April 13, 2022
Deutsche Telekom (DT) has been spending some time of late working out which of its multiple assets it wants to keep, and which it is happy to untether from the group and push into a different orbit.
T-Mobile Netherlands is a recent example of a business that DT decided to let go. The transaction to offload the Dutch unit was completed on the last day of March, and raised around €4 billion (US$ 4.3 billion) for the German group.
Figure 1: Deutsche Telekom's "declared strategic goal" is to acquire the majority of the capital of T-Mobile US.
(Source: Deutsche Telekom)
T-Mobile US, on the other hand, is a highly lucrative business in which the group is keen to gain majority ownership. DT has just completed a previously announced plan to raise its stake in T-Mobile US by 5.3 percentage points, to 48.4%, through a transaction with SoftBank Group Corp., T-Mobile's other big owner.
The process took place in two steps: In September last year the Japanese company agreed to swap about 45 million T-Mobile shares for a 4.5% stake in DT. The German group then announced today that it acquired a further 21.2 million T-Mobile US shares from SoftBank at an agreed value of $2.4 billion, translating into a "blended price" of $113 per share (11.8 million shares at $101.46 and 9.3 million at $128.68).
DT reiterated that its "declared strategic goal" is to acquire the majority of the capital of T-Mobile US. As part of an original June 2020 agreement with SoftBank, the German group was given the option to buy a total of 101 million T-Mobile US shares from SoftBank by June 2024.
Bloomberg noted that SoftBank still holds about 39.7 million shares in T-Mobile, currently worth about $5.2 billion.
As well as increasing its stake in T-Mobile US to a majority, a big driver for DT is to bring down its whopping debt mountain, which stood at €130 billion ($146.5 billion) at the end of last year. At the same time, the group is looking to plough money into 5G and fiber networks in its main market, Germany.
While the sale of T-Mobile Netherlands has helped to fund some of these objectives, much more funding is clearly required. The group's portfolio of 40,600 mobile towers has emerged as a contender for potential infrastructure monetization, with an estimated value up to €18 billion ($19.5 billion).
Although DT group CEO Timotheus Höttges previously expressed a preference for "an industrial partner" that would enable it to better optimize these valuable assets, the group is understood to have kick-started the process of selling its towers.
According to a Reuters report, DT is now in the process of reviewing bids to buy either 51% or less than 50% of its towers business.
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Citing unidentified sources, the report said bids have been submitted by Vodafone's Vantage Towers, a consortium comprising KKR and Global Infrastructure Partners (GIP), and independent tower companies American Tower and Spain-based Cellnex.
GD Towers is the German operator's central wireless infrastructure vehicle encompassing DT tower assets in Germany and Austria. Within this grouping, Deutsche Funkturm operates around 33,400 towers in Germany.
— Anne Morris, contributing editor, special to Light Reading
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