Deutsche Telekom sells 51% of its Towers business for 17.5 billion euros
Deutsche Telekom announced the sale of 51% of GD Towers comprising its tower assets in Germany and Austria, to Digital Bridge and Brookfield for an enterprise value of 17.5 billion euros, without cash or debt.
The valuation represents an attractive pro forma AL 2021A EV/Adjusted EBITDA multiple of approximately 27. The transaction marks the successful conclusion of Deutsche Telekom’s strategic review of its tower business announced at the May Capital Markets Day. 2021.
With around 800 employees, GD Towers operates more than 40,000 sites in Germany and Austria and has a proven track record of delivering new sites for its flagship tenant Telekom Deutschland and securing revenue with third-party clients. The Company generated €1.1 billion in pro forma revenue in 2021. Pro forma AL 2021 Adjusted EBITDA was €640 million.
Both Digital Bridge and Brookfield have significant exposure to the European tower sector. By joining forces with Deutsche Telekom, the partners will provide both expertise and long-term capital to refine and evolve GD Towers’ strategic plans and ambitions for increased value creation both in the core business towers and in the rapidly growing adjacent segments as well as through mergers and acquisitions. The structure of the transaction allows GD Towers to pursue these value-creating investments with an appropriate capital structure for an infrastructure business, which would otherwise be constrained by Deutsche Telekom’s balance sheet.
GD Towers’ current management team with Bruno Jacobfeuerborn (CEO) and Thomas Ried (CFO) will continue to lead the business after closing. Deutsche Telekom retains a 49% stake and significant minority protection rights, including the right to appoint two of the five members of the shareholders’ committee, including the initial chairman. In addition, Deutsche Telekom also has the right to take over and reconsolidate GD Towers in the future.
Telekom Deutschland and Magenta Austria will continue to have unrestricted access to GD Towers’ passive mobile infrastructure through advantageous long-term lease agreements (approximately 30 years). Among other things, these agreements offer network operators inflation protection with annual site lease increases indexed to the respective consumer price indices with a 15% discount but capped at 3%, guaranteed access to strategically critical “gold sites”, preferential access to free site capacity for future network upgrades, industry-leading operational service levels, and buy-out rights. Telekom Deutschland and Magenta Austria have secured reciprocal contractual commitments from GD Towers for approximately 5,400 new sites through 2026 and have prioritized radio access network upgrade capacity through 2028.