Deutsche Telekom has sold 51 percent stake in GD Towers, the telecom tower assets in Germany and Austria, to Digital Bridge and Brookfield at 17.5 billion euros enterprise value on a cash and debt free basis.

The valuation represents EV/ pro forma adjusted EBITDA AL 2021A multiple of around 27. Deutsche Telekom has retained 49 percent stake in the telecom tower business, said a news statement from Deutsche Telekom.

“Deutsche Telekom once again delivers on its strategic agenda,” said Tim Hottges, CEO of Deutsche Telekom. “The deal allows us to continue improving Deutsche Telekom’s undisputed network leadership in Germany and benefit from further value upside of the towers business.”

Brookfield is already a leading global infrastructure investor, with approximately 200,000 telecom tower and rooftop sites under management globally.

GD Towers, which has around 800 employees, operates more than 40,000 sites in Germany and Austria and has a track record in delivering new sites for its anchor tenant Telekom Deutschland and securing revenues with third party customers. The company generated 1.1 billion euros of pro forma revenues in 2021. Pro forma adjusted EBITDA AL 2021 amounted to 640 million euros.

The current GD Towers leadership team with Bruno Jacobfeuerborn (CEO) and Thomas Ried (CFO) will continue running the business after closing. Deutsche Telekom retains significant minority protection rights including the right to appoint two out of five members of the Shareholder Committee, including the initial chairman. Deutsche Telekom also has the right to regain control and reconsolidate GD Towers in the future.

Telekom Deutschland and Magenta Austria will enjoy access to the passive mobile infrastructure of GD Towers via long-term (around 30 years) lease agreements. Amongst other these agreements afford the network operators inflation protection with annual site lease increases indexed to the respective consumer price indices at a discount of 15 percent but capped at 3 percent, guaranteed access to critical sites, preferential access to free site capacity for future network upgrades, industry-leading operational service levels and buyback rights. Both Telekom Deutschland and Magenta Austria have secured contractual commitments from GD Towers for around 5,400 new sites through 2026 and prioritized capacity for radio access network modernization through 2028.

The transaction will reduce Deutsche Telekom’s financial leverage by 10.7 billion euros (c. 0.2x EBITDA AL) and net debt including leases by 6.5 billion euros (c. 0.1x EBITDA). The incremental headroom will mainly be used for deleveraging at the Deutsche Telekom Group level and to accelerate the path towards its targeted 50.1 percent share capital interest in T-Mobile US.

Spain’s Cellnex, which had been teaming up with Brookfield and was seen as a top contender for a stake, had withdrawn from the race.

Deutsche Telekom, according to media reports, also received a competing offer by a consortium led by KKR & Co.