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DigitalBridge strikes surprise $17.5bn deal for Deutsche Tower unit

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DigitalBridge Group has reached an agreement with Deutsche Telekom to acquire 51% of its tower unit for US$17.5 billion.

GD Towers is the largest tower company in Germany, operating over 33,000 towers and communication sites in Germany and over 7,000 in Austria.

The deal comes as quite the surprise, given that GD Towers was widely expected to be acquired by a KKR-backed consortium.

This was only strengthened by Cellnex’s withdrawal from the race yesterday.

DigitalBridge’s last-minute bid was made in conjunction with its investment management arm and Brookfield Infrastructure.

“The partnership being formed today is about building the next generation digital infrastructure champion of Europe,” said Marc Ganzi, CEO of DigitalBridge.

“The combination of Deutsche Telekom’s leading mobile network and market position, alongside one of the largest real asset managers in the world in Brookfield, combined with the digital infrastructure domain expertise of DigitalBridge, creates a team of unmatched capabilities to support GD Towers as it grows to meet the evolving network demands of enterprises and consumers across Europe.”

According to Kester Mann, director of consumer and connectivity at CCS Insight, the outcome is a good one for Deutsche Telekom.

“On the one hand, the sale proceeds will make a dent into its massive debt pile of over €130 billion and smooth the path to securing control of the group’s star-performing unit, T-Mobile US,” he says.

“On the other, Deutsche Telekom still retains a tight hold on an asset it sees as strategically important, meaning it retains influence on important decisions such as when and where mobile towers should be deployed.”

Mann says attention will now turn to what comes next for other European tower units such as Orange’s totem and specialists like Cellnex, which was a frontrunner for GD Towers before its withdrawal.

“With the industry keen to capitalise on continued high levels of investor interest in passive infrastructure, further deals are likely just around the corner,” Mann adds.

The transaction is expected to close later this year and is subject to regulatory approvals and other customary closing conditions.

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