Communications Towers M&A Roundup – What’s for Sale?

Dgtl Infra provides a roundup of potential forthcoming communications towers M&A activity based on recent reports and market speculation. Tower infrastructure owners and providers including Deutsche Funkturm, TDF Infrastructure, Radius Global Infrastructure, BAI Australia, Vodafone New Zealand, Spark TowerCo, Globe Telecom, and Protelindo, all make the communications towers M&A roundup list.

Also, Dgtl Infra recently put together a list of the Top 100 Cellular Towers Companies in the World as of 2023, which is available here.

With reference to recent market reports, below is Dgtl Infra’s roundup of possible near-term communications towers M&A activity:

Deutsche Funkturm – Germany

Deutsche Funkturm (DFMG), Germany’s largest tower company and a wholly-owned subsidiary of Deutsche Telekom, has been named in multiple reports regarding a potential sale. Firstly, according to press reports from Reuters, Deutsche Telekom, through investment bank Goldman Sachs, has commenced the sale process of its towers business. The sale could value Deutsche Telekom’s 40.6k sites at around €18bn ($19.9bn USD).

• Potential Buyers Named: Cellnex, American Tower, Vantage Towers, and TOTEM (Orange)

Secondly, according to press reports from Bloomberg, Brookfield Asset Management is discussing a potential joint offer with Cellnex for Deutsche Telekom’s towers business. Furthermore, the report states that any transaction could value the towers unit at around €20bn ($21.4bn USD).

• Potential Buyers Named: Cellnex, Brookfield, DigitalBridge, Stonepeak Infrastructure, and Vantage Towers (note that DigitalBridge owns a ~4% stake in Vantage Towers)

Reportedly, binding bids are due towards the end of June 2022.

Company Overview

Deutsche Funkturm operates 33.5k towers in Germany and has ~47k tenants with equipment on its towers, equating to a tenancy ratio of ~1.4x.

READ MORE: DigitalBridge, Brookfield Buy 51% of Deutsche Telekom’s Towers

Additionally, Deutsche Funkturm’s sites are ~30% ground-based towers and ~70% rooftop sites.

TDF Infrastructure – France

TDF Infrastructure, the second largest independent tower operator in France, according to press reports from Reuters, could have a change in its largest shareholder. Reportedly, Brookfield Infrastructure, which invested in TDF in March 2015, has hired investment banks, Citigroup and Credit Suisse, to explore selling its 45% stake in the business. The stake sale could value TDF Infrastructure at up to €5bn ($5.3bn USD).

Other key shareholders of TDF Infrastructure include PSP Investments, APG Asset Management, and Arcus Infrastructure, who together own a combined 45% stake in the company. Additionally, Crédit Agricole Assurances controls the remaining 10% interest.

Reportedly, PSP Investments has hired Lazard, an investment bank, to evaluate whether it should sell its stake alongside Brookfield. In contrast, APG Asset Management has decided to retain its holdings in TDF Infrastructure.

Company Overview

TDF Infrastructure operates 7.8k active multi-purpose towers & rooftop sites and a national fiber backbone spanning more than 3.1k miles (5.0k kilometers) of fiber in France. Specifically, the business has three primary segments: i) telecom site hosting, ii) wholesale fiber-to-the-home (FTTH) networks, and iii) television and radio broadcasting.

READ MORE: Brookfield Infrastructure Details Digital Portfolio Companies

For the 12-months ending December 31, 2021, TDF Infrastructure reported revenue of €731.7m and EBITDAaL (EBITDA after Leases) of €412.2m. Therefore, the company’s EBITDAaL margin was 56.3%.

Radius Global Infrastructure – United States

Radius Global Infrastructure (NASDAQ: RADI), a ground lease aggregator, owning property interests that are leased to wireless carriers and tower companies, has been named in press reports from Bloomberg as mulling its options, including a sale. Presently, the company trades with a market capitalization of ~$1.3bn.

Company Overview

Radius Global Infrastructure owns a portfolio of 6.3k sites in 21 countries, which together comprise $125.4m of annualized in-place rents.

READ MORE: Radius Global Infrastructure Eyes $400m of Acquisitions

In Q1 2022, Radius Global reported revenue of $30.6m, a 5.5% increase quarter-over-quarter, and adjusted EBITDA of $8.7m, a 2.3% decrease quarter-over-quarter. Therefore, on an annualized basis, the company generates revenue of $122.4m and adjusted EBITDA of $34.8m.

BAI Australia – Australia

BAI Communications (BAI) is a provider of distributed antenna systems (DAS), small cells, and towers, which is backed by the Canada Pension Plan Investment Board (CPP Investments), Alberta Investment Management Corporation (AIMCo), and Kindle Capital.

