TowerXchange’s analysis of the independent tower market in Europe

The summer of 2018 was dominated by the activities of European mobile network operators, with the Altice sale reaching its conclusion and Vodafone announcing the potential sale of as many as 55,000 towers across Europe, we’re seeing a significant increase in the number of European towers available for co-location.

Altice has entered into an ‘exclusivity agreement’ with KKR for the sale of a 49.99% stake in a new French towers business – SFR TowerCo. The transaction, expected to close in Q418, will include 10,198 sites and values the company at around €3.6bn, a valuation which is 18x the company’s pro forma EBITDA for 2017, bolstering the view that the investment community is chomping at the bit for stable European telecoms assets, and willing to accept a lower IRR in favour of steady growth. 

In addition, there is a build-to-suit agreement in place between SFR and SFR TowerCo for approximately 1,200 new sites, with SFR TowerCo expected to generate @€250mn in additional proceeds within the next four years.

As well as selling 49.99% of its French towers, Altice has also sold a 75% stake in its newly formed Portuguese towers business ‘Towers of Portugal’ to a consortium including Morgan Stanley and Horizon Equity Partners. Having closed in September 2018 and comprising 2,961 towers, Towers of Portugal is valued at €660mn, or as much as 18.9x pro forma EBITDA for 2017. As with the French towerco, the deal also includes a build to suit agreement for a further 400 new sites for Altice’s Portuguese opco MEO (part of Portugal Telecom) over the next four years.

On the back of this news, Vodafone’s incoming CEO, Nick Read, has put the cat among the pigeons by mooting potentially the biggest tower sale in European history. Vodafone owns 110,000 towers across Europe of which they directly control 55,000, which have been valued at around €12bn by Barclays.

Speaking at the Goldman Sachs conference in New York, Read, who takes the reins in October, opened up the possibility of reversing the stance of his predecessor, Vittorio Colao, and selling the tower assets if the right deal could be struck. There’s no doubt that various packages of towers will appeal to both towercos and investors in the space, and if the deals go ahead they could shift the tower landscape in Europe quite fundamentally. 

Finally, we’re seeing an increasing amount of convergence between towercos and other infrastructure as a service offerings in Europe as they ramp up ahead of 5G rollout. Digital Colony have added a second European acquisition to their portfolio, UK-based Stratto, who specialise in in-building small cells and DAS. Spanish broadcast towerco Axion have agreed a deal with Spanish gas supplier Enagas to create a joint venture, Axent, which will commercialise 5,000km of fibre in Spain and Cellnex has acquired fibreco Xarxa Oberta de Catalunya, giving them access to around 3,000km of fibre in Spain. 

The current state of play in Europe 

Let’s review the current state of the European tower industry country by country. A couple of caveats before you start reading: firstly, TowerXchange includes Russia, Turkey, the CIS and former CIS States in our definition of Europe. Secondly, our definition of a “tower” is slightly different in Europe – when presenting tower counts, we are always interested in sites and structures that can accommodate multiple tenants, and which towercos might consider investible. While our tower statistics on emerging markets focus on ground based towers, in Europe we are equally interested in counting rooftop sites, but we exclude multi-tenant DAS, microcells and small cells from headline counts, and are working to complete national small cell counts in the near future.

TowerXchange tower counts are the result of qualitative market research and the aggregation of our own and other research firms’ work – as such they should be treated as estimates. We assert copyright over data sourced to TowerXchange – you will need to request our permission to quote our data and there may be a charge to do so.

Figure two: breakdown of ownership of Europe’s ~600,000 telecom tower and rooftop structures as at the end of Q3 2017

Figure 3: Projected tower ownership in Europe 

CIS

Until this point the CIS has been relatively low on tower activity. In 2017 VEON decided to bring over 12,000 towers to market in Ukraine, Kazakhstan, Armenia and Georgia. We did believe that this deal was quietly scrapped after the sale of VEON’s Russian towers was cancelled in May 2017, but are now aware that VEON may be courting a new buyer with experience in the region.

