KKR GIP and Stonepeak bid $21bn for DT towerbiz

Would give controlling interest in long term steady earner

KKRGlobal Infrastructure Partners (GIP) and Stonepeak Partners have jointly made a binding offer of โ‚ฌ21 billion for a controlling stake in the Deutsche Telekom (DT) towers unit. A Bloomberg report said the private equity/alternative investor pact is in direct competition with a consortium of Canadian investment firm Brookfield Asset Management and Spainโ€™s Cellnex Telecom, which made a confirmatory bid for DTโ€™s tower company.

Auction

DT created the tower auction in March, with Goldman Sachs handling the sales process for a bundle of 40,600 masts. Deliberations are still proceeding and other bidders, such as the American Tower Corp may still emerge, Bloombergโ€™s sources said. One insider said Vodafone Groupโ€™s infrastructure unit, Vantage Towers, is keen on DTโ€™s towers assets and could make a bid on its own or with a partner. Investment firm DigitalBridge has also been evaluating the towerco sector and in March it announced a deal to buy Belgian mobile operator Telenetโ€™s towers for โ‚ฌ745 million. Bloomberg News reported in May that further acquisitions are in order.

Merger frenzy

Cellnex, Europeโ€™s biggest mast operator, already jointly owns towers with Deutsche Telekom in Switzerland and the Netherlands. Germany is the only major European market where Cellnex hasnโ€™t been able to build a presence. In May Nicholas Roy, CEO of Orange Groupโ€™s spin-off tower company Totem, told Mobile Europe that as the โ€˜uncontested fibre optic leader of Europeโ€™ he was ready for deals. Private equity firms like buying telecoms infrastructure because it generates steady, long-term returns, whereas Europeโ€™s mobile operators need ready cash to fund their immediate expansion. KKR raised $17 billion for its latest global infrastructure fund earlier this year, while GIP is targeting $25 billion for what would be the worldโ€™s biggest pool of capital dedicated to infrastructure investments.