about the creation of a joint venture, which will hold the 81.7% stake in Vantage Towers that Vodafone currently owns and to launch a voluntary takeover offer in the forthcoming period. This is a strategic co control partnership as Nick Reed had announced as being the core scenario or a hypothesis that Vodafone wanted to pursue. And it’s with long term investors who have strong expertise in digital infrastructure and share our view of the opportunities that are offered by this sector for long term growth and value creation.
So the joint venture will launch a voluntary takeover offer for the outstanding Vantage Towers shares for EUR32 per share, which is a premium of 33% to the IPO price. And we view this as spare, as adequate, and are indeed attractive. And both the Vantage Towers management board and the supervisory board welcome this creation. The offer document will only become available in the beginning of December and we then will publish our recent statement during the first two weeks of the acceptance period. So [Technical Difficulty] for today, there’s not much more we can say, because that’s the next big milestone. Voluntary takeover offer comes out early December, we issue — we’re on the back of this offer document recent statement, and then the process continues. But that’s indeed a significant highlight for the company and a big milestone after the previous one, which was think the IPO and a good progression of the value offered to shareholders through this voluntary takeover offer.
I’ll now move back to our more standard agenda of the results and a few highlights of this first half. So we continue on our three tracks: commercialization, production and efficiencies, in particular, the GLBO program. On the first two and 710 net new tendencies in this first half. So we’ve plucked in 1.45 times as tenancy ratio, so we’re halfway to what we had said at the IPO, which was when we started we were at 1.39 times and we want to get above 1.5 times, and so this is the 1.45 times milestone. In the second quarter, we’ve added some ancillary revenues, still good commercial momentum, good dialogue with lots of players who are on — also areas on the edge of the core MNO tower tenancy business, indoor coverage solutions, a bit of high speed broadband Internet, some fiber agreements.
We’ve accelerated our macro side build in the second quarter, added over 400 new macro sites in the first half. We all know the operating environment remains difficult with the number of constraints around our supplies that we have accelerated. 260 of those sites were in Germany and our programs that we’ve been discussing over the past few quarters are delivering significant steps of improvement, be it on warehousing, be it on — be it on organization, on staffing, and on supplier commitments.
If I look at GLBO, we’ve now reached the 1,500 mark in terms of signed contracts and commitments across the footprint since inception. We’ve added 220 in the second quarter, so continuing on that pace of signing up for lease buyouts across our footprint. If I look at the numbers now, group revenue by 6% to EUR524 million and a EUR5 million growth in our EBITDA after leases to EUR273 million as we continue to ramp up our teams ahead of the revenue creation that is obviously the — what we’ll ensure from the production and tenancy growth that I mentioned just above.
Our recurring free cash flow stands at EUR220 million, so that’s pretty much halfway mark of the year. And it’s a good conversion ratio, 80.7% conversion EBITDA after leases to recurring free cash flow. There’s a normalization of working capital and tax payments relative to the first half of the prior year, which also explains the calendarization of this recurring free cash flow result. We’ll continue to invest on accelerating the build to suit program. We’ll continue to work on the [indiscernible] rollout and indeed strengthen our delivery on that jointly with a very good cooperation from Vodafone and focusing on production and delivery.
So as an outcome of all this and of what we’ve achieved so far in H1, we’re comfortable reaffirming our guidance for fiscal 2023 at revenue growth of 3% to 5%, EBITDA after leases EUR550 million to EUR570 million, and recurring free cash flow EUR405 million to EUR425 million.
That’s the highlights of H1. And with that, I’d like to turn it over to Q&A. Let’s try to keep it to one question per analyst so that we can rotate and have everyone being able to ask questions. And with this, over to you.
Question-and-Answer Session
Operator
Thank you very much. Our first question today comes from David Wright from Bank of America Merrill Lynch. David, please go ahead.
David Wright
Hello, guys. Hoping you can hear me. And I guess first things first, congratulations on the offer. And just guessing that you guys are pretty tied up with the offer itself on what you’re allowed to say or do around that. But if I could just ask, there were some stories about a potential approach to Cornerstone and acquiring the minorities. Are you effectively kind of locked up from not doing anything now until the offer is complete and/or the actual — the ownership has changed. So just if you’re allowed to comment anything? And just on the basis that you might not be able to answer that, I’m going to ask my one question, which is just on the GLBO. You’ve obviously seen very good momentum. I just wondered, are you finding any change in the responses you’re getting, the interest you’re getting as a result of the rapidly changing macro environment? Do you feel like that’s bringing more people to the table as they maybe look for a little liquidity or even to sell? Thank you very much.
