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Tower sale surge continues with €80m Bouygues Telecom deal

Bouygues Telecom is the latest mobile operator to be caught in the ongoing wave of tower sales, as MNOs seek to drive down operating costs and shift infrastructure spending to future platforms, such as the impending 5G.

The third French mobile operator is selling 230 of its mobile towers to European towerco Cellnex Telecom for €80m in the initial phase of the deal, but this could potentially increase to 500 sites during the next stage of negotiations. The tower sites are located largely in rural areas of France, with a select few in more urban areas.

This is not a significant dent in Bouygues’ total of 15,000 sites across France, but the deal is significant because it represents Cellnex’s first move into the country. Like towercos in other parts of the world like the US, Cellnex is branching into new countries to increase its economies of scale and take advantage of MNOs’ changing priorities. The company also sees this geographical expansion as a more efficient way of diversifying revenues, rather than moving into small cells or active infrastructure, as some other tower operators are doing.

However, the firm is also eyeing these new revenue streams, and the Bouygues deal could be a stepping stone into new infrastructure service markets. Cellnex says the deal opens up a long term industrial collaboration with Bouygues, to address the challenge of mobile broadband based on 4G and 5G, and it includes a contract to provide services to Bouygues for the next 20 years.

“We trust that this agreement opens the door to extend it in the future to other areas such as construction of new towers on demand (build to suit), or the deployment of new technologies based on ‘small cells’ for mobile broadband extension,” said Cellnex CEO, Tobias Martínez. “This deal strengthens our European scope and thus our ability for building a partnership with customers operating in different European markets to whom we can offer telecom connectivity solutions.”

Cellnex says another of its key focus areas is on developing smart city systems, and claims to be currently deploying an IoT network ecosystem in Spain.

The towerco, which has dubbed itself the ‘American Tower of Europe’, also has assets in Spain, Germany, the Netherlands and Italy. The company bid for Telecom Italia’s tower subsidiary Infrastrutture Wireless Italiane (INWIT) earlier this year, as part of a consortium including F2i and EI Towers (owned by Mediaset), but the latest statement from Cellnex said there had been no progress here as Telecom Italia had put negotiations on hold. American Tower was also rumored to be interested but has not submitted a bid.

Back in May, Cellnex bought 261 mobile sites from Protenlindo Towers in the Netherlands, and last year Italian mobile operator Wind sold its towers to Cellnex, netting €693m for a 90% stake in the unit, which controls 7,377 sites.

Francisco Reynés, Cellnex’s chairman said: “These operations consolidate the model of a neutral and independent telecommunications infrastructure operator focused on growth opportunities in Europe. This was the objective which underpinned the company’s IPO one year ago: gaining flexibility and leeway in order to seize the opportunities that we understood the market could offer us and which we are seeing confirmed with today’s deal with Bouygues, or the most recent ones with CommsCon in Italy and Protelindo in Netherlands”.

In other recent European M&A news, Hutchison and VimpelCom have proposed an offload of assets, including 5,000 towers, to make the planned merger of their Italian units – 3 Italia and Wind – more attractive to EU antitrust regulators. The EU was reported to be close to approving the deal, as the offload of towers and spectrum would facilitate a new entrant, probably to France’s Iliad. VimpelCom itself recently spun off its tower infrastructure in Russia into a separate subsidiary, National Towers Company.

Deutsche Telekom is another operator looking at opportunities for its tower assets, with an auction set to take place later this year. This is expected to raise between €4bn and €5bn, including debt. Back in 2012, Crown Castle bought Deutsche Telekom’s US tower operations for $2.4bn and, also in Germany, Telefonica Deutschland sold 2,350 towers to Telxius in April this year.

Also this week, French regulator Arcep published results of its latest mobile services survey; with Orange preserving its top spot, followed by Bouygues in second, and SFR in third.

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