TowerCo: part of TDF’s capital should be sold to a Swedish fund

Image: TDF.

Launched in January 2019, the sale of TDF (Télédiffusion de France) may finally take a decisive turn. According to Les Echos, its main shareholder Brookfield is to sell its 45% stake in TDF to the Swedish fund EQT. This will cost the digital infrastructure and the network operator approximately 8 billion euros, i.e. the lower range of the amount expected by the seller (between 8 and 10 billion euros).

Born in 1975, the historic French TV presenter has lived several lives. After losing its monopoly on radio and television in the mid-2000s, and then experiencing a media crisis with the advent of digital players, TDF was forced to diversify its activities.

The group thus became a telecommunications infrastructure operator, managing and maintaining around 19,200 towers (as of June 2022) on which mobile operators install their 4G or 5G antennas for a fee. TDF also deployed more than 610,000 fiber optic outlets, which were then sold by operators, according to the economic daily.

SFR, Free and Bouygues Telecom towers acquired by Cellnex

Born in the United States, this so-called TowerCo business model has been a resounding success in Europe in recent years. In January 2021, Spanish Telefonica sold the antennas of its Telxius subsidiary to American Tower Corporation (ATC) for €7.7 billion. The following month, Altice, the parent company of SFR, sold its TowerCo, called Hivory, to Spanish giant Cellnex – i.e. 10,500 telecommunications sites in France – for 5.2 billion euros.

Having already sold part of its towers to Cellnex, Bouygues Telecom entered into a joint venture with Cellnex in February 2020, this time dedicated to the deployment and operation of its fiber network in France. Quantitative investment by 2027 will amount to 1 billion euros. Cellnex also acquired a 70% stake in Iliad TowerCo, a subsidiary of Iliad, Free’s parent company, in the summer of 2019. Today, Cellnex is valued at almost 24 billion euros.

Most recently, in November 2022, British Vodafone sold a majority stake in Vantage Towers to KKR & Co and GIP (Global Infrastructure Partners), valuing the company at €16.2 billion. Such financial transactions allow operators to get out of debt, as well as find funds to finance expensive investments in the deployment of fiber and 5G.

Orange made the opposite choice. The historic operator created its TowerCo under the name Totem to manage more than 26,000 telecommunications nodes in France and Spain, its main markets. Orange then joined Ofitem, the French association of mobile telephony infrastructure operators. The latter also brings together Cellnex France, TDF, Hivory and ATC France.

TDF weighed down by its historic broadcast activity

In such a favorable context for TowerCo, how can we explain the relatively small amount of the deal between TDF and EQT? Les Echos explains this with the band’s share of the airwaves. This historic broadcasting activity still accounts for over a third of its turnover. This lowers the TDF score.

In 2021, its turnover growth of 6.4% (€731.7 million) is primarily driven by mobile telecommunications (+9.5%) and fiber deployment (+80%), while revenue from audiovisual services decreased by 1.8%.

Moreover, the TDF file will appear at the end of the battle after the main transactions in this TowerCo market have been completed and investors have already made their purchases.

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