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Summary
- Telecom companies Cellnex and Deutsche Telekom have entered into an agreement to merge their tower businesses in the Netherlands.
- The two companies will also fund an independently managed Digital Infrastructure Vehicle.
- Cellnex will hold majority shares in the newly formed company.
Spanish and German telecommunications infrastructure company Cellnex Telecom S.A. (BME: CLNX) and Deutsche Telekom AG (ETR: DTE) have agreed to merge their tower business. The combination of T-Mobile Infra BV, Deutsche Telekom’s tower business, with Cellnex NL, Cellnex's subsidiary, will help Cellnex in becoming the largest independent cell mobile tower company in the Netherlands, which will operate 4,314 sites.
Financial Considerations
A 15-year long-term provision contract will be signed by both the companies, which will be having automatically renewable clause for a period of 10 years.
T-Mobile Infra BV will be transferred to the Digital Infrastructure Vehicle (DIV) fund, a newly established and independently managed fund, in return for a cash payment of €250 million ($302.7 million). Also, the €250-million cash will be contributed to the DIV fund along with the assets of T-Mobile Infra, consisting of 3,150 sites.
Deutsche will be the owner of 38 per cent stake in Cellnex Netherlands. Cellnex is permitted to contribute €200 million of capital to the fund, as per the agreement, along with Telekom’s contribution of approximately €400 million worth of assets. The remaining 62 per cent will be held by Cellnex.
A roll out of 180 new sites will also be included in the deal. Once this is completed, the transaction will amount to an estimated EBITDA of €63 million (IFRS16) and an increase of €30 million of Recurring Leveraged Free Cash Flow (RLFCF) to the group.
(Image source: ©Kalkine Group 2020)
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CEO’s comments
Tobias Martinez, CEO of Cellnex, said that the transaction had exemplified the strength of Cellnex’s partnerships with its customers. The company has successfully created an alliance with Deutsche Telekom in The Netherlands, similar to Cellnex’s partnership with Sunrise in Switzerland. This allows Cellnex to consolidate its position as a key player in the Dutch market.
Since the agreement also involves Cellnex gaining assets in exchange for equity, the company is presenting a new growth operation to the market that preserves and protects Cellnex’s capacity to take on more projects by not using financial resources from the group.
About Cellnex
Barcelona-headquartered Cellnex Telecom was formed in 2015 and is one of the leading operators of wireless telecommunications and broadcasting infrastructures in Europe. It has a total portfolio of approximately 70,000 sites.
The areas in which Cellnex operates are Austria, Denmark, France, Spain, Ireland, Italy, Netherlands, Portugal, Switzerland, and the UK.
Previous acquisitions of Cellnex in Netherlands
In 2016, the company acquired Protelindo and Shere Group and initially entered the Netherlands market. In 2017, Cellnex bought Alticom. Currently, the portfolio of the company consists of 984 sites through an investment of roughly €492 million.
