Telekom turns land, concrete and steel into money. The group is selling the majority of its radio tower subsidiary GD Towers for 17.5 billion euros to two overseas investors who bid together: Canadian Brookfield and US-based Digitalbridge. This means that foreign investors are taking over more than 40,000 radio towers in Germany and Austria. The antennas of providers such as Vodafone, 1&1 and Telekom itself hang on them. The deal is about the towers and the land on which they stand – so-called passive infrastructure. The network itself remains in the hands of Telekom, says a company spokesman.
The investors from North America are specialized in infrastructure. Brookfield owns 200,000 cell towers and rooftop radio stations worldwide. 10.7 million euros of the purchase price flow in cash, the rest are debts that the buyers take on. 800 people work at GD Towers. The operation of the towers had become too exhausting for Telekom, the specialists from overseas can do it more efficiently, so the conviction in Bonn. Above all, they need the money there. The Telekom top wants to use the income to reduce debt, which totals more than 130 million euros. In addition, she would like to use the money to take over the majority of T-Mobile in the USA.
Brookfield surprisingly prevailed in a tough competitive bidding. They not only outperformed a consortium led by investor KKR. The Canadians did not team up with Digitalbridge until late, after their previous partner had left: Cellnex from Spain was actually the favorite for the purchase. According to reports, the market leader in Europe wanted to give Telekom a maximum of 20 percent of the shares.
Rapid examination by the EU Commission
Vantage Towers, Vodafone’s radio tower subsidiary, was also interested. However, an entry by the competitor would have made the competition authorities suspicious. Although he was optimistic that the antitrust authorities would have approved an agreement with Vodafone, said Telekom boss Timotheus Höttges. However, an investigation would have taken twelve to 15 months – too long for him. The EU Commission’s review of the Brookfield deal should go faster. At the end of the year, Telekom wants to have it completed.
The group said it would continue to exert influence through a minority stake of 49 percent and two board members. You also have “unrestricted access” to the towers “through an advantageous long-term lease agreement of around 30 years.” You also have the right to take control of the company again.
But do foreign investors have an incentive to take care of critical infrastructure in Germany? The spokesman says: “Of course, the further network expansion and the modernization of the locations are guaranteed and firmly agreed with our partners.” The Federal Network Agency explained: “As the assignment holder of frequencies, Telekom must ensure that it can continue to operate its network without interference and that it can use frequencies efficiently without interference.”
Manuel Atug, IT security expert and spokesman for the AG Kritis, in which experts are involved in the security of Germany’s most important infrastructure, criticizes the sale: “We want to protect the core mobile network with the ‘critical components’ of the critical infrastructure, especially from abroad “But at the same time, we’re allowing 51 percent of the physical components of the critical infrastructure base to be sold to foreign investors. I think that doesn’t add up from a national security perspective.” The Telekom spokesman says: “It’s all about steel, concrete and land, about everything that isn’t technology: no antennas, network technology or fiber optic lines.”
Cell tower business is booming as Europe’s phone companies sell towers and landlines. Because they have to invest a lot of money in fiber optics and 5G networks. Investors consider the towers to be secure sources of income. The mobile phone providers conclude long-term contracts with their owners, and the money flows reliably. GD Towers made a profit of 640 million euros in 2021.