HomeFinancial/RegulationCellnex and DT in tower talks

    Cellnex and DT in tower talks


    Vodafone out, but KKR’s private equity pact circling

    Spain’s Cellnex has offered Deutsche Telekom (DT) a take in its tower business as it bids to get its hands on the German telco’s €18 billion ($18.8 billion) infrastructure division, according to Reuters four inside sources. As Europe’s top tower operator, Cellnex caused tremors when it submitted a binding offer for DT’s towerco Deutsche Funkturm (DFMG). The bid is backed by Canada’s Brookfield Asset Management (BAM) and allegedly lets DT maintain a minority stake in DFMG.


    Vodafone has seemingly abandoned efforts to merge its Frankfurt-listed towers business, Vantage Towers with DFMG, said Reuters’ source with insight into Vodafone’s strategy. Vodafone said it is “exploring its own options” to achieve the objectives for Vantage that were set out in May “including discussions with potential industrial partners.” Germany is a key European market for Cellnex, which has 137,000 tower sites in countries including Spain, Italy, the Netherlands, France and Austria.


    Offering a stake of less than 10% in Cellnex, whose total value is €25 billion euros, would help neutralise the interest of a Global Infrastructure Partners (GIP) and Stonepeak consortium led by KKR. This private equity pact has enticed DT with a promise to let it retain control of its towers business, the sources said. However, the KKR proposal would still give Wall Street some control over the German company’s corporate governance, forcing DT to compromise on key strategic decisions over its mobile towers’ business. Guided by Goldman Sachs, DT is expected to announce the winner before its second quarter results on Aug. 11.


    Cellnex’s alliance with Brookfield would give the Spanish firm enough funding to avert a capital hike, said Reuters. Investors are still nervous its stock fell 18% over its plans for a €7 billion rights issue last year, said Reuters’ Emma Victoria-Farr’s sources said. Cellnex’s bid for DFMG follows a golpe de estado by Spanish firm after it secured British regulatory approval earlier this year to buy CK Hutchison’s towers assets, if it sells at least 1,000 mobile phone towers in Britain.

    Dry run

    This proved to be a dry run for the DT, though CK was only offered around 5% of Cellnex as part of the transaction. Last year, DT and Cellnex signed a deal to combine their tower businesses in the Netherlands and set up a joint fund to invest in digital infrastructure. The Dutch deal saw Cellnex controlling 62% of the combined entity while DT took 38% through the fund.