READ MORE: CPP’s BAI Communications Gets $2.0bn, Acquires Mobilitie

According to press reports from the Australian Financial Review, CPP Investments has put BAI’s Australian broadcast towers unit, known as BAI Australia, up for sale, at a valuation of A$2.0bn+ ($1.4bn+ USD), through a process being run by Barrenjoey Capital. Overall, BAI Australia owns 774 towers which produced A$285m ($201m USD) of revenue in FY 2021.

Additionally, according to press reports from The Australian, the sale process has attracted interest from only two potential buyers.

Vodafone New Zealand TowerCo – New Zealand

Vodafone New Zealand, which is owned by Infratil and Brookfield, according to press reports from Bloomberg and the Australian Financial Review, is considering selling 80% of its 1,484 mobile towers in an auction process run by UBS and Barrenjoey Capital. The valuation being contemplated could reach up to NZD 1.5bn ($954m USD).

• Potential Buyers Named: John Laing Group, Ontario Teachers’ Pension Plan (OTPP) / New Zealand Superannuation Fund (jointly), Infrastructure Capital Group (ICG), DigitalBridge, American Tower, and Northleaf Capital / InfraRed Capital Partners (jointly)

Overall, Vodafone New Zealand’s towers have an average lease term of ~13 years. Additionally, 290 more sites are anticipated to be built by the year ending March 2027.

Finally, Vodafone New Zealand is expected to generate EBITDA of more than NZD 51m ($32.5m USD).

Spark TowerCo – New Zealand

Spark New Zealand, a wireless carrier and fixed broadband provider in New Zealand, has established Spark TowerCo, into which Spark transferred its passive mobile tower assets comprising 1,263 sites.

In April 2022, Spark, through investment banks Jarden and Forsyth Barr, commenced a process to explore the sale of up to a 70% stake in Spark TowerCo. As such, the company intends to retain at least a 30% shareholding in the new business and become a long-term anchor tenant via a 15-year sale-and-leaseback agreement.

READ MORE: Spark to Establish TowerCo in New Zealand with 1.5k Mobile Sites

For FY 2023, Spark TowerCo is projected to generate EBITDA of NZD 35m ($22.3m USD).

Globe Telecom – Philippines

Globe Telecom, a wireless carrier in the Philippines, according to press reports from Bloomberg, is considering selling ~50% of its telecommunications tower portfolio, representing 6.0k towers, through a sale-and-leaseback transaction. Reportedly, the deal could be worth up to $1.5bn USD, which implies a valuation of $250k per tower.

In April 2022, PLDT, another wireless carrier in the Philippines and a key competitor to Globe Telecom, agreed to sell 5.9k telecom towers for $1.47bn USD (77bn Philippine pesos). This transaction involved two buyers:

• EdgePoint Infrastructure: independent tower company in Southeast Asia, which is a portfolio company of DigitalBridge
• edotco Group: regional tower company in Asia, which is a 63%-owned subsidiary of Axiata Group

READ MORE: DigitalBridge’s EdgePoint, edotco Spend $1.5bn on PLDT’s 5.9k Towers

Overall, PLDT’s two tower portfolios, collectively 5.9k sites, were valued at a multiple of ~20x EV/EBITDA and $248k per tower.

Protelindo (Sarana Menara Nusantara) – Indonesia

Protelindo (Sarana Menara Nusantara), according to press reports from Bloomberg, is exploring a 15% to 20% minority stake sale, which could raise up to $1bn USD. Specifically, the potential sale is targeting pension and infrastructure funds. Presently, the company trades with a market capitalization of ~$3.2bn USD.

In November 2021, Protelindo completed the acquisition of a 94% stake in Solusi Tunas Pratama (STP), the fifth-largest tower company in Indonesia for $1.17bn USD (16.7 trillion Indonesian Rupiah). Particularly, Protelindo purchased STP’s 6.8k towers and 5.0k miles (8.1k kilometers) of terrestrial fiber and subsea cables.

READ MORE: Protelindo Buys 6.8k Towers from STP in Indonesia for $1.2bn

Protelindo (Sarana Menara Nusantara) operates 29.0k towers in Indonesia, which have 54.6k tenants, equating to a tenancy ratio of 1.88x. Within Indonesia, 55% of the company’s towers are located in the Java region, while 45% are in the ex-Java region.

Want Even More on Communications Towers?

Check-out Dgtl Infra’s Communications Towers Roundup – May 2022 for more towers M&A activity and partnerships announced during the month of May 2022.