Deutsche Telekom has sold a 51% stake in its GD Towers business for €17.5 billion, becoming the latest major European telco to divest some control of its passive mobile infrastructure assets to a third party.
The successful bid came from a consortium comprising DigitalBridge and Brookfield, both of which have experience in the field and have promised to invest in the business to further monetise the tower assets in Germany and Austria.
The deal provides Deutsche Telekom with an opportunity to reduce its debt and further its ambition to achieve a majority stake in T-Mobile USA, while it retains significant minority rights as a 49% shareholder in GD Towers.
Tower sale
The operator will remain the anchor tenant and will benefit from any future revenue growth in the business.
“Deutsche Telekom once again delivers on its strategic agenda. We crystalize the value of our tower assets, thereby creating value for our shareholders,” said Tim Höttges, CEO of Deutsche Telekom.
“At the same time the deal allows us to continue improving Deutsche Telekom’s undisputed network leadership in Germany and benefit from further value upside of the towers business through our retained 49% stake.”
Many operators have sought to either sell or spin off their tower assets in recent years, hoping to raise funds to invest in new networks. A sale generates immediate capital, while a separate entity or joint-venture can be more effective at monetising the infrastructure than if it stays in house.
Meanwhile, private equity firms and third-party investors who can take a long term view appreciate the predictable returns and the scope for growth given the expected explosion in demand for mobile data and 5G services.
Spanish firm Cellnex has a growing portfolio of assets across Europe, including those formerly owned by Three’s parent company CK Hutchison, while Vodafone has spun off its towers into Vantage Towers, a business which went public last year.
“This represents a great opportunity to invest in a highly attractive tower portfolio, with highly contracted cash flows and strong upside potential,” elaborated Sam Pollock, Managing Partner at Brookfield and CEO Infrastructure. “Brookfield is already a leading global infrastructure investor, with approximately 200,000 telecom tower and rooftop sites under management globally. We hope to bring that experience and expertise to this new partnership, for the benefit of our customers in Germany, Austria and beyond.”
“The combination of Deutsche Telekom’s leading mobile network and market position, alongside one of the largest real asset managers in the world in Brookfield, combined with the digital infrastructure domain expertise of DigitalBridge, creates a team of unmatched capabilities to support GD Towers as it grows to meet the evolving network demands of enterprises and consumers across Europe,” added Marc Ganzi, CEO of DigitalBridge.
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