Emerging from recession after political instability, Ukraine is a growth market with 3G yet to be extensively rolled out and 4G still on the horizon, meaning a potential 2,500 PoP could be added in the next three years.

In 2016 Turkcell carved out and transferred 811 lifecell towers to UkrTOWER, the local subsidiary of their captive towerco Global Tower. UkrTOWER’s current site count is 1,201, including a number of in building solutions, and the company boasts a healthy tenancy ratio. Outside of UkrTOWER, there are multiple structures available for co-location in the market, so there is a significant margin for error in our site counts. While all parties agree VEON has around 3,500 sites, around 60% of which are rooftops and 40% ground based towers, our best estimate is that Kcell owns around 5,500 towers and rooftops, with Altel and Tele2 combining a total of around 4,200 towers and rooftops. Third party structures make up around 30% of Kazakhstan’s mobile networks, and total at least 1,500, perhaps significantly more.

Georgia and Armenia consist of around 3,000 and 2,200 sites respectively. Around 65% of sites are rooftops, but less alternate site typologies are used than in Kazakhstan: just a handful of broadcast tower co-locations. 

 

Estimated count of owned towers and rooftops

Belarus

Global Tower has recently taken control of Turkcell’s towers in Belarus, where they have owned subsidiary BeST since 2008. Global Tower currently operates 828 towers in the country under the name BelTower.

Czech Republic

With an ongoing project to decommission 35-40% of the country’s parallel infrastructure, TowerXchange estimate there are around 10,200 active cell sites in the Czech Republic’s telecom network, of which only around a quarter are ground based towers, with the balance being rooftops and IBS.

CETIN (Česká Telekomunikační Infrastruktura), an infraco carved out of O2, has 4,800 towers and 750 micro sites. CETIN’s business model includes all the physical assets which used to belong to O2, including active equipment and 38,000km of fibre, the MNO having been acquired by PPF and the infrastructure business spun off. CETIN absorbs O2’s RANsharing venture with T-Mobile, which operates under the MORAN model.

Rumours that Macquarie-owned České Radiokomunikace (CRa) will come to market in 2018 have intensified. With an EBITDA of €63mn, the asset could fetch as much as €800mn for 800 towers in the Czech Republic. Macquarie bought the towerco for €574mn in 2010 and has attempted to sell it unsuccessfully at least twice since then. 

Denmark

Infrastructure sharing is second nature in Denmark, where Telia and Telenor formed active infrastructure sharing joint venture TT-Network. There are around 4,500 towers in Denmark, with co-location management agreements managed through KPR Consult. Falck operates a small towerco in the country with around 75 towers, while Teracom operates the country’s broadcast towers.

There is little possibility of sale and leasebacks in Denmark in the short term, but don’t discount the possibility in the medium to long term, with TT Networks working to streamline operations quite possibly in advance of a divestiture.

Finland

There are around 9,576 towers in Finland, around half of which are owned by incumbent operator Elisa, with the balance distributed across the other MNOs Telia and DNA. An active infrastructure sharing joint venture between Telia and DNA increases the efficiency of providing coverage to the sparsely populated Northeastern region.

Digita operates Finland’s broadcast network, with 27 high masts and 530 smaller masts and was acquired in April 2018 by Digital Colony.

Current site numbers in France

France

There are just over are 52,298 sites (ground based towers and rooftops) in France, of which just 32% remain operator-captive. The remainder are divided among three independent towercos and one new MNO carve out towerco.

