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Reports suggest that the company is considering approaches from numerous companies seeking to take a majority or minority stake in the company’s tower infrastructure
Towards the end of 2021, Deutsche Telekom’s CEO, Timotheus Höttges, announced during an investor conference that he was interested in finding a partner for the company’s tower business, with media reports later suggesting that a stake sale in the unit was imminent.
Analysts have previously suggested that Telekom’s roughly 40,600 towers, could be worth up to €18 billion.
Now, just days after Deutsche Telekom started the official sales process for the unit, reports are suggesting that the operator has already been inundated with bids for take a stake in its German towerco, Deutsche Funkturm. The unit controls around 33,4000 towers across Germany.
According to the report, Vantage Towers and a consortium of KKR and GIP has submitted bids to purchase either 51% equity in the business, or a majority stake.
Spanish infrastructure giant Cellnex, which has been on an enormous towerco acquisition spree in recent years, has also made a bid, though they are only seeking a majority stake.
The report also suggests that American Tower Corp has submitted a bid, though the size of the stake sought was not noted.
Deutsche Telekom has hired Goldman Sachs to advise them on their options regarding these approaches and reportedly hopes to sign a deal for its tower assets by the middle of the year, assuming regulatory approval.
It should be noted that this approval, however, is far from guaranteed.
A tie up with Vantage Towers, for example, would leave the German tower assets of both Vodafone and Deutsche Telekom in the hands of a single company, making them a runaway market leader and potentially stifling future competition. As a result, such a move would come under major scrutiny from European regulators.
According to Reuters sources, such a merger would require “a package of remedies including asset disposals to win the blessing of European regulators”.
Nonetheless, Vantage Towers has been vocally enthusiastic about such a deal’s potential, even fending off approaches from private equity investors in favour of waiting for a possible deal with Funkturm or another major European towerco, such as Orange’s Totem.
One the other hand, the sale of a minority stake in Funkturm would be far less likely to run into regulatory red tape and thus may be the more attractive option for Deutsche Telekom.
In fact, a cash injection from any stake sale would be quite timely, with the company today announcing that it has spent $2.4 billion to increase their stake in T-Mobile from 48.4%. According to a company statement, this investment was largely facilitated by the €4 billion windfall from the sale of T-Mobile Netherlands to a consortium of Consortium of Apax and Warburg Pincus last year.
The stake increase leaves the Deutsche Telekom just a stone’s throw away from majority control of the T-Mobile, something that Höttges has been driving the company’s board of directors towards since last year.
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