Back in November, Deutsche Telekom (DT) CEO Timotheus Höttges provided some insights into his views as to what the German group should do with its tower assets, and expressed a preference for "an industrial partner" that would enable it to better optimize these valuable assets.

He also said that he was not in favor of an IPO or selling a minority stake (the route taken by Vodafone with Vantage Towers), and that he wanted to retain some control in decision-making following any deal.

Handelsblatt is now reporting that DT aims to start the process of selling its tower business within the first quarter of 2022.

Figure 1: Everything must go: According to Handelsblatt, Deutsche Telekom wants to start a sales process for its towers in the first quarter of 2022.
(Source: dpa picture alliance/Alamy Stock Photo)

Quoting unidentified sources, the German paper said DT is open to offers for both a minority and majority stake, and estimated the valuation of the division at up to €20 billion (US$22.48 billion).

As pointed out by Handelsblatt, the sale of some of its towers represents a change in strategy for DT. Höttges, whose contract as CEO was recently extended until 2026, has apparently ordered this change for the group.

"The company should increasingly rely on external partners and is also prepared to give up control of the infrastructure," Handelsblatt said.

Rival strategies

DT has clearly been watching what its rivals are up to: Vodafone still holds a majority stake in Vantage Towers, its European tower company spinout that it listed on the Frankfurt Stock Exchange in March.

Telefonica sold its towers to ATC, meanwhile. Orange has created a tower unit called Totem and has insisted that it intends to play a proactive role in the tower sector.

DT's German and Austrian towers are managed by a separate unit called GD Towers, with around 33,000 towers in Germany and 7,000 in Austria. DT also owns other tower assets in Europe that have not yet been incorporated into GD Towers.

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A big driver for DT right now is to bring down its whopping debt mountain of €130 billion ($146.5 billion). It also wants to increase its stake in T-Mobile USA to a majority.

Sources told Handelsblatt that money raised from a tower sale could really help fund both objectives. A listing of GD Towers is also said to be under consideration, but is not the favored option.

As for potential buyers, ATC, independent towerco Cellnex Telecom and Vantage Towers have all been cited as interested parties.

Cellnex is apparently the strongest contender here. Indeed, Cellnex has already formed a tower joint venture with DT in the Netherlands.

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— Anne Morris, contributing editor, special to Light Reading