Broadcast-telecom hybrid TDF has 7,728 telecom towers as well as an established broadcast business and growing fibre interest.  In December 2016 American Tower announced the acquisition of FPS Towers for €697mn, a deal which closed in February 2017, gaining them a significant foothold in the market with 2,472 towers. Cellnex have bought into the French market having acquired 500 towers from Bouygues Telecom in two transactions in 2016, the first of which was for 230 towers at a valuation of €80mn and the subsequent tranche for 270 towers for €697mn, and in January 2017 they signed a deal with the aforementioned governing the transfer of 1,800 existing sites and 1,200 new build towers for a total of €354mn, giving Cellnex a good presence in France and a solid anchor tenant. Now Altice’s new SFR TowerCo becomes France’s first carve-out towerco, with 10,198 more towers becoming available for co-location. 

Entering the market with 10,198 sites allows SFR TowerCo to leapfrog the current largest towerco in France, TDF, which has 7,728 towers, as well as Cellnex (with 2,000 towers and another 2,100 in the pipeline) and American Tower with 2,472 towers.

In terms of MNO activity in the market, reports in the French press that Orange and Iliad’s Free are teaming up to extend and deepen their infrastructure sharing agreement past the 2020 deadline may have an impact on France’s towercos, but the sheer volume of new sites needed in France, as well as the quality of tenants, keeps the market buoyant. According to French site BFM Business “By 2020, Orange, SFR and Bouygues must install another 50,000 antennas [in France]. Free, who entered the market six years ago, will have to catch up and install around 10,000.”

There has also been recent activity in the broadcast vertical of the French market. With TDF acquiring ITAS for a reported €100mn (420 towers) and NRJ seeking a buyer willing to part with ~€300mn for their 500-tower asset Towercast.

Estimated breakdown of ground based towers and rooftops in Germany

Germany

Just 20,006 of Germany’s 75,474 cell sites are ground based towers – the rest are rooftops, which can be problematic for tower owners seeking to lease up their assets. Deutsche Funkturm’s rooftop portfolio has a tenancy ratio which is currently 0.8x lower than their GBTs, and this gap could grow as they actively pursue further co-locations in the German market, as access and landlord contracts make leasing up rooftops a significantly trickier proposition than towers. 

Deutsche Funkturm is Germany’s biggest towerco, with ~28,000 sites (of which ~9,000 are macro towers and a further ~19,000 are rooftops) across the country. Additionally, Deutsche Funkturm took control of 7,700 former TEF rooftop assets under the name Omega Towers, although it is believed that they are partway through a decommissioning programme to reduce this number to ~5,000.

As well as offloading their rooftops, Telefónica transferred 2,350 German towers into their towerco Telxius in 2016 in a deal valued at €587mn, where these towers sit under management with assets in Spain and CALA, and alongside Telefonica’s sub-sea cable assets. 

American Tower have been active in Germany since acquiring KPN’s ~2,000 E-Plus towers for €393mn in 2012. Their portfolio has grown slightly over the last six years to a total of 2,206, mainly through the acquisition of 186 transmission towers from German broadcaster WDR. Although the cost of these towers was not publicised, we estimate that American Tower probably paid around €35-50mn for the assets. 

German broadcast towerco Media Broadcast Group owns a further 450 towers in Germany, and was acquired by Freenet in 2016 for €295mn (around 12x EV/EBITDA). 

Of the remaining MNOs in the market, we believe Telefonica owns a further ~2,000 towers plus ~12.000 rooftops, and Vodafone owns around 4,000 masts and ~18,000 rooftops in Germany. 

There are a total of around 23,000 co-locations in Germany, most being on Deutsche Funkturm and American Tower’s ground based towers, with tenancy ratios estimated at 2.5 and 1.8 respectively. Deutsche Funkturm is believed to be embarking on a policy of rapid growth in Germany, planning to double the number of GBTs by 2022. 

Greece

While there are no independent towercos in the 12,000 site Greek market at present, tough economic conditions and the dominance of market leading Cosmote may prompt a sale and leaseback in the medium term.

Cosmote’s competitors Wind may have an appetite to monetise their towers, while the other MNO in Greece, Vodafone has less financial incentive. Joint venture infraco VICTUS Networks currently manages Vodafone Greece and Wind Hellas’ sites. There are around 10,500 tenants on VICTUS Networks’ 7,000 sites. Decommissioning could see VICTUS Networks’ site count fall to 6,000 and the tenancy ratio rise accordingly.

