Deutsche Telekom and Cellnex merge infra units, unveil investment fund

Deutsche Telekom and Cellnex merge infra units, unveil investment fund

Deutsche Telekom AG Timotheus Höttges.jpg

Deutsche Telekom and Spanish mast operator Cellnex Telecom are to merge their mobile infrastructure operations in the Netherlands, to create Cellnex Netherlands BV (Cellnex NL).

Extending the deal, the two will establish a joint fund, the Digital Infrastructure Vehicle (DIV), in which they will both become anchor investors. DIV will invest in digital infrastructure in Europe, supported by a commitment of €400 million in capital from Deutsche Telekom and €200 million from Cellnex.

Deutsche Telekom CEO Tim Höttges (pictured), said: "The agreement with Cellnex underlines the high value of passive mobile infrastructure. We are creating a leading tower company in the Netherlands, which should unlock synergies and accelerate our 5G rollout. At the same time, DIV opens an innovative way to finance telecom infrastructure in partnership with institutional investors.

"The Corona crisis has shown stable broadband connections are essential for people to communicate, both professionally and privately. That is why we are once again strengthening our commitment to digital infrastructure in Europe."

Once finalised, Cellnex Netherlands will operate 4,314 sites, including 180 new sites scheduled to be built over the coming seven years. Cellnex will own 62% of the new entity, while Deutsche Telekom will hold 38% through the fund.

According to the two, Cellnex Netherlands will be "the largest independent cell mobile tower company in the Netherlands and will provide excellent geographic coverage".

A long term service agreement will allow T-Mobile Netherlands to continue to have full access to the infrastructure contributed through Deutsche Telekom.

Initially Deutsche Telekom will transfer T-Mobile Infra to the newly established and independently managed DIV and will receive a €250 million cash payment out of the transaction in addition to a shareholding in DIV in exchange for the T-Mobile Infra business.

Following this, DIV will contribute the received T-Mobile Infra business to Cellnex NL. In return, DIV is to receive around a 38% economic interest in Cellnex NL.

In addition to the anchor investors Deutsche Telekom and Cellnex, DIV will be open to institutional investors. Deutsche Telekom intends to hold a limited partner stake of around 25% in the fund after the envisaged third-party investments.

DIV as a fund will be independently managed by a team of investment and capital market experts led by Vicente Vento, co-founder of Deutsche Telekom Capital Partners (DTCP).

Höttges said: "DIV is a newly established and independently managed fund that will identify and promote exceptional digital infrastructure projects in partnership with Europe's leading telecommunications group and the leading tower company”, said Vicente Vento. “We have an exciting pipeline of projects. 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.”

Upon closing of the transaction Deutsche Telekom will deconsolidate T-Mobile Infra, which currently generates €60 million of revenues and around €30 million of EBITDA after leases.




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