July 14, 2022 at 3:50 p.m
Debt reduction: Telekom sells radio tower division for 10.7 billion euros
Telekom boss Tim Höttges has to reduce debt. Photo: dpa/Oliver Berg
Bonn Telekom needs money, but remains a junior partner of the spin-off radio tower company. The now independent offshoot could approach the Dusseldorf Vodafone offshoot Vantage.
Düsseldorf/Bonn After Vodafone spun off its Düsseldorf-managed radio tower division Vantage Towers in March 2021 and listed it on the stock exchange, Deutsche Telekom follows. The largest German telephone company sold its radio tower division GD Towers to two investors from the USA and Canada, who together receive 51 percent of the shares. The total value of the offshoot was set at 17.5 billion euros, Telekom will receive 10.7 billion euros from the two buyers. She wants to use this money to pay off her mountain of debt, which is more than 130 billion euros. This is important for corporate bonds, especially in view of rising interest rates on the capital markets. In addition, Telekom needs money to acquire a majority stake in its very successful US subsidiary T-Mobile USA, which is growing rapidly and is worth 170 billion euros on the stock exchange.
Despite the deal, Telekom shares fell by 2.3 percent, and investors had obviously hoped for an even better selling price.
Telekom boss Tim Höttges was satisfied with the deal: “We are making the value of our radio tower business visible and thus creating value for our shareholders,” summed up the business graduate from Solingen. Telekom played off several bidders against each other, and the two North Americans were only awarded the contract in the end. “It wasn’t an easy decision,” said Höttges. However, Telekom secured a significant minority stake in the deal, a possible buyback option for the business and comprehensive rights to have a say.
With around 800 employees, GD Towers operates radio towers at more than 40,000 locations in Germany and Austria. The company achieved sales of around 1.1 billion euros in 2021, the adjusted operating income was around 640 million euros. The remaining 49 percent will remain with Telekom.
Höttges said they also looked into a merger with Vantage Towers. But because the antitrust authorities would have looked at such a merger very closely, they would have refrained from such a decision for the time being. Höttges said that one could not have waited a year for a decision from the antitrust authorities, the pressure to reduce debt is just great.
In this country, Telekom is the market leader in mobile communications, Vodafone is number two.
Höttges does not rule out the possibility of a deal with Vantage after all. According to Höttges, the two investors in GD Towers have “deep pockets”: “We now have powerful partners with whom we can think about further consolidation,” he said. Vantage Towers, for example, works very professionally – and further consolidation in Germany would bring advantages. Vantage Towers is currently worth 14 billion euros on the stock exchange, around 15 percent more than in spring 2021 when it went public.