Market leading mobile network operator, Telekom (owned by Deutsche Telekom) founded their infraco Deutsche Funkturm in 2002, initially as a subsidiary but then restructured into a “sister company” in 2017 with a view to commercialise their assets more actively. Deutsche Funkturm (DFMG) is held under Deutsche Telekom’s GD Towers unit, alongside Austrian towerco, TOWERS Infra Austria, with DFMG helping to steer the new entity.
In July 2022, Deutsche Telekom reached a deal to sell a 51% stake in GD Towers to DigitalBridge and Brookfield which closed in Q1 2023. Deutsche Telekom retains a 49% stake in the entity along with significant majority protection rights, including the ability to appoint two of GD Towers’ five shareholder committee members, including the Chairman.
GD Towers has contracts in place to roll out 5,400 new sites for DT’s opcos in Germany and Austria, with the bulk of such rollout set to take place in Germany.
In 2016, Telefónica carved their 2,350 German ground based towers into a newly created infraco, Telxius, in a deal valued at €587mn (with the operator also transferring Spanish and CALA towers as well as 31,000km of subsea cabling into the infraco). Telefónica subsequently sold a 40% stake in Telxius to investment firm KKR, before selling an effective 9.99% stake to Pontegadea), leaving the operator with a controlling 50.01% stake in the infraco. In June 2020, Telefónica announced the sale of a further 10,100 (primarily rooftop) sites to Telxius for €1.5bn, with the deal also including a BTS commitment for Telxius to add up to 2,400 (primarily greenfield) new sites for the operator. In January 2021. American Tower announced that it had reached a deal to acquire Telxius’ tower business. The deal has since closed adding a further 12,500 sites to American Tower’s German portfolio as well as a build-to-suit pipeline of 2,400 sites.
American Tower entered the German market back in 2012 with the acquisition of KPN’s 2,000 E-Plus towers for €393mn (KPN having since sold E-Plus to Telefónica).
American Tower’s German sites were transferred to ATC Europe, a joint venture formed with PGGM in which the towerco had a controlling 51% stake. Following the Telxius deal, American Tower sold a 48% non-controlling interest in the newly enlarged ATC Europe to CDPQ (30%) and Allianz (18%), with PGGM converting its prior holding in ATC Europe to minority stakes in the towerco’s local German and Spanish operating companies.
Vodafone sold an 81.7% of its stake in its European toweco Vantage Towers to a consortium of investment firms KKR & Co., Global Infrastructure Partners (GIP) and The Public Investment Fund of Saudi Arabia (PIF). The co-control partnership of the MNO, GIP and KKR called Oak Holdings has bought out the minority shareholders in Vantage
Towers and how holds a 89.3% stake. The towerco was delisted at the end of 2023.
Germany - telecom market statistics Q3 2024
In late 2021 Vantage signed an agreement with new MNO market entrant 1&1 to provide at least 3,800 (but up to 5,000) existing sites to 1&1 throughout the country for
the next 20 years. 1&1 missed coverage targets claiming
Vantage Towers has failed to activate 1&1 sites on its infrastructure, leaving the MNO with just five operational 5G sites at end-2022, behind the 1,000 it was required to have under the terms of its spectrum licences. In August 2023 it announced a national roaming agreement with Vodafone’s 5G network in areas that are not yet covered by its own network starting from July 2024 ousting current network partner Telefonica and gradually reducing services. In December 2023 1&1 has announced the activation of its own mobile network and the start to offer services to customers on it.
German broadcast towerco Media Broadcast Group owns a further 450 towers in Germany, and was acquired by Freenet in 2016 for €295mn (around 12x EV/EBITDA).
In October 2023 Phoenix Tower International entered the market announcing it’s buying 220 sites from Novec GmbH, a subsidiary of Netherlands-based Novec BV.
Whilst co-location potential remains strong on Germany’s ground-based towers (DFMG reports a 2.3x co-location ratio, more recently formed Vantage Towers 1.8x ), unique
conditions in the German market means that the tenancy ratio on rooftop sites sits at almost exactly one. Landlords in Germany typically agree rooftop leases on a per operator basis rather than per site basis and as such, the synergies
available from passive sharing on rooftops are greatly reduced. Towercos are working on lease renegotiations to improve the economics.
In November 2019, Deutsche Telekom, Telefónica and Vodafone announced an initiative to jointly cover white spots (primarily in rural areas and along transport routes) which would otherwise be uneconomic to cover.
Each operator will build 2,000 sites which will be made available for the other two players to use via passive sharing agreements.
Vodafone, Deutsche Telekom and Telefónica have also teamed up to improve LTE, 4G and 5G coverage in rural areas and along traffic routes at so called “grey spots” – areas where LTE quality coverage is only available from a single operator. The operators will implement active network sharing across antenna sites using a MOCN approach. Active network sharing agreements are unlikely to be expanded beyond this. New build in the German market remains significant. Vantage Towers has a commitment in place with Vodafone to add 5,500 towers (2,000 of which under the white spot programme) and reports demand outstripping this, Deutsche Telekom rolled out 1,400 new sites in 2021 and over the past four years have built 6,300 new sites. American Tower is set to add up to 2,400 new sites for Telefónica.