Vivek Badrinath
I’ll leave the GMBO question for Thomas. As regards to [VTIL] (ph), well, what I can say because there’s no specific answer to that question [indiscernible]. Obviously, the business goes on while transactions happen. Nevertheless, and also in terms of context, our — the investors have reiterated that they were supportive of the strategy that we’re driving, which is focused on BTS, on collocations and open access. So that’s been reaffirmed. On the fact that we’re pursuing some adjacencies, reasonable adjacencies around our core business that I think proved quarter after quarter that there is materiality there. And indeed, they’ve reaffirmed that they see value in the pursuit of the continued consolidation of the European tower infrastructure sector.
So I would say, I can’t give a direct yes or no answer to your question, but what I can say is, there’s nothing that precludes in what they’ve said about the investment, continuing to look at Cornerstone. We continue to believe as a management team that it is a relevant asset for us and that consolidating Cornerstone would be a good step for Vantage Towers. That said, the rest of it is, of course, we’re in this signing to closing periods. So there always something we can’t talk about.
Thomas Reisten
Absolutely. And then on your other question on GLBO, indeed, obviously, GLBO will continue to accelerate. We have now got over 1,500 contracts, which again shows the continuous acceleration as well from the first quarter. And obviously, from last year we are now well above the one-third of the GLBO case is already being signed or committed. So which shows great progress towards actually achieving the 10% buyout ratio that we did flag at the time of the IPO. What’s important to mention in that context as well is that, we’ve seen continuous really good growth in Spain. We’ve continuously seen as well in the — all of the other markets, very good growth. And then lastly, to mention that in Germany as well, we are now over 420 GLBOs, so you see a really good part of acceleration in Germany there as well.
So then to — if you reflect on that, where we stand today on GLBO, what we are seeing is that, there’s some areas where landlords actually are a little bit more leaning forward to sell as well. But that’s I would call as green shoots in the current economic environment. So it’s not that we see this massively coming through, but we see actually some cases there. Obviously, depending on the economic situation, you will have as well as some cases where landlords are saying, oh, now I don’t want to sell anymore. Right? So it depends really then on the economic condition. On average, in many cases, actually we see some green shoots of continuous acceleration being supported as well by the economic environment.
Nevertheless, it’s all according to plan. We are seeing first results coming through as well on the bottom line, and that actually helps us on our path towards achieving the high-50s percentage margin over the medium term.
Vivek Badrinath
I think it’s fair to that [Multiple Speakers] Yeah. And just to be fair to the team, I think it’s also fair to say that we’re getting better at it. The people on the ground are finding the right angle, the right arguments, they’re getting more and more relevant in their conversation with landlords, and I think that’s also eking out some more conversion.
David Wright
Yeah. Thank you, gents.
Operator
Thank you very much. Our next question today comes from Jerry Dellis from Jefferies. Jerry, please go ahead.
Jerry Dellis
Yes. Good morning. Thank you. Good morning. Hi, there. Thanks for taking my question. In relation to the German white spot program, you said your current expectation of that will be rolled out to the full extent as you saw it at the time of the IPO? And if I could just sneak in a quick second one. In relation to the KKR, GIP agreement, is there a material adverse condition in that deal, please? Thank you.
Vivek Badrinath
I’m not sure we would give that level of information on the second question. I don’t think we — that’s a question that — if anything you need to discuss with the signatories that is – we will have to [indiscernible]. On the white spot program, the white spot program is tracked very carefully by the German regulator. We are committed to the sites that we’ve got on our order form from Vodafone Germany. So we’re pushing ahead. I mean, that’s what we’re doing. I mean, there’s no change in direction. There will be adjustments on the — on a side by side basis sometimes you find that in a certain location rather than putting one site, you are able to provide coverage from two adjacent places. So it could be two instead of three, those kind of things, but nothing significant in that respect.
