In a further move consolidating ownership of the European tower sector, with 5G rollouts picking up speed, Deutsche Telekom and wireless telecommunications infrastructure specialist Cellnex Telecom have signed an agreement to merge their respective Dutch mobile communications infrastructure companies into Cellnex Netherlands BV (Cellnex NL).
Both companies will also become anchor investors in the newly established and independently managed Digital Infrastructure Vehicle (DIV), an investment fund focused on European digital infrastructure.
Deutsche Telekom operates its Dutch telecommunications tower business in T-Mobile Infra BV, with some 3,150 towers and rooftop sites. The business of Cellnex NL, a subsidiary of Cellnex, comprises 984 cell sites. The enlarged company, with ca. 4,310 sites including planned new build of 180 sites, will be the largest independent cell mobile tower company in the Netherlands and will provide excellent geographic coverage.
T-Mobile Netherlands will continue to have full access to the contributed infrastructure through a long-term service agreement at arm’s length.
In a first step, Deutsche Telekom is transferring T-Mobile Infra to the newly-established and independently-managed fund Digital Infrastructure Vehicle (DIV). Deutsche Telekom will receive a €250 million cash payment out of the transaction and a shareholding in DIV in exchange for the T-Mobile Infra business. This translates into a capital commitment of Deutsche Telekom of €400 million to the fund. Cellnex has also agreed, as part of the transaction, to commit €200 million of capital to DIV.
In a second step, DIV will contribute the received T-Mobile Infra business to Cellnex NL. In return, DIV receives approximately 38 per cent economic interest in Cellnex NL.
In addition to the anchor investors Deutsche Telekom and Cellnex, DIV will be open to institutional investors. Deutsche Telekom intends to hold a limited partner stake of around 25 per cent in the fund after the envisaged third-party investments.
DIV will focus on promoting digital infrastructure investments across Europe into fibre, towers, and data centres, with the goal of delivering attractive risk-adjusted returns.
DIV as a fund will be independently managed by a team of investment and capital market experts led by Vicente Vento, co-founder of Deutsche Telekom Capital Partners (DTCP), an investment management platform focusing on technology growth equity and digital infrastructure.
“The agreement with Cellnex underlines the high value of passive mobile infrastructure. We are creating a leading tower company in the Netherlands, which should unlock synergies and accelerate our 5G rollout. At the same time, DIV opens an innovative way to finance telecom infrastructure in partnership with institutional investors,” said Tim Höttges, CEO of Deutsche Telekom. “The Corona crisis has shown stable broadband connections are essential for people to communicate, both professionally and privately. That is why we are once again strengthening our commitment to digital infrastructure in Europe.”
“DIV is a newly-established and independently-managed fund that will identify and promote exceptional digital infrastructure projects in partnership with Europe’s leading telecommunications group and the leading tower company,” said Vento. “We have an exciting pipeline of projects. Our focus will be on investments that offer attractive risk adjusted returns to investors by bringing together a lean and disciplined investment approach with the strengths of our corporate partners.”
Upon closing of the transaction, Deutsche Telekom will deconsolidate T-Mobile Infra BV which currently generates ca. €60 million of revenues and around €30 million of EBITDA after leases.