The Americanization of European Towers

Rapid convergence in the format that towers are owned is occurring in both the United States and Europe. Indeed, the change in ownership of towers towards independent tower companies, from wireless carriers, has particularly accelerated in 2021. Dgtl Infra calls this phenomenon the Americanization of European Towers.

United States and Europe Towers Market

Overall, the United States has 157k towers, with a 2.3x tenancy ratio, equating to 360k tenants. Whereas, Europe has 360k towers, with a 1.4x tenancy ratio, equating to 500k tenants. Indeed, the United States and Europe tower markets are two of the largest globally, only behind China, India, and Japan, in terms of tower count.

However, the key difference between the United States and Europe towers markets is that, in the United States, the independent tower companies serve a much more important role than in Europe.

In the United States, the largest wireless carriers like Verizon, AT&T, and T-Mobile have historically depended on leasing space, on towers from independent tower companies, to deploy their communications equipment. Specifically, these independent tower companies include American Tower, Crown Castle, SBA Communications, and Vertical Bridge.

In the United States, 95% of the country’s 157k towers are owned by these independent tower companies. Whereas, in Europe, the independent tower ownership has been only 20% of the country’s 360k towers. Indeed, Cellnex Telecom is the most notable independent tower company in Europe.

However, over the past year, and particularly during 2021, Europe is rapidly changing into a tower market more akin to the United States. Many of the wireless carriers in Europe are selling their tower assets to independent tower companies, like Cellnex. Additionally, wireless carriers are also bringing their tower businesses public through initial public offerings (IPOs) in 2021.

Dgtl Infra calls this phenomenon the Americanization of European Towers. Below we summarize the wireless carriers and tower companies in both the United States and Europe. Subsequently, we focus on the recent strategic transactions of European tower companies.

United States – Wireless Carriers

1. Verizon is the largest wireless carrier in the United States with 120.9 million subscribers
2. T-Mobile is the second largest wireless carrier in the United States with 102.1 million subscribers
3. AT&T is the third largest wireless carrier in the United States with 95.3 million subscribers
4. DISH Network is the fourth largest wireless carrier in the United States with 9.4 million subscribers

United States – Towers Companies

1. American Tower owns 40.6k towers in the United States
2. Crown Castle owns 40.1k towers in the United States
3. SBA Communications owns 16.5k towers in the United States
4. Vertical Bridge owns 6.0k towers in the United States, which increases to 20.0k towers, when including its master-leased towers

Europe – Wireless Carriers

1. Deutsche Telekom is the largest wireless carrier in Germany, which is also the company’s top market. Notably, Deutsche Telekom is also the controlling shareholder of United States wireless carrier T-Mobile
2. Vodafone operates in markets including Germany, the United Kingdom, Italy, and Spain
3. Telefónica focuses on the markets of Germany and the United Kingdom, in which it operates under the O2 brand. Additionally, Telefónica operates in its home market Spain, under the Telefónica and Movistar brand
4. Orange operates in markets including France, Spain, and Poland

Europe – Towers Companies

Below we discuss the Americanization of European Towers. Indeed, this phenomenon exemplifies how many of the wireless carriers in Europe are either selling their tower assets to independent tower companies or are bringing their tower businesses public through initial public offerings in 2021.

Cellnex Telecom

Cellnex Telecom owns 120k tower sites, pro forma for all of its acquisitions and planned build-to-suit (BTS) programs. Indeed, there have been a tremendous number of recent updates from Cellnex, three of which are below.

Firstly, in January 2021, Cellnex announced a joint venture transaction with Deutsche Telekom to add 3.2k towers in the Netherlands to its portfolio, at a valuation of €645m. Beyond this Netherlands transaction, Deutsche Telekom is the largest wireless carrier in Europe to have not announced any monetization plans for its tower assets. This is important as Deutsche Telekom owns 63k tower sites in Germany, Poland, and Austria, among other European countries. Indeed, these towers are highly sought after.

Secondly, in February 2021, Cellnex announced an agreement with Altice France, a French wireless carrier, and KKR, a private equity firm. The agreement stipulates that Cellnex will acquire their joint venture, called Hivory, which owns 10.5k towers in France, for a price of €5.2bn.

Finally, in November 2020, Cellnex announced an agreement with CK Hutchison, a pan-European wireless carrier, to acquire 24.6k towers throughout Europe for €10bn. This transaction included towers in Italy, the UK, Ireland, Sweden, Austria, and Denmark.

Vantage Towers

Vantage Towers is currently part of British wireless carrier Vodafone. Indeed, Vantage Towers will be the second largest European towers operator with 82k tower sites in ten countries in Europe. Specifically, this will occur once the company separates from Vodafone, through an initial public offering (IPO) in early 2021.

Overall, Vantage Towers operates in Germany, Italy, Spain, Greece, the Czech Republic, Portugal, Romania, Hungary, Ireland, and the United Kingdom. Note that Vantage Towers’ UK operations represent its 50% stake in Cornerstone Telecommunications Infrastructure Limited (CTIL), the UK’s largest tower company.

American Tower

American Tower, up until 2021, only had a relatively small portfolio of 5k towers in Europe. However, in January 2021, American Tower agreed to acquire Telxius Towers, from Telefónica, in a €7.7bn ($9.4bn USD) deal. Specifically, this transaction comprises 30.7k towers, of which 26k towers are in Europe. In turn, Telxius Towers brings American Tower’s total portfolio in Europe to 31k towers.

TOTEM

TOTEM is currently part of French wireless carrier Orange. In February 2021, Orange announced that it is creating a tower company named TOTEM, through a corporate carve-out. Specifically, TOTEM will own and operate 25.5k tower sites across France and Spain.