Thomas Reisten
[Multiple Speaker] to the program more when you touch the real life, but the program itself is — I mean, we have 7,100 sites in produce of which the white spots.
Jerry Dellis
Thank you. Sorry about that. Could it be actually possible that the MNOs decide that they can fulfill their coverage obligations deploying fewer sites than originally envisaged. Do you have any sort of visibility on that?
Vivek Badrinath
Nothing. There’s no changes in the regulatory environment that we can obviously see or actually have been reported on.
Thomas Reisten
They have to agree with the with the German regulator, which — I mean, it’s always possible that — look, it’s these sites already hosted three operators and they have to — and they were listed after a pretty involved process involving the regions on one hand and then the transport ministry for the way the — the rivers and the roads. So there’s — I mean, it’s quite a scientific program. Right? That came up with the list.
Vivek Badrinath
And I mean, let’s reflect as well on — even in that theoretical case, that we have no visibility of, actually from a regulatory point of view, as we speak, that wouldn’t change the commitment to us of 7,100 sites. That’s a commitment [Multiple Speakers]
Jerry Dellis
Thank you.
Vivek Badrinath
Thanks, Jerry.
Operator
Thank you very much. Our next question today comes from Andrew Lee of Goldman Sachs. Andrew, please go ahead.
Andrew Lee
Yes. Good morning, guys. Thanks for taking my question. I just had a question around the decision to go with the financial partner and conscious that part of this is — a question really for Vodafone, but maybe thinking about where you go from here. So there had been a tradeoff between whether you’d work with a financial or a strategic partner in terms of Vodafone stetting down its stake. You mentioned that you have similar views in terms of how the European telco landscape will evolve from here. Guessing there have been conversations with potential strategic partners over the last year. So the question really is just, where does this decision to sell to a financial part like Vodafone and sell it to the JV put you in terms of process of potentially working with strategic partners in different markets. There’s still some of them out there that potentially would be willing to work with you. So just wondered whether that — similar to Jerry’s question, I’d add to Dave’s question earlier whether that sort of hold or whether there’s still progress that can be made if you are of a similar strategic mindset to your JV partners? Thank you.
Vivek Badrinath
Yes. Look [indiscernible] there were scenarios on one and — one to one combinations. Right? Us with DFMG or us with [indiscernible], that were modeled seven, eight months ago, if I recall, well, at the beginning of this year, there was a paper called The Last Dance that kind of looked at how these could fit together. This change in our shareholding will probably force people to go back to the drawing board on what shape or form such a combination would take. That said, I don’t think they — I mean, the investors have said that they still see consolidation in the European tower sector as something relevant. So I don’t think once again any of — any of this precludes further combinations as they — as time evolves.
If you notice — well, DFMG made their decision, and I think Tim [indiscernible] was quite explicit when he mentioned it, saying, well, it was a time versus cash availability calendar type of — calendar led decision making, but that he also felt that there was a lot relevance into mining with Vantage Towers. So I’d say that’s out there. Totem is still evolving its strategic outlook and I think they’ve got a strategic update in the beginning of 2023. I mean, in the first quarter of calendar 2023. So I expect that they will — they will firm up their views on what they intend to do with their tower assets at that point in time. So I would say that the game is still on in a certain way and having two strong infrastructure focused players who obviously view that the European tower market is going to consolidate and that they could be part of it. I think it — leaves quite a few doors open for the future.
Andrew Lee
Thank you. And that consolidation is cross border and in country when you refer to consolidation? You mean both or one in particular?
Vivek Badrinath
I mean, yeah, we’ve always said in country is easy to model and indeed increases the strength of upgrade. So always excited and always interested. And then cross border, because why we always felt — economies of scale, scope and experience are still there. They’re not massive compared to the size of these objects or, let’s say, of these entities, but they’re still relevant, they give us speed and efficiency. And I think that’s something that — as this industry evolves and professionalizes more and more, the ability to consistently drive tower operations at the high level of efficiency across geographies will make a difference as well, and that’s what we — that’s been our core belief from the beginning.
Andrew Lee
Thank you.
Operator
Okay. Thank you very much, Andrew. Our next question today comes from Emmet Kelly from Morgan Stanley. Emmet, please go ahead.
