According to Bloomberg, it looks like a marriage made in heaven with European phone companies selling off their “mobile masts,” i.e., towers, and the major American towercos always looking to add to their inventories. But deals are being rolled up by international players instead. Spain’s Cellnex Telecom SA and the Aussie-based Macquarie Group Ltd., KKR & Co. and others are making a clean sweep of European tower assets.
Bloomberg reports that price is a big factor, in the towercos’ uncharacteristic stand-offishness, as the international lust for reliable, steady income streams has overheated the market. In short, the U.S. majors don’t see a deal in the mix of offerings and are wary of the co-location opportunities that make tower ownership profitable by American standards.
“The American tower companies say, ‘OK, Europe is fine at the right price, but prices are not where we need them to be, so we think the opportunities elsewhere are more attractive,”’ Nick Del Deo, senior analyst at U.S. research firm MoffettNathanson told Bloomberg.
According to TowerXchange, 59.4 percent of Europe’s towers will be owned by towercos by Q421. Hutchinson, for example, recently announced that by year-end it anticipated carving out its 28,500 European sites into captive towerco CK Hutchinson Networks. The towerco plans to start with a footprint in the UK, Italy, Sweden, Denmark, Austria and Ireland, and tenancy ratio of 1.2.
CK Hutchison Networks has yet to define whether the scope of its tower company will include power systems (batteries, cooling, generators and grid connections), which Hutchison says will be determined on a country-by-country basis. Similarly, a number of the 28,500 sites are part of joint ventures, so precise details of the carve-outs vary market to market.
Vodafone will eventually build out or own 61,700 towers in ten European countries, and Hutchinson will acquire/build/own a further 28,200 towers in six countries.
August 30, 2019
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