Following a similar deal in Norway and Finland, Nordic operator, Telia has agreed the sale of a 49% stake in its Swedish tower business to infrastructure investor, Brookfield, and pension fund, Alecta. Brookfield and Alecta will acquire the stake for 5.5bn crowns (c. €225mn) equating to an enterprise valuation of 11.2bn crowns (c. €458mn).
Following in the footsteps of Europe’s other operators looking to unlock the value of their passive infrastructure, Sweden headquartered Telia had first announced it was exploring the potential monetisation of its tower portfolio back in their Q4 2020 results. Their ground-based tower portfolios in Norway, Finland and Sweden were carved out into separate towerco entities and moved under a new business unit, Telia Asset Management, which was tasked with bringing in external investment.
Norway and Finland were the first to be monetised, with Telia reaching a deal with Brookfield and Alecta in June last year (read TowerXchange’s coverage of the deal). Sweden was always expected to follow suit.
From a tower sharing perspective, Sweden is a more complex market than Norway and Finland with a number of joint ventures in place (see figure two). However, unlike their Nordic counterpart, Telenor, Telia had opted to exclude their ownership in towerco joint ventures from their initial tower carve out and monetisation plans. Such a stance has made it easier to get a deal done. Their deal with Brookfield and Alecta in Sweden includes the MNO’s 1,600 towers wholly owned by the operator, but does not include their 50% stake in SUNAB – the 3G JV the operator has with Tele2. SUNAB is understood to own around 4,000 towers, and with 3G being sunsetted in the country, the joint venture is set to be wound down. It is widely expected that the towers will be split between the parent companies, offering a further 2,000 sites which Telia could look to monetise.
In addition to their towers held by SUNAB, further monetisation in Finland, Norway and Sweden could come from the sale of a stake in their rooftop sites. In Telia’s Q2 21 results call, CEO Allison Kirby hinted that they may look to accelerate the monetisation of their rooftop and Swedish assets – the latter has already been achieved, could the rooftops be next?
Telia spoke in their 2021 end of year results about being on track to create the "region's first meaningful tower company with an enterprise value of €2.6bn in partnership with one of the world's largest owners and operators of towers" but gave no further details about any expansion beyond this.
In Denmark, Telia’s towers are held by TT-Network, their 50:50 JV with Telenor. With the JV’s scope having been extended to include 5G it appears that it is very much here to stay, but with Telenor including their stake in the JV under their Telenor Tower Holding unit, perhaps could Telia also see this as an asset to monetise? TT-Network is understood to own around 1,200 ground-based towers and 3,100 rooftop sites.
Telia also has a presence in the Baltics and has hinted that their Latvian towers could move under Telia Asset Management. For now, towerco activity in the Baltic region has been limited but a move by a major operator such as Telia could be the catalyst to it opening up.
Whether the agreements with Brookfield and Alecta could extend to the Baltics (or Denmark) remains to be seen. Brookfield has a proven appetite for the towerco asset class and owns the UK’s Wireless Infrastructure group, France’s TDF and India’s Summit Digitel in addition to its stake in Telia’s tower portfolios.
Figure 1: Estimated tower ownership in Sweden
Figure 2: Network sharing joint ventures in Sweden