Emmet Kelly
Yes. Good morning, everybody. Good morning, Vivek. Good to see you both, good to see everybody this morning. So my question is on build to bill. So earlier in the year, you highlighted some supply side constraints that you were facing that were edging your build to bill program, particularly in Germany. Can you just give us an update on the supply side constraints? And maybe just give us a flavor of how we should expect build to suit to ramp over the coming, let’s say, three to four quarters on a quarterly basis? Thank you.
Vivek Badrinath
Yeah. I won’t give a quarterly breakdown, but what I can tell you is, we’ve been very — in a disciplined way executing the various parts of our plan, which are on the supplies, putting in place the warehouse, preordering the materials. So in terms of availability of material, I think I can confidently state alongside Thomas who –
Thomas Reisten
Repurchasing of steel, et cetera. So we’ve executed on all of that.
Vivek Badrinath
Yes. So supply of equipment in place, strengthening of commitments with suppliers, we have coverage for the upcoming quarters for the production that we need, strengthening of permitting still a bit slow, but putting more resource on it. People are coming in, we’re hiring people into these positions. That’s been one area where we needed to ramp up. We’ve done that, and we’re getting through the permits both inflow and outflow at higher basis quarter after quarter. So that’s in progress. You can see that out of the outcome of the numbers, we delivered 260 sites in Germany in this quarter and 400 overall. So the ramp up is effective. It’s double what it was last year. So, I mean, we’re pulling up the production level.
The most important thing I would say, however, is not in these three, which are very operational decisions that you can make as a company. It’s also the organization. We put in place the five regions, the five regional heads are in place, the deployment head is in place. We’ll have a full management team completely constituted as we come to the end of this here. But certainly already having these regional teams, which means you break down the size of the problem into five regions, which is the first key of a proper scaling up exercise. And you build it up with proximity that is, you have permits people, deployment people, and acquisition people sitting in the same office, working together on the same portfolio of sites. That’s the — that’s what’s giving us the biggest boost. And we can see that in terms of accountability of the team players rather than having one big list of sites to deliver across Germany. Now you’ve got people who are much more focused and closer to the problem.
And I think at the end, all the very scientific stuff that we’ve put in place on run rates and so on is one thing, but it’s also about being able to stare somebody in the eye and say, hey, you will need two more sites this month and the month is not over, so you’re going to have to deliver them now. That’s what we’re seeing as a difference.
Emmet Kelly
Super. Thank you very much.
Vivek Badrinath
Yeah. Thanks, Emmet.
Operator
Thank you very much. Our next question today comes from Robert Grindel from Deutsche Bank. Robert, please go ahead.
Robert Grindle
Hi, there.
Vivek Badrinath
Hi, Robert.
Robert Grindle
Yes. And that’s the video. Thanks very much, and congratulations too. Fiber deals were mentioned a few times in the release, including co locating a rural fiber provider, acting as a selling agent. How is your view on fiber evolving? I think originally, you’d said you build some of your own, but I’m not sure you’ve done any. Would you like to do more own build rather than acting as an agent, perhaps that could be easier post tender? And a quick follow-up on the [indiscernible] questions. Revenue seems to have accelerated very nicely there. Is that driven by Streetworks or something else? And is the delay on [indiscernible] because of the impact of the communications code, which seems to have a very positive impact on the business? Thank you.
Vivek Badrinath
I’ll leave the [indiscernible] question for [indiscernible] Chairman. And now on fiber, look, we’re opportunistic. That is, if there is fiber available, we don’t want to build it. I mean, overbuilt for just for a tower is a silly business model. So we don’t want to do it. However — so when we see partnerships, when we see people who are ready to, who are coming close by with their fiber either because they’ve got FTTH or because they’ve got enterprise type of builds. We are happy to jump on that. And what matters to us is that, our sites are 5G ready and fiberizable or fiber can be brought. That’s the first order priority. So if it — if you can tick that box, we don’t need to deploy capital, we don’t want to deploy capital just for that. However, we’ve identified a number of sites and we’re not working on them. For what I’d call fiber to the last house, which is when you have a site which is a bit outside the city, and you need to bring fiber just to that extending from, let’s say, the fiburization of the villager or of the urban community just to reach that tower. In that case, we’re very open to laying it. And so, we’re looking at a number of business cases there. And I think that will obviously ramp up as we move forward because those sites will require more 5G, and fiber might be a good answer to that when microwave’s not obvious.
