American Tower signed a 20-year contract with 1&1 AG, a wireless carrier in Germany, to provide 1&1 with access to colocation on its tower infrastructure in Germany – which currently comprises a portfolio of 14.7k communications sites. Specifically, the agreement is between American Tower’s subsidiary, ATC Germany Holdings GmbH, and 1&1 AG’s subsidiary, 1&1 Mobilfunk GmbH.

American Tower and 1&1 Partner in Germany

American Tower’s framework contract to lease antenna sites to 1&1 will facilitate 1&1’s 5G network roll-out in Germany. Under the agreement, American Tower will provide 1&1 with access to its communications sites for the installation of 1&1’s antennas.

Further, the companies will collaborate to identify colocation availabilities for sites that can be phased into operation in the near future. Each of these sites will have a lease term of 20 years, which can be extended by 1&1 multiple times.

Germany Segment

As of Q1 2022, American Tower operates 14.7k communications sites in Germany. In aggregate, these sites in Germany generate 3.2% of property revenue and 3.0% of property gross margin for American Tower. Finally, in terms of customers, American Tower drives the majority of its site leasing revenue in Germany from Telefónica and Vodafone.

Transaction Rationale – 1&1 AG

1&1 is building-out a new, virtualized 5G wireless network based on Open RAN (radio access network) technology and plans to launch commercial service by the end of 2022. Specifically, 1&1 is using ~70 MHz of spectrum holdings in the 2.6 GHz and 3.5 GHz to 3.7 GHz frequency bands.

Through 1&1’s partnership with American Tower, the wireless carrier will progress on its BNetzA roll-out obligations for tower infrastructure, which are as follows, by year-end:

  • 2022: build-out 1.0k wireless sites
  • 2025: build-out 6.5k wireless sites to satisfy its obligations to cover 25% of Germany’s population
  • 2030: build-out 13k wireless sites to satisfy its obligations to cover 50% of Germany’s population

Colocation on American Tower’s sites allows 1&1 to progress with the roll-out of its 5G network in Germany – rapidly and cost-effectively. Indeed, by partnering with tower companies, 1&1 will primarily use existing sites to deploy its antennas and radios.

To this end, American Tower is 1&1’s third partner for passive network infrastructure, following a similar agreement with Vantage Towers in December 2021. Additionally, in April 2022, 1&1 signed a contract with GfTD GmbH, a general contractor, for the construction of 500 new antenna sites, as part of its wireless network roll-out.

Mobile Virtual Network Operator (MVNO)

Presently, 1&1 operates as a mobile virtual network operator (MVNO) in Germany, utilizing the networks of Telefónica and Vodafone.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G.

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