Deutsche Telekom Said to Cool on Tower Sale After Telxius Fiasco

  • German carrier considering internal towers unit instead
  • Telefonica canceled IPO of tower division Telxius last month

Deutsche Telekom AG has shelved plans to sell shares in its mobile-phone towers after a similar deal from Telefonica SA ran aground late last month, according to people familiar with the matter.

Instead, the German carrier is leaning toward having an internal tower unit to run the business more efficiently and boost profitability, the people said, asking not to be named because the discussions are private. Deutsche Telekom may decide to pursue a stake sale or an initial public offering later, the people said.

A representative for the German company, which has about 50,000 mobile-phone towers in Europe, declined to comment when contacted by phone.

Telefonica was forced to scrap the sale of tower and submarine-cable unit Telxius last month as demand from investors proved inadequate. The Spanish carrier had sought a valuation of as much as 3.75 billion euros ($4.1 billion) for Telxius in a sale of as much as 40 percent of the unit. Deutsche Telekom has been closely watching Telefonica’s attempts at an IPO, the people said. Telefonica had created Telxius to sell a part of its infrastructure assets to raise money to cut debt.

Deutsche Telekom, also eager to reduce borrowing and raise cash for network investment, has been pondering the future of its mobile-phone towers to create more value, Chief Financial Officer Thomas Dannenfeldt said in May. The carrier and advisers were eyeing options including a possible spinoff or IPO, which could value the assets in the billions of dollars, people familiar with the matter said in March.

Deutsche Telekom already has a unit for its German towers, called Deutsche Funkturm. The carrier, which also operates in countries including Austria, Poland and the Netherlands, could integrate its other towers into that unit or create a new business. Deutsche Telekom last month named Chief Technology Officer Bruno Jacobfeuerborn as managing director of Deutsche Funkturm.

Carriers including Telecom Italia SpA and billionaire Carlos Slim’s America Movil SAB have succeeded in splitting off infrastructure businesses in recent years.

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