Thomas Reisten
Okay. On [indiscernible], Robert, there’s actually basically two larger revenue drivers. One is indeed actually more sites, of which, actually Streetworks is one element, but not the only. They’re building sites as well in general. So that drives up revenue. The other thing to keep in mind as well is that the unwind program continues to roll out, so which adds tenancies as well. And as a consequence, obviously, more revenue growth from that. So overall, really happy with the continuous progress that we are making in [indiscernible], and it’s a really important asset for us.
Robert Grindle
Thank you.
Operator
Thank you very much. Our next question today comes from Jacob Bluestone from Credit Suisse. Jacob, please go ahead.
Jacob Bluestone
Hopefully, can you hear me? Vivek, you mentioned in your opening comments that you saw the EUR32 offers, I think you said, fair, adequate and attractive. I was just wondering if you can maybe expand a little bit on the analysis you guys have done to reach that conclusion. Thank you.
Vivek Badrinath
I mean, obviously, it’s a bit early because we will be doing our recent statement in the proper way on the back of the full — of the full offer document. So that would be the moment. But we just felt that as we looked at the offer, we — it was incumbent on us to give our first impression. The multiple is quite attractive. It’s quite similar. If you look at the DFMG transaction, which was not very long ago, you’re at 26 times versus their 27 times on a very different country mix. The DFMG deal is on a Germany — majority Germany and a bit of Austria, whereas we’ve got a broader footprint, including some Eastern European countries, Southern Europe, et cetera. So I would argue that if you were to look at it from a country adjusted point of view, the 26 times compares very favorably to the 27 times of the of the recent transaction, which I think was well received by the market.
If you look at the journey that it’s allowed from since IPO, it’s a 33% uplift of the share price from the 24% to the 32%. And at all this against the backdrop of the last few months where I would say the whole sector has been — has been reiterated down and interest rates have been high. And there’s an amount of, I would say, correlation between the interest rates and the devaluation of telco. So I’d say overall — and this is for me — and this is a co control deal versus the control deal. So when you compare it to recent transactions, when you compare it to — I would say, the sector in general, I’d say that led us to that impression that the EUR32 was a very attractive proposition.
Jacob Bluestone
And just in terms of process, when will the board give a formal recommendation?
Vivek Badrinath
So the VT — the voluntary takeover — the offer document will be issued in December, early December, and then we have 14 days. So we move at pace. Both us and the Supervisory Board will have to give there — what’s called the recent statement, which is a deeper analysis, looking at the details of the offer itself. And then on that basis we will ensure our position. And we have 14 days to do that after the offer is issue, I don’t know, if it take fourteen days or — but we’ll do our work. I mean, we have to do that properly.
Jacob Bluestone
Thank you.
Operator
Okay. Thank you very much, Jacob. Our next question today comes from Sam McHugh from Exane. Sam, please go ahead.
Sam McHugh
[Multiple Speakers] On the offer can you say whether there’s been any or where there will be any material changes to the MSA? So obviously, you’re saying you think it’s a fair offer. Are there any material changes in the MSA? And then just on the numbers elsewhere, you talked about the EUR10 million to EUR15 million of investment this year, what kind of run rate are you in terms of incurring those costs in the first half? And are you trending towards the upper or lower end of that EUR10 million to EUR15 million at the moment? Thanks very much.
Vivek Badrinath
So on the first one, really, that’s — I mean the MSA changes, that should be a question more for Vodafone and [Multiple Speakers] So it’s a question for Vodafone and if there’s any changes that will be after completion, okay? So that’s — what we understand is, there could be some small adjustments, but not anything that we saw that was material to value and certainly nothing before completion. So I’d say the subjects that we’re in discussion are more adjustments than anything else. So I wouldn’t over-read into that.
Sam McHugh
Yes. And Thomas, maybe on the EUR10 million to EUR15 million and how that —
Thomas Reisten
Absolutely. I mean you’ve seen in our accounts that there’s a ramp up in actually our costs overall. You’ve seen that in the margin actually as well. So the EUR10 million to EUR15 million we actually have and got a good chunk of that in the first half and will continue to actually have some in the second half as well. So overall, I think it’s fair to say that what we have actually been saying there is really indeed happening in terms of investing into ramp up.