Broadcast towerco Digea owns 156 towers in Greece.

Who owns Ireland’s 4,000 towers?

Ireland

60% of Ireland’s 4,000 cell sites sit in the hands of the country’s three MNOs: Vodafone, Meteor and 3.

A network sharing partnership between Meteor and O2 (Mosaic) is in place with 3 joining the alliance, putting downward pressure on current and prospective future tenancy ratios.

With little prospect of sale and leasebacks in Ireland, the most likely source of tower transactions remains consolidation among the many independent tower companies, broadcast operators and public sector players. Irish towerco Cignal seems keen to consolidate further after their acquisition of Cellcom in early 2017, and larger European players seem to be turning their attention to this small but interesting market as well. We anticipate seeing some smaller scale consolidation between existing Irish towercos in the short term, followed by the entry of a larger towerco in the medium term. 

Who owns Italy’s 47,468 telecom and broadcast sites?

Italy

With the merger of 3 and WIND now complete, and Iliad having launched into the Italian market, all eyes are on how this will play out. Already, Iliad owner Xavier Niel, known as the enfant terrible of the French telecoms sector, is locked in a war of words with the incumbent operators, who fear the introduction of new business models and aggressive price wars. Although no set plan of action is in place for Italy’s infrastructure, it’s widely believed that Iliad’s requirements will ‘free up’ around 5,000 towers, which may well come to market in the coming months and which will be of interest to several parties.

Currently, INWIT, Cellnex and EI Towers’ TowerTel lead the telecom tower market in Italy, where towercos own just under half the total sites, and where decommissioning may outstrip organic growth in the coming years.

TIM retains a 60% equity stake in INWIT, with the balance having been floated on the Milan Stock Exchange in June 2015, and had initiated a process to sell some or all of their retained equity in 2016 which was then halted ostensibly because the TIM management team believed that several value adds had yet to reach fruition and were not yet reflected in INWIT’s valuation. Although recent rumours were that TIM would sell its 60% stake in INWIT in 2018, a complete overhaul of the INWIT board in April 2018 may mean the operator has other plans for the asset.  

By the end of 2018, INWIT forecasts driving tenancy ratios to around 1.9, decommissioning 800-1,000 more sites, and building as many as 500 new sites, primarily for TIM’s 4G rollout.

The continent’s largest pan-European towerco, Cellnex, has rolled up several small towercos in Italy, but the lion’s share of their portfolio comes from the acquisition of Wind’s towerco Galata, and their 7,377 towers, for €693mn in 2015.

Both INWIT and Cellnex remain bullish about the potential of small cells in Italy, highlighted by Cellnex’s acquisition of CommsCon for €18.65mn in June 2016.

The other key player in the Italian market is  EI Towers, whose telecom-focused subsidiary TowerTel has built and acquired a portfolio of 700 telecom towers with an aggregate EV of up to €55mn, ~300 of which have been added through several small acquisitions.

The Netherlands

Only 20% of The Netherlands’ 15,204 cell sites are macro cell sites, with the balance being rooftops, DAS and small cells.

Cellnex acquired Protelindo’s 261 Dutch towers for €109mn, (and is now marketing the towers under the name ‘Towerlink Netherlands’), and a further 460 as part of their deal with Shere Group. There is no duplication between the two portfolios. Following the small scale acquisition of local towers, Cellnex now owns 788 towers, or 24% of the macro towers in The Netherlands, where 1,781 (59%) of the country’s 3,031 ground based towers are already owned by towercos. Cellnex’s acquisition of Dutch broadcast towerco Alticom in 2017 gave them a further 30 towers in the country, as well as securing them high-quality infrastructure to support 5G rollout in the Netherlands.

