KKR, GIP jointly bid for US$21b Deutsche Telekom unit

KKR, Global Infrastructure Partners (GIP) and Stonepeak Partners have jointly made a binding offer for a controlling stake in Deutsche Telekom’s 20 billion-euro (S$29.1 billion) towers unit, people familiar with the matter said.

They’re competing with a consortium of Canadian investment firm Brookfield Asset Management and Spain’s Cellnex Telecom, which made a confirmatory bid for part of the Deutsche Telekom business, the people said, asking not to be identified because the information is private. 

Deliberations are ongoing and other bidders may still emerge, the people said. Vodafone Group’s listed infrastructure unit, Vantage Towers, is keen on Deutsche Telekom’s towers assets and could make a bid on its own or with a partner, one of the people said. Investment firm DigitalBridge Group has also been evaluating the business, Bloomberg News reported in May.

Representatives for Brookfield, Cellnex, Deutsche Telekom, Stonepeak and Vantage declined to comment. Spokespeople for KKR and GIP didn’t immediately respond to requests for comment.

Shares in Deutsche Telekom rose as much as 2 per cent on Friday (Jun 17). The stock was up 1.6 per cent at the close in Frankfurt, giving the company a market value of 90.2 billion euros. 

Europe’s struggling phone carriers once saw ownership of these network infrastructure assets as a vital part of their business models. Now, under pressure to raise cash and cut the bill for new network investments, they’ve begun to spin off their wireless masts into separate units or sell them outright.

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Private equity firms are drawn to telecoms infrastructure because of its ability to generate steady, long-term returns. KKR raised US$17 billion for its latest global infrastructure fund earlier this year, while GIP is targeting US$25 billion for what would be the world’s biggest pool of capital dedicated to infrastructure investments. 

Cellnex, Europe’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 hasn’t been able to build a presence. BLOOMBERG