If I look at the margin overall, I mean, let me make that point as well. You have to take for the first half margin versus the second half margin, a few points into account, which is not only the point about the investment. But it’s — obviously, this investment plays a role in it.
And that’s — as we have said in the past, it’s a ramp-up for the BTS program that you have seen actually now producing about 400 sites in the first half. It’s a ramp-up in the preparation for the 1&1 rollout that continues to be incurred and that’s actually the people cost as well that you have seen, indeed, first half last year, first half this year actually to increase in our accounts there as well.
So I mean staff costs increased from just under EUR20 million to now about EUR28 million as an example, year-on-year, right? So that’s the first point to keep in mind. The second point is, you have seen us as well generating revenue growth overall, excluding pass-through of 6%, whereas the macro side revenue grew by about 4%, so 3.9%. So overall, that means that we have as well incurred some revenue that is at lower margin. But that will normalize throughout the rest of the year as well. So we won’t have actually as big an impact on a year-on-year point of view there as well. So that’s the second point.
The third point then keep in mind that in the current economic environment, we are as well looking at inflationary trends and see actually short term, obviously, some impact coming through. However, we have taken as well a cautious position on that one in our accounts in the first half.
So then the fourth point on this is; I’ve mentioned the 400 sites that we have actually been rolling out. So first half versus second half it’s similar to what I’ve been flagging in the past about this fiscal year and the ramp-up where we’re investing to next fiscal year when we actually get the revenue.
Of those 400 sites, just as an example, if you consider that we obviously have incurred the costs for those sites already when we brought them up for being actually ready for active installation, in the second half, you are getting the revenue. So that’s alone on the 400 sites, the EUR3 million to EUR4 million incremental margin boost that you would get in the second half. And that’s on the rollout of sites.
As Vivek said right at the beginning, we have the 710 tenancies. So there you have a similar effect, obviously. So you see that ramp up effect coming through compensating actually obviously, the investment point you are making now.
So if we step back from that, we are very confident that we will achieve the margin guidance that we have given of EUR550 million to EUR570 million as it stands. So I’ve read a few comments about do we indicate actually which side of it? No. It’s the margin guidance as it stands. Okay. I hope that clarifies this point as well a little bit broader for you. Sorry, I’ve been elaborating on that.
Sam McHugh
And I don’t know if you mind me ask one more question, a follow-up on the deal. The dividend that you pay was normally that was declared in July last year. Is it right to think of the EUR32 offer price, excluding any dividend that will be declared for FY ’23?
Thomas Reisten
Yes. I mean this is some — I mean, I think it excluding dividend. And this depends really on the calendarization and the closing, I guess, ultimately.
Sam McHugh
Thank you. Sorry for asking three questions. Very bad of me.
Operator
Thank you very much. Our next question today comes from Usman Ghazi from Berenberg. Usman. Please go ahead.
Usman Ghazi
Hi, gentlemen. Thank you for the opportunity. I just had a question on the 1&1 contract, please. I guess it’s been a few months now since the contract started. Could you talk about the — how in your view the contract is going and whether there have been any things that you can take, I mean, learnings that you can take from the initial implementation of the contract in terms of acceleration going forward?
And if there are any hiccups that you’ve seen in terms of landlord acceptance or any other issues that you’ve seen through this contract that — where you think you need to put more resources to accelerate the build?
Vivek Badrinath
So we are putting resources and we’re working very actively with them. It’s a new program, right, for everybody, yes, for everybody in the chain. So we’re getting lots of things sorted out step by step.
I would say in terms of landlord acceptance per se, it’s work. I mean you need to show them the drawings. They need to get comfortable that what you’re putting is adequate, et cetera. But these are pretty standard rollouts. And it’s not like the — it’s neither the first nor the last country where 5G 3.5 gigahertz equipment will be installed to be in 5G across geographies.
So it needs to be processed. Also worth mentioning the very — it’s also fair to say that the other three operators have also been quite active on the rooftops. So there’s a lot of, I would say, work going on, new adjustments, people putting equipments, both for their network, or in our case, for the new entrant. That’s all a lot of work that we’re putting resource on. We’ve increased the resourcing on this just as Thomas mentioned, to hit the right speeds. And yes, we’re making progress month after month, it’s a learning curve. I mean its learning curve for everybody.
