Deutsche Telekom has sold a 51% stake in its GD Towers business for €17.500 billion, becoming the latest major European telecommunications operator (opens in a new tab) to hand over partial control of its assets to passive mobile infrastructure to a third.
The winning bid came from a consortium including DigitalBridge and Brookfield, both of which have experience in the field and have committed to investing in the company to further monetize the tower's assets in Germany and Austria.
The deal offers Deutsche Telekom the opportunity to reduce its debt and pursue its ambition to acquire a majority stake in T-Mobile USA, while retaining significant minority rights as a 49% shareholder in GD Towers.
The operator will remain the primary tenant and will benefit from any future revenue growth of the business.
“Deutsche Telekom is once again delivering on its strategic agenda. We crystallize the value of our tower assets, creating value for our shareholders,” said Tim Höttges, CEO of Deutsche Telekom.
"At the same time, the agreement allows us to continue to enhance Deutsche Telekom's undisputed network leadership in Germany and to benefit from the higher added value of the tower business through our retained 49% stake."
Many operators have tried to sell or divest their tower assets in recent years, hoping to raise cash to invest in new networks. A sale generates immediate capital, while a separate entity or joint venture may be more effective at monetizing the infrastructure than staying in-house.
Meanwhile, private equity firms and outside investors who may take the long view appreciate the predictable returns and growth opportunities 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 previously owned by Three's parent company CK Hutchison, while Vodafone has turned its towers into Vantage Towers, a venture that has gone public el año pasado.
"This represents a great opportunity to invest in a very attractive portfolio of towers, with tightly squeezed cash flow and strong growth potential," said Sam Pollock, Brookfield's managing partner and executive director of Infrastructure. “Brookfield is already a leading global infrastructure investor, with approximately 200,000 rooftop and telecommunications tower sites under management globally. We look forward to bringing this experience and knowledge to bear in this new partnership, for the benefit of our customers in Germany, Austria and beyond.
"The combination of Deutsche Telekom's mobile network and market position, along with one of the world's largest real asset managers in Brookfield, combined with DigitalBridge's digital infrastructure domain expertise, creates a team of unmatched capabilities to support GD Towers as it grows to meet the evolving network demands of businesses and consumers across Europe,” added Marc Ganzi, CEO of DigitalBridge.