Deutsche Telekom is readying the sale of its roughly 40,600 mobile towers, potentially attracting a price tag of up to €20 billion
Back in November, Deutsche Telekom’s CEO, Tim Hoettges notably that the company was interested in finding for an industrial partner with which to potentially deconsolidate the company’s tower infrastructure. Both Vodafone and Orange were speculated to be viable options for some kind of partnership, with the former having spun off its own tower infrastructure unit to form Vantage Towers in 2020 and taken the company public in 2021.
By December, the Deutsche Telekom’s willingness to sell a minority or majority stake in its towers had become more overt, with German media reporting that the company was looking to make a sale by Q1 of 2022. At the time, the media valued Deutsche Telekom’s tower assets – roughly 40,600 mobile towers – at up to €20 billion.
Now, a trio of inside sources speaking to Reuters are suggesting the sale process is already underway, with the company expecting indicative offers in the coming weeks.
According to these sources, both Spanish infrastructure giant Cellnex and US-based American Tower Corp are both preparing to make offers for the towers. These are some of the largest independent tower operators in the world, with portfolios of roughly 130,000 and 220,000 towers, respectively.
To say both of these companies have been on a shopping spree in recent years would be an understatement. In 2020, Cellnex agreed to purchase all of CK Hutchison’s European towers for roughly €10 billion; most of these deals have since closed, with the more complicated acquisition process in the UK being given the green light by regulators just last week.
American Tower, meanwhile, bought Telefonica’s tower unit, Telxius, for $9.4 billion last year, as well acquiring data centre real estate investment trust CoreSite Realty for roughly $10 billion a few months ago.
However, it may not be just these independent tower operators that are interested in some form of tower deal. Vodafone’s Vantage Towers, with roughly 82,000 towers, and Orange’s tower unit Totem, with 26,000 towers, are also viable options for M&A. Both Vodafone and Orange have previously indicated that they would be open to merging their tower units with those of another European player.
Finally, private equity firms can also not be ruled out, having shown a strong appetite for investing in telecoms infrastructure in recent years, viewing towers as a reliable investment that will deliver predictable returns for many years.
If a tower sale does come to pass and overcomes the necessary regulatory hurdles, the funds raised by Deutsche Telekom will primarily go towards reducing the company’s debt pile of over €130 billion, as well as further expanding their 5G and fibre rollouts.