Usman Ghazi
Okay.
Operator
Thank you very much. Our next question today comes from Nick Delfas from Redburn. Nick, please go ahead.
Vivek Badrinath
Hi, Nick. You seem to be on mute.
Operator
Nick, we actually can’t hear you.
Nick Delfas
Sorry about that. I had to press the button again. Just going back to your question Tom, — the point about the extra cost for the 1&1 contract. So the — in the half year, the staff costs were up EUR8 million and presumably there are some other costs as well. So is it correct to say that the cost at the high end of the EUR10 million to EUR15 million that you talked about? And is that all staff or are there were some other costs as well that have been added this year to fulfill that contract? Thanks.
Thomas Reisten
Yes. So I mean, obviously, if you compare first half last year to first half this year, you actually have a bit of an effect of the ramp-up that was any way there for the ramp-up of the organization after the IPO, which has actually continued as well. So it’s not the entire EUR8 million that actually falls into the camp, so of the EUR10 million to EUR15 million actually that we have been flagging for this fiscal year.
But I think overall, you can assume that we have already incurred a good chunk that is — a proportionate chunk actually in the first half and that actually there will be some more costs coming through in the second half. But overall, the EUR10 million to EUR15 million is — would be flagged. We presumed, obviously, then as well, the up to 150 basis points. That was what we’ve said when we were giving the guidance and that is incorporated in the guidance, the 150 basis points.
Nick Delfas
And just thinking ahead, I know you probably may not be a public company by then. But all this means that in FY ’24, you should be seeing EBITDA growth ahead of revenue?
Thomas Reisten
Absolutely. So you see incurring of costs upfront, just like the effect I’ve explained just a moment ago when Sam asked actually the question on the first half versus second half. You are seeing as well the benefits of new build-to-suit and new tenancies, whether that’s actually from other customers or actually as well, obviously, then from 1&1 coming through and generating actually the revenue growth as well for next year, whereas you have incurred the costs in this year.
And I mean — so it’s basically obviously a constant ramp up when you’re accelerating, whether that’s from a year-on-year perspective or in the year indeed.
Nick Delfas
Okay. Thanks very much.
Thomas Reisten
Thank you.
Operator
Thank you very much. Our next question today comes from Luigi Minerva from HSBC. Luigi, please go ahead.
Luigi Minerva
Good morning, Vivek and Thomas. Good to see you. Just — so one question on the transaction, i.e. it’s about the bonds. So my question is whether Vantage is going to be able to keep its existing bonds? Or if the change in control close will trigger the early repurchase of the existing bonds? And in that case, how would you fund it? Would you issue new bonds to repurchase the existing ones?
And then if I may, just a very quick one on the numbers. It’s 260 sites in Germany in H1 in the presentation. Can you give us the split between Q1 and Q2, if possible? Thanks.
Thomas Reisten
Yes. So on the bonds, I mean; this is actually too early to draw a conclusion on that one. So the — whether the change of control close, the bond documentation actually will be drawn at this point in time, we cannot actually say that this is or it isn’t.
Overall, I mean, just I think we need to let the transaction come to a close. And then we will take the appropriate action at that point in time, obviously, in accordance with the refinancing that will be available at that stage. In case, this actually would help.
Luigi Minerva
Okay. So on this Thomas — Thomas, can I ask you if there is a rating targeted once the transaction is completed?
Thomas Reisten
Well, there’s obviously interaction with rating agencies in order to obviously understand the position there. But this is indeed still too early to make an announcement on right now. You have a comment on that one. So I’ll ask what your kind of understanding on that.
Luigi Minerva
Okay. Thank you
Vivek Badrinath
And on the Q1 versus Q2, out of the 400 total footprint, I’m not focusing on Germany, I don’t have that breakdown at hand. It was 140 in Q1 versus 260 in Q2. And from memory, it’s pretty much — it’s quite broadly the same across [indiscernible] Germany, you’re not going to be very, very long.
Luigi Minerva
Okay. Great. Thank you.
Vivek Badrinath
No. So there is a ramp up. I mean, for sure. We feel it.