Open Tower Company has around 850 towers, plus access to over 1,000 electricity pylons and is rumoured to be looking for buyers in 2018. UK headquartered Wireless Infrastructure Group is also present in The Netherlands.

KPN sold their towers in four tranches between 2008-12, while Vodafone and T-Mobile retain around 1,250 towers between them. New entrant fourth MNO Tele2 has few if any towers, preferring to rely on co-location and a RANsharing deal with T-Mobile.

T-Mobile and Tele2 Netherlands agreed to deepen their existing co-locations and RANsharing deals at the end of 2017, announcing a merger of the two entities. Deutsche Telekom has ringfenced their tower assets in the market and is in the process of bringing them under the control of infrastructure arm Deutsche Funkturm, which has been operating almost exclusively in Germany to date.

Mobile tower ownership in Portugal

The Netherlands

Only 20% of The Netherlands’ 15,204 cell sites are macro cell sites, with the balance being rooftops, DAS and small cells.

Cellnex acquired Protelindo’s 261 Dutch towers for €109mn, (and is now marketing the towers under the name ‘Towerlink Netherlands’), and a further 460 as part of their deal with Shere Group. There is no duplication between the two portfolios. Following the small scale acquisition of local towers, Cellnex now owns 788 towers, or 24% of the macro towers in The Netherlands, where 1,781 (59%) of the country’s 3,031 ground based towers are already owned by towercos. Cellnex’s acquisition of Dutch broadcast towerco Alticom in 2017 gave them a further 30 towers in the country, as well as securing them high-quality infrastructure to support 5G rollout in the Netherlands.

Open Tower Company has around 850 towers, plus access to over 1,000 electricity pylons and is rumoured to be looking for buyers in 2018. UK headquartered Wireless Infrastructure Group is also present in The Netherlands.

KPN sold their towers in four tranches between 2008-12, while Vodafone and T-Mobile retain around 1,250 towers between them. New entrant fourth MNO Tele2 has few if any towers, preferring to rely on co-location and a RANsharing deal with T-Mobile.

T-Mobile and Tele2 Netherlands agreed to deepen their existing co-locations and RANsharing deals at the end of 2017, announcing a merger of the two entities. Deutsche Telekom has ringfenced their tower assets in the market and is in the process of bringing them under the control of infrastructure arm Deutsche Funkturm, which has been operating almost exclusively in Germany to date.

Poland

There are around 22,000 telecom structures in the Polish network, a little under half of which are towers, with the rest being rooftops.

Poland has more subscribers per tower than the majority of other countries in Europe, indicating both potential demand for more towers, and indicating the extent of decommissioning that has already taken place in the country. A balanced, competitive MNO market amplifies the attractiveness of the Polish market to towercos.

T-Mobile and Orange share passive and active infrastructure in Poland through 50-50 joint venture NetWorkS! Initiated in 2011, the partnership was intended to last 15 years, but there has been speculation that one or both party might wish to exit the venture and sell towers to a third party. 

While NetWorkS! operates around 13,000 towers, the assets remain on T-Mobile and Orange’s own balance sheets. Outside of the NetWorkS! venture, as little as 2% of Poland’s towers are shared between multiple MNOs.

Alinda Capital Partners owned Emitel is the Polish broadcast towerco, operating 377 sites and diversifying into telecom. It’s rumoured that Emitel will be coming to market later in 2018.

Mobile tower ownership in Portugal

Portugal

TowerXchange understands there to be ~7,100 ground based towers in Portugal, with a further ~4,700 sites in use across different topographies (rooftops, street poles, utilities etc). With no known bilateral sharing agreements in place between MNOs, co-location has been organised on an ad-hoc basis and the tenancy ratio across the country is close to one (the only exception to this being indoor DAS projects, where one operator provides the infrastructure and shares with the other two).

