This week, Cellnex has announced that it will no longer bid for a stake in Deutsche Funkturm, leaving KKR the last remaining suitor for the German towers unit, valued at around €18 billion.
Deutsche Telekom first began hinting at its desire to sell off a stake in its tower unit late last year, aiming to follow in the footstep of numerous mobile operators worldwide, including European rivals Vodafone and Orange…

This week, Cellnex has announced that it will no longer bid for a stake in Deutsche Funkturm, leaving KKR the last remaining suitor for the German towers unit, valued at around €18 billion.

Deutsche Telekom first began hinting at its desire to sell off a stake in its tower unit late last year, aiming to follow in the footstep of numerous mobile operators worldwide, including European rivals Vodafone and Orange, that had sold off their towers in exchange for much needed quick cash.

By March, the stake sale process was already underway, drawing considerable interest from the likes of Cellnex, American Tower Corporation, and Vodafone’s Vantage Towers. The latter, however, quickly ruled itself out of the running due to anticipated regulatory hurdles, with such a merger potentially creating an enormously dominant market leader within Germany. 

Cellnex, on the other hand, presented a much more natural partner. The infrastructure specialist already owns and operates roughly 137,000 tower sites in various European markets, including the UK, Spain, Italy, France, the Netherlands, and Austria; in fact, in Switzerland and the Netherlands, Cellnex already owns tower businesses in direct partnership with Deutsche Telekom. 

Germany, however, has remained notably out of reach for the Spanish giant. 

By the end of June, however, reports were suggesting that another highly appealing bid had been tabled by a rival consortium, led by US private equity firm KKR. According to sources, the bid would allow Deutsch Telekom to retain control of the towers unit, though gives KKR some corporate governance control.

KKR has been on a major acquisition spree over the last year when it comes to telecoms infrastructure, which investors increasingly view as being a reliable long-term investment. The company notably presented Telecom Italia with a roughly €10 billion takeover offer late last year, which has since fallen through. 

Seemingly in response to this bid by the KKR consortium, Cellnex made its own binding offer for the coveted towers, giving Deutsche Telekom the opportunity to take a stake of less than 10% in Cellnex itself in an effort to sweeten the deal.  

It seems, however, that this was not enough to entice Deutsche Telekom, with Cellnex this week withdrawing its offer, leaving only the bid from KKR remaining, according to sources. 

No official decision from Deutsche Telekom has yet been announced. 

If a deal does materialise for the German operator, the funds raised will likely be used to reduce its debt pile of around €136 billion, as well as to help fund the further rollout of its fibre and 5G networks.

EDIT: Bloomberg is reporting that Brookfield Asset Management Inc. has teamed up with DigitalBridge Group for a last minute bid for the tower company. Brookfield had been previously in discussions with Cellnex for a joint bid.

How would the sale of Deutsche Funkturm impact the dynamics of the German mobile market? Find out from the operators at this year’s live Connected Germany event

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Back in March, Orange Spain and MásMóvil announced their intention to merge, forming a 50:50 joint venture with an enterprise value of roughly €20 billion. 
The deal would create a converged operator with around 7.1 million fixed line customers and 20.2 mobile customers, as well as 1.5 million TV customers. 
Orange’s tower company, TOTEM, would notably be excluded from the merger…

Back in March, Orange Spain and MásMóvil announced their intention to merge, forming a 50:50 joint venture with an enterprise value of roughly €20 billion. 

The deal would create a converged operator with around 7.1 million fixed line customers and 20.2 mobile customers, as well as 1.5 million TV customers. 

Orange’s tower company, TOTEM, would notably be excluded from the merger, as would Orange Bank and MásMóvil’s Portuguese operations. 

Nonetheless, this would represent an enormous dynamic shift for the Spanish telecoms market, consolidating a telecoms market that has long been considered one of the most competitive in Europe and creating a new market leader. As such, any deal is expected to face significant regulatory scrutiny, but before this can even be considered a formal agreement needs to be made – a process that is proving slower than first anticipated, largely due to delays in achieving the required financing. 

Last month, following the requisite due diligence, the two operators announced that they were seeking a €6.5 billion loan to help facilitate the merger. However, with the global economy currently experiencing surging inflation and widespread geopolitical uncertainty, banks are being cagier than ever when it comes to investments in 2022. 