Operator
Thank you very much, Luigi. Our next question today comes from James Ratzer from New Street. James, please go ahead.
James Ratzer
Yes. Good morning to Vivek and Thomas. So congratulations on the offer. And I had a question about what happens now if shareholders actually don’t accept the offer. I mean, the shares are trading above the EUR32 price. So I just wanted to understand what would happen if Vodafone triggers the profit and loss domination agreement, but they’re unable to exercise a full squeeze out of the minorities.
Could you run through the process of how the dividend would be set for minority shareholders in that situation? I mean we’ve seen this in other situations like KDG, where the minority shareholders were still able to actually get quite an attractive dividend post deal that was re-struck after the transaction.
So I just would like to understand how the process would work for that dividend calculation if minorities decide not to accept the offer and there’s no squeeze out? Thank you.
Vivek Badrinath
It’s a bit early to comment. I mean it’s a regulated process that involves auditors giving a report. All that will happen at the — I mean all that will happen if there is a domination agreement that needs to be put in place that will happen at the AGM at that point in time.
And those parameters would be clear to the shareholders when they have to vote, but that’s at that point in time —
Thomas Reisten
So, I mean we need to receive the offer document, obviously. And then we will form obviously, a final view on that one. But nevertheless, we have given actually our support already on the basis of the information subject to this offer document that we have seen so far. And I mean, I think this question then ultimately is a point that would have to come back to the shareholders.
James Ratzer
Do you know those for your minority shareholders, presumably it would be a key function on whether your Board and independent directors so decide to recommend the offer. I mean what would actually be the process though by which that calculation is done. I understand you can’t give us a number. But is it done as a payout of earnings, a payout of cash flow, payout of the profit and loss domination agreement? Just like to understand what the process by which the calculation will be done.
Thomas Reisten
The calculation of the fixed —
James Ratzer
Of the dividend for the minorities.
Vivek Badrinath
In case there is one on an ongoing basis, you mean?
James Ratzer
Absolutely, yes. [Multiple Speakers] are minorities, how can we work out what the dividend they will receive would be?
Vivek Badrinath
I mean I think, first of all, obviously, this depends on the success of the offer document, right? So ultimately, so whether there is a minority, an ongoing minority or not. I mean that’s I think too early to say at this point in time.
So let us — in case, obviously, we get some more clarity on it when we — I think this is a question really that then would have to be asked at that point in time and more by the shareholder intent at this stage. [Multiple Speakers]
Thomas Reisten
It’s an auditor set dividend policy that becomes the rule, but that I don’t want to step ahead of —
Vivek Badrinath
Yes. But this is actually only in case the offer document actually — and the offer wouldn’t be successful in its entirety, right? So I think it’s too early to speculate on that.
James Ratzer
Would there be guidance on that in the offer document itself to help shareholders make up their decision?
Thomas Reisten
I would assume that the offer document is comprehensive enough indeed actually for shareholders to make their decision, but —
Vivek Badrinath
Yes, it will tell them what happens if there’s a domination agreement. What is the impact on them and what is their benefits. So I think that’s when we’d get hold of it.
Thomas Reisten
Absolutely. We haven’t seen it yet. So there’s a few things that obviously we will have to come back once we see the offer document.
James Ratzer
Okay. Thank you.
Thomas Reisten
Thanks.
Operator
Okay. Thank you very much, James. I’m afraid that is our last question for today. That’s all we have time for, so I’ll hand back to Vivek and Thomas.
Vivek Badrinath
Yes. So first of all, thank you very much for your kind — your questions and your interest in Vantage Towers. I guess you can see we’re — we’ve kept course focused on commercialization with a number of new deals and tenancies, focused on ramping up our BTS program, which remains one of the more attractive dimensions of Vantage Towers and certainly the GLBO program, which in the current environment is extremely relevant for our profitability improvement.
So we’ve held that course and we’re able to reconfirm our guidance for this year. We’re very much on track, both in terms of revenue, EBITDA and recurring free cash flow. And I think that’s worth highlighting. Of course, the transaction and, in particular, the offer document, which will be followed by our recent statement are the next big events of that process. And once again, we welcome this evolution for our company, which has been — which is a very significant milestone in its journey.
With this, thank you so much for your attention and I wish you a very good day.
Thomas Reisten
Thank you very much.
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