Deutsche Telekom's towers among Europe's most highly valued

Deutsche Telekom AG's lucrative deal to sell a majority stake in GD Towers set records and bodes well for European tower M&A.

Earlier this month, a consortium led by DigitalBridge Group Inc. and Brookfield Infrastructure Partners LP beat out other interested parties and struck an agreement to buy a 51% stake in GD Towers at a valuation of €17.5 billion, including the assumption of net debt.

The sale represents the largest tower deal seen in recent years across the globe, well ahead of American Tower Corp.'s $9.40 billion purchase of Telxius Towers from Telefónica SA in 2021, according to Kagan, a media research group within S&P Global Market Intelligence.

The deal values each of GD Towers' roughly 40,000 sites in Germany and Austria at about $437,500 per tower. That compares to a median per-tower valuation of about $270,400 globally between the first quarter of 2020 and the first quarter of 2022, or about $273,800 when looking at just the 12 largest deals announced in that two-year span, according to Kagan data.

"Even in this economic environment, towers are seen as a solid investment and carriers turn to off-loading these assets to fund things like fiber and 5G rollouts," said Kagan analyst Lynnette Luna, who focuses on mobile services and towers. "This group paid more [for GD Towers] because of the quality of assets and the potential for big returns."

* Download a spreadsheet with the Kagan data featured in this story. * Use our Transactions Statistics page to run a custom screen of M&A by industry or geography.

 

The valuation of GD Towers also compares well with other European peers.

Vantage Towers AG, which is majority-owned by Vodafone Group PLC, has an EBITDA margin that is similar to GD Towers, but Vantage is valued at $277,300 on a per-tower basis, the lowest among four European tower companies analyzed by Market Intelligence. Vodafone is reportedly looking to sell or merge Vantage with another tower company. Infrastrutture Wireless Italiane SpA had the best valuation of the four, but it is also the most profitable with an EBITDA margin of 68% in 2021.

While the economic environment remains difficult and M&A deals are declining broadly, M&A in the telecom infrastructure space is expected to remain upbeat. Private equity firms still have deep pockets to pursue these kinds of deals, Luna said. In addition, the pool of quality tower assets in Europe is dwindling as consolidation takes place, so "the bidding war is going higher," Luna said.

Beyond Vodafone's potential Vantage deal, discussions regarding a merger of Italy's Open Fiber Spa and Telecom Italia SpA's fixed network assets are still ongoing.

The U.S. has already undergone consolidation in the tower space, with three main companies emerging from the process, including SBA Communications Corp., American Tower and Crown Castle International Corp. Some of these companies are looking for expansion opportunities in Europe as well.