Altice’s MEO had the largest tower portfolio with 2,961 traditional structures, which have now been rolled up into towerco Towers of Portugal, Vodafone owns approximately 2,500 and NOS about 1,300. In addition, there are around 350 broadcast towers run by state-owned Radiotelevisão Portuguesa, although TowerXchange are not aware of any current co-location agreements with Portugal’s three MNOs.

In June 2018, Altice agreed to sell a 75% stake in its newly formed Portuguese towers business ‘Towers of Portugal’ to a consortium including Morgan Stanley and Horizon Equity Partners. Expected to close in Q318 and comprising 2,961 towers, Towers of Portugal is valued at €660mn, or as much as 18.9x pro forma EBITDA for 2017. As with the French towerco, the deal also includes a build to suit agreement for a further 400 new sites for Altice’s Portuguese opco MEO (part of Portugal Telecom) over the next four years. Towers of Portugal is the country’s first towerco in any form, making them well placed to capitalise on the densification needed to complete 4G coverage and begin 5G rollout. 

Romania

Romania hosts a competitive four MNO market, with no independent towerco activity to date. Orange and Vodafone Romania operate a joint venture infrastructure sharing company called Netgrid Telecom (formerly Ovidu Telecommunications).

Despite being one of the poorest countries in Europe, ARPU is relatively high in Romania at around €20, which means there is little financial imperative for the country’s MNOs to monetise their towers.

Estimated breakdown of ground based towers and rooftops in Russia

Russia

TowerXchange estimate there are around 61,260 ground based towers and 65,400 rooftop structures across the vast Russian landscape. Each of Russia’s four MNOs has looked at utilising tower company business models, but in contrasting ways.

VEON’s creation of ‘National Tower Company’, into which they injected their ~13,000 Russian towers, was hailed as a precursor to the sale of the assets to an independent towerco. However, the company decided to pull the plug on the sale process in May 2017, and it is believed that the towers are being reabsorbed into the opco.

MegaFon has carved out First Tower Company, which is has announced will come to market in 2019, although as MegaFon has just delisted from the LSE, there are several queries about the shape of the future business and how this will develop over the next 12 months. Rumours persist that Tele2 Russia are selling their ~9,000 towers, but with no concrete process in the public domain as yet.

Leading local towercos Russian Towers and Vertical, as well as the Russian Direct Investment Fund, are all expected to be prominent bidders as Russia’s towers come to market, with Tele2’s towers the most likely up for grabs. Russian Towers is also undergoing a period of sustained organic growth, growing from ~2,300 to ~3,500 since the beginning of 2017. Newcomer Service-Telecom is also keen to expand organically and recently acquired Link Development, a Russian towerco with around 200 towers in the St Petersburg region. A new Russian towerco has also recently come onto the TowerXchange radar: Stoka Vysotok. Based in Tatarstan, Sotka Vysotok is believed to have around 200 towers centred mainly around the regional capital, Kazan.

Serbia

Managed service provider Konsing Group, which also owns a portfolio of 47 sites, counts all three MNOs among their client base (Telekom Serbia, Telenor and Telekom Austria).

Slovakia

Broadcast towerco Towercom, which has around 700 sites, was acquired by Macquarie Infrastructure Fund in 2013. Towercom turns over in excess of €50mn annually and includes O2, T-Mobile and Orange among their customer base. Towercom completed the roll up of TBDS, RK Tower and Rádiokomunikácie in 2008. Macquarie is believed to be considering.

Estimated ownership of Spain’s 49,461 telecom and broadcast sites

Spain

40% of the 49,461 broadcast and telecom towers and rooftops in Spain are owned by towercos, led by Telefónica’s Telxius and European market-maker Cellnex.

Cellnex has seen fast growth in its telecoms arm, deriving €471mn of its €789mn 2017 revenue from telecoms, an increase of 23% yoy. In 2017 they entered the Swiss market, as well as acquiring Alticom in the Netherlands.

