March is TowerCo spring when telcos shed their infrastructure
Belgium now has its first dedicated tower building and management business DigitalBridge, which promises to bring more efficiency to infrastrcutre management so that Belium’ mobile operates can get on with the intellectual challenges involved in creating core network software and services. The dedicated tower company was created after mobile operator Telenet agreed to sell its tower business division in a bid to divert funds to its 5G network roll out.
On Monday DigitalBridge Group announced that an affiliate, DigitalBridge Investments, now referred to as DigitalBridge, has agreed to acquire the mobile telecommunications tower business, named TowerCo, belonging to Telenet Group in an all-cash transaction valued at €745 million ($820 million). The transaction is debt and equity financed, with a commitment from DigitalBridge of €470 million ($517 million).
To avoid confusion, Telenet’s TowerCo division was not actually an independent company that could be classified as a generic ‘TowerCo’, in the sense that DigitalBridge will be, since the latter has no involvement in creating software for core networks or the applications that will run over the networks.
The transaction gives DigitalBridge complete ownership of Telenet’s passive infrastructure and tower assets, including TowerCo’s nationwide footprint of 3,322 sites in Belgium, comprising 2,158 owned sites and 1,164 third-party sites.
DigitalBridge says it will capitalise on the unique opportunity of being the first independent towerco in Belgium with an expansive footprint, a total tenancy ratio (the number of operators with antennae or active devices on site) of 1.2x and a tenancy ratio of 1.6x in towers. The transaction means DigitalBridge can benefit from Telenet’s increased participation in 5G expansion and meet the growing coverage needs of all telcos.
“This transaction helps [telcos] unlock embedded value in their networks via creative solutions built on long-standing relationships and a proven track record of successfully operating assets,” said DigitalBridge CEO Marc Ganzi, “We see significant headroom for growth in the Belgian telecom market through the enhancement of mobile penetration and data usage and we look forward to meeting and exceeding Telenet’s increased coverage needs.”
Under the terms of the agreement, DigitalBridge will enter into a long-term Master Lease Agreement with Telenet, which includes an initial period of 15 years and two renewals of 10 years each. The agreement also includes a build-to-suit commitment to build a minimum of 475 additional new sites. The transaction is expected to close in the second quarter of 2022 and needs no regulatory approvals.
This has been a mad March for tower deal makers. In Africa Helios bought Airtel’s towers for €50 million. Telecom Italia is suffering a boardroom battle over the decoupling of its infrastructure from its service creation efforts. The biggest possible development would be in Germany. On March 10th it was announced that Deutsche Telekom is scheming to sell its portfolio of 40,600-towers in Germany and Austria. American Tower, Spain’s Cellnex, Vodafone Group’s Vantage Towers and Orange’s Totem are all potential buyers. Private equity investors are also thought to bidding. DT’s advisor Goldman Sachs says the German telecom can expect $19-$22 billion for its towers, according to Reuters. It will use the money to cut its debts of $143 billion and buy back control of its lucrative US mobile operator T-Mobile.