Cellnex forms Dutch tower venture with DT

Cellnex Telecom, the aggressively expansionist Spanish mobile tower company, is increasing its presence in the Netherlands through a new mobile tower venture with Deutsche Telekom (DT).

The move, which follows the recent closure of Cellnex's acquisition of CK Hutchison's telecommunications tower assets in Austria, Denmark and Ireland, will create what the two partners describe as the leading independent telecommunications tower company in the Netherlands.

Furthermore, Cellnex and DT are creating a new and independently managed fund called Digital Infrastructure Vehicle (DIV), which will be headed up by Vicente Vento, the co-founder of Deutsche Telekom Capital Partners (DTCP).

Towering over: Cellnex says the tie-up with DT will create the the leading independent telecommunications tower company in the Netherlands. (Source: Cellnex)
Towering over: Cellnex says the tie-up with DT will create the the leading independent telecommunications tower company in the Netherlands. (Source: Cellnex)

The aim of the fund is to invest in fiber networks, mobile towers and data centers in Europe.

Complex deal

The ambitious aims of the new partnership are matched by its complexity: The creation of the enlarged Dutch towerco is linked to the establishment of DIV and will form an anchor investment for the fund.

In detail, Cellnex and DT signed an agreement to merge their respective Dutch mobile tower businesses into Cellnex Netherlands BV (Cellnex NL).

DT currently operates its Dutch tower business via Telekom Infra (formerly T-Mobile Infra), with about 3,150 towers and rooftop sites. The existing Cellnex NL operates 984 cell sites.

The enlarged company will then operate about 4,314 sites, although this includes 180 planned sites over the next seven years.

T-Mobile Netherlands, which DT is rumored to be selling, will continue to have full access to the infrastructure through a 15-year service agreement, which is automatically renewable for ten-year terms.

In a first step, DT will transfer Telekom Infra to the DIV fund, in return for a cash payment of €250 million (US$304 million) and a shareholding in DIV.

This translates into a capital commitment of Deutsche Telekom of about €400 million ($486 million) to the fund. Cellnex has also agreed to commit €200 million ($243 million) in capital to DIV.

In a second step, DIV will contribute the Telekom Infra business to Cellnex NL. DT, via DIV, will hold a 38% stake in Cellnex NL while Cellnex will hold a 62% stake.

DT also noted that DIV will be open to institutional investors and said it intends to hold a limited partner stake of around 25% in the fund. DIV will focus on promoting digital infrastructure investments across Europe into fiber, towers and data centers, with the goal of delivering attractive risk-adjusted returns.

DT will ultimately deconsolidate Telekom Infra, which currently generates about €60 million ($73 million) in revenue and around €30 million ($36 million) in EBITDA after leases.

Plotting for growth

Cellnex first entered the Netherlands in 2016, when it acquired Protelindo and Shere Group. In 2017 it acquired Alticom. The current portfolio consists of 984 sites for an investment of €492 million ($598 million).

The towerco now operates a total of around 70,000 sites including forecast rollouts up to 2028. Cellnex is present in Spain, Italy, Netherlands, France, Switzerland, the UK, Ireland, Portugal, Austria and Denmark.

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The formation of DIV will provide both DT and Cellnex with further opportunities for expansion on a partnership basis. Indeed, the two companies already jointly acquired Swiss Towers AG from Sunrise Communications International in 2017, together with Swiss Life Asset Managers.

Vento said DIV "will identify and promote exceptional digital infrastructure projects" in partnership with both Cellnex and DT.

"We have an exciting pipeline of projects," Vento added. "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."

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— Anne Morris, contributing editor, special to Light Reading

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