There are tens of thousands of cell phone masts and roofs in Germany, many of which are owned by Deutsche Telekom. But the Bonn group is now withdrawing from this business and involving North American financial investors.
By selling most of its radio tower business to North American investors, Deutsche Telekom is looking to make a lot of money.
The Bonn-based group announced it will sell 51 percent of its previous operations to Brookfield Asset Management in Canada and Digital Bridge in the US. Telekom wants to keep 49 percent. As part of the transaction, Funkturm’s business is reportedly valued at € 17.5 billion excluding debt and cash. That’s around 40,000 mobile pages, of which around 33,000 are in Germany and 7,000 in Austria.
Telekom remains on board as a tenant – so in the future there will also be magenta antennas in the locations. The branch with around 800 employees recently achieved an annual turnover of 1.1 billion euros, operating profit (Ebitda AL) was 640 million euros. In Germany, the company operates under the name Deutsche Funkturm GmbH, based in Münster.
EUR 10.7 billion in revenues
According to the information, the financial debt of Deutsche Telekom will decrease by EUR 10.7 billion, along with revenues. In view of concerns about a recession in the economy and the prospect of billions in revenues for Magenta, Telekom CEO Tim Höttges said: “It’s good to be winter-hardy.” The board also presented the prospect of using some of the proceeds to increase its stake in the lucrative US subsidiary T-Mobile US.
The other two German mobile network operators have already taken the step that Telekom is now taking. Most of Telefónica Deutschland (O2) radio towers belong to the American company American Tower, only a small part is still owned by O2. Vodafone made its radio tower subsidiary Vantage Towers public last year. As the majority shareholder with approximately 82 percent of the share capital, Vodafone continues to rule.
During the presentation of the agreement with investors from North America, the head of Telekom Tim Höttges announced that talks were also held with Vodafone. He was optimistic that the antitrust authorities would approve such a merger. However, a proper investigation by competition authorities would take 12 to 15 months, the manager said, explaining that they would not like to wait that long.
Why Financial Investors Now?
The Spanish group of Cellnex radio towers also competed in the race but were unable to defend themselves. Why Financial Investors Now? The head of Telekom Höttges emphasized the advantages of financially strong partners. “These guys have deep pockets for the next steps.” Telekom expects the authorities to give the green light over the next few months and the sale will be finalized by the end of this year.
Companies producing radio towers have so-called passive infrastructure – i.e. concrete and metal structures on which the antennas are suspended. Antennas, in turn, belong to network operators.
In the age of the Internet, cell towers are a reliable business with promising development. Digital Bridge CEO Marc Ganzi spoke of a clear perspective: “We are seeing strong organic growth driven by a growing demand for mobile data, connectivity and coverage.”
In the business model of the niche industry, the “tower company” enters into long-term lease agreements with mobile network operators, in Germany so far they have been Telekom, Vodafone and O2. A fourth network operator, 1 & 1, will be added soon. In the past, only the antennas of one network operator were connected to the mast. In the meantime, however, the telecommunications industry is working closely together, and the antennas of several network operators are increasingly hanging from one mast. (dpa)