In 2016, Telefónica transferred 11,000 Spanish towers and rooftops to their towerco Telxius for an undisclosed sum ahead of ahead of their planned IPO, however, the IPO was scrapped in October 2016 due to lack of interest in the market. Telefónica has since completed the sale of a 40% stake in Telxius to investment firm KKR for €1.3bn.

AMP Capital acquired Axion from Antin Infrastructure in 2018. Axion operates 584 broadcast towers, with some telecom co-location, 70% of which are in Andalucía.

Sweden

There are no independent tower companies in Sweden, largely because network sharing is efficiently managed through three network sharing joint ventures.

SUNAB is a 50-50 3G joint venture between Tele2 and TeliaSonera which runs the MOCN RANsharing model; Net4Mobility, another 50-50 joint venture, runs Telenor and Tele2’s combined 2G and 4G network; and 3GIS is a joint venture running Telenor and 3’s 3G network outside of Sweden’s largest cities.

Teracom operates Sweden’s broadcast tower network. there are a little over ‘8,000 sites in Sweden.

Switzerland

Cellnex acquired 2,339 towers from Sunrise in May 2017, creating Switzerland’s first fully fledged towerco Swiss Towers AG. Working with partners Swiss Life and Deutsche Telekom Capital Partners, the Cellnex-led consortium paid €430mn for roughly 20% of Switzerland’s 11,300 towers, mostly in rooftop locations. With future build to suit as well as 200 DAS nodes agreed in the deal, Cellnex sees a chance for significant growth through data usage and 5G rollout in this central European country.

Turkey

Established in 2006, Global Tower has 8,067 ground based towers among a portfolio of over 23,000 sites in Turkey. Of these macro towers, TowerXchange believes that Global Tower owns around 3,400 and leases around 2,390 from Turkcell, for which they only receive revenue from co-locations. In addition they manage a portfolio of around 2,215 towers on behalf of Turkcell, for which they just receive maintenance fees.

Turkey is also home to one of the world’s largest government-owned universal service networks, called ‘Universal Services Project’ and implemented by the Ministry of Communication and Transportation. Phase one of the project was auctioned in 2011, with Turkcell implementing 1,100 rural sites following a successful bid. Phase two was recently auctioned and will see Vodafone and Turk Telekom creating a joint venture to build a further 2,500-3,000 RANsharing sites in rural areas.

In addition, the Turkish government has just launched a new towerco called PTT Kule Inc, which is currently focussed on very large scale tower structures for telecoms and broadcast as well as hosting datacentres and other facilities. 

United Kingdom

The UK has a tower market structure unlike any other in the world. Independent towercos, headed by Arqiva, Wireless Infrastructure Group and Shere Group (recently acquired by Cellnex in 2016), own 38% of the 40,000 active towers in the UK. The balance are contained within two joint venture infracos: CTIL, which operates Vodafone and O2’s network (Telefónica), and MBNL, which performs a similar function for EE (now BT) and 3 (Hutchison). CTIL and MBNL are both the primary clients of the UK’s independent towercos, and site sharing businesses in their own right. Their business models differ in that the tower assets are actually on CTIL’s balance sheet, while MBNL is a management company with the assets retained by the MNOs. CTIL is a passive infrastructure sharing play, while MBNL’s model extends to active infrastructure and transmission sharing.

The UK’s broadcast tower operator Arqiva has been through many changes of identity and ownership (BBC, Crown Castle, National Grid to name a few), and was initially believed to be close to closing a sale to a consortium of buyers led by Brookfield, before a short-lived attempt at an IPO in Q417. It remains to be seen whether Arqiva will revisit the option of a strategic sale, or give themselves some breathing room to try and show that their improving EBITDA is sustainable in order to close the gap between their expectations and market valuation.

Who owns/operates the UK’s 40,000 active cell sites?

Figure four: Estimated tower counts for selected markets in Europe

European sale and leaseback deals since 2008

Major European towerco equity deals and listings since 2016

European towerco consolidation since 2008

European heatmap

 

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