According to sources, French banking group BNP Paribas has been leading the financial operation to get the loan from around a dozen total banks, including Societe Generale, Crédit Agricole, JP Morgan, Goldman Sachs, Santander, BBVA, and La Caixa.

Now, reports from El Economista suggest that the financing deals are expected to be finalised later this week, with anonymous sources telling the newspaper that “if everything goes as expected, the agreement [with up to a dozen banks] could be done next week”. 

If such financing does materialise, then the merger proposal will likely proceed directly to the European Competition Commission for approval, likely bypassing Spain’s National Commission for Markets and Competition due to its sheer scale. 

Whether or not it will receive the green light without incident is unclear, with analysts previously suggesting that a tie-up between Vodafone and MásMóvil would be more likely to succeed, potentially requiring less significant concessions to retain a high level of market competition.

However, European regulators have been somewhat mellowing in recent years and, given the highly crowded nature of the Spanish market, it is highly unlikely that they will block the deal outright or apply severe restrictions.

In fact, even Vodafone Spain, which will be left in third place if the market goes head, has been positive about the deal, suggesting that the market has long been ripe for consolidation and that the merger will open up the market to additional investment. 

Today, reports from Bloomberg suggest that the government is seeking yet more information about billionaire Patrick Drahi’s increasing stake in BT. 
The official deadline for the national security investigation’s conclusion was roughly a week ago, with the government now suggesting it needs more time to reach a conclusion.
French-Israeli billionaire Patrick Drahi first took a stake in BT back in the summer of 2021, specially forming Altice UK in order to buy a 12…

Today, reports from Bloomberg suggest that the government is seeking yet more information about billionaire Patrick Drahi’s increasing stake in BT. 

The official deadline for the national security investigation’s conclusion was roughly a week ago, with the government now suggesting it needs more time to reach a conclusion.

French-Israeli billionaire Patrick Drahi first took a stake in BT back in the summer of 2021, specially forming Altice UK in order to buy a 12.1% stake for £2 billion. 

The investment immediately triggered warning bells for BT’s management, with many onlookers suggesting that this initial investment from Drahi was merely a prelude to a larger takeover attempt later in the year. 

Drahi, however, was quick to allay these fears, saying that he had no intention of launching a takeover bid. Following this statement of intent, UK law dictated that Drahi could not further increase his stake for six months, giving BT a window in which to shore up their defences.

But when the six-month deadline arrived, BT were not faced with the dreaded takeover bid but rather Drahi’s next step in stake-building, with the billionaire seeking to increase his stake from 12.1% to 18%. Once again, Drahi said that he had no interest of taking over BT, thereby removing his ability to increase his stake for another six months. 

However, before this latest deadline could arrive in June this year, the UK government intervened, with business secretary Kwasi Kwarteng using new powers granted by the National Security and Investment (NSI) Act 2021 to investigate stake increase on the grounds of national security. The results of the probe could see conditions imposed upon the deal, or even block it entirely.

This investigation was expected to have concluded by the start of July, but it seems the government wants yet more information before making their decision. A new deadline for the investigation’s conclusion has yet to be announced. 

A similar investigation into Nexperia’s purchase of Newport Wafer Fab, announced at a similar time to the BT probe, is also being delayed.

The investigation comes at a time of great uncertainty for both BT and the UK government itself. 

Last week saw UK ministers resign in droves, forcing the resignation of prime minister Boris Johnson and triggering a leadership race within the Conservative party. Kwarteng was notably not among the list of over 50 MPs who resigned.

Meanwhile, BT could be facing its own internal uprising, with the Communication Workers Union (CWU) confirming at the end of last month that workers were prepared to strike after BT announced that workers would receive a flat raise of £1,500 for 2022 – a pay cut in real terms, given the UK’s inflation of over 11%. 

At the end of last week, the CWU said that BT had until the 13th of July to enter formal negotiations over pay, or else see strikes implemented. 

« In short, next week we will either enter into serious negotiations with the company or we will announce strike action. The ball is firmly in the company’s court, » said the CWU in an email to members. 

Want to find out all the latest action from the UK telecoms industry? Join the discussion with the operators themselves at this year’s live Connected Britain conference 

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