Properties for sale will be mast-haves for Cellnex and ATC
Deutsche Telekom (DT) has begun the first phase of staging an auction of its towers business, according to Reuters, whose sources say Goldman Sachs is to create the sales process. It expects indicative offers over the sale of its 40,600 masts in the next two weeks, in a deal that could value the business at close to 18 billion euros ($19.9 billion), say sources close to the deal.
DT reviewing options
A DT spokesperson said the group is reviewing several alternative options for the tower business – as reported last year on its capital markets day. Telecom towers have become a recognised business sector in their own right – TowerCo – as mobile operators seek to divest themselves of what is essentially a property market outside of their core skills. It also helps them raise the capital fund the development of 5G infrastructure and applications.
Towercos have become hot properties and the target of several big takeovers in the past few years as telecom companies seek to reduce debt and costs. DT has debts of €130 billion and could use funds not just for investment in infrastructure but also to take back control of its US subsidy T-Mobile which is now its biggest revenue source, comprising 60 per cent of group sales. Spanish mobile telephone infrastructure operator Cellnex and the American Tower Corp are both readying offers, Reuters’ sources have said. Both are at the starting gates anxious to take a lead in the European property market stakes.
ATC and Cellnex at starting gate
American Tower and Cellnex are the two largest independent tower operators in Europe. Cellnex has 130,000 tower sites in its portfolio, while American Tower has 220,000 towers globally with 55,000 in Europe. There are still 170,000 towers owned by mobile network operators who may want to cash in on these assets and sell to a Towerco.
Dilemma for merger
The deal may also attract interest from private equity groups or competitors such as Vodafone’s Vantage, which owns 82,000 sites, or Orange’s Totem, which would be looking to add to its relatively small portfolio of 26,000. In February Vodafone CEO Nick Read said a merger would be the logical progression for Vantage Towers. Orange chairman and acting CEO Stéphane Richard has mooted the idea of joining Totem forming a pact with another European mobile operator.