October 13, 2023
Phoenix Tower International has inked a deal to acquire NOVEC’s German unit, giving it access to major European market with significant growth potential.
The passive infrastructure specialist, which has been on a fairly aggressive expansion push in recent years, did not disclose the value of the deal. However, it’s unlikely to be massive, given that NOVEC currently has just 220 sites in Germany, although Phoenix Tower notes that it has developed “a significant pipeline” of new sites.
The deal is noteworthy not because of its size, but because it marks Phoenix Tower’s entry into another new market at a time when M&A activity has somewhat cooled in the towers sector. And it’s a potentially valuable market.
“Germany is a major global market with significant near term wireless build out needs, especially across more rural locations where no coverage exists today and where the NOVEC team specializes in coverage solutions,” said Dagan Kasavana, CEO of Phoenix Tower International.
Indeed, not only is Germany Europe’s biggest economy, with some big name players rolling out 5G, but it is also home to a relatively new mobile network operator in the shape of 1&1. The newcomer’s network rollout has been fraught with issues, in no small part down to a dispute with infrastructure partner Vantage Towers, which has largely failed to hook the telco up in a timely fashion. Interestingly, Vantage Towers also named Germany as a key market for potential growth when it came into being in its current form three years ago. Whether Vantage has truly capitalised on that growth potential only it can say, but it’s unsurprising that the likes of Phoenix Tower are also getting in on the action.
The US-based firm is on a mission to become a household name in Europe, having recently boosted its French footprint by almost 2,000 sites via the closure of two deals with Cellnex and Bouygues Telecom. And its ambitions may not stop here.
A fortnight ago Phoenix Tower closed a new €1.2 billion senior credit facility in Europe to consolidate its existing loans and to fund further growth, both in its existing European markets and new ones, it said.
“The multi-jurisdiction loan provides PTI with the flexibility to continue to grow our business across Europe with incremental liquidity available at our disposal,” Kasavana said, at the time. “The financing will allow us to strengthen our commitment to the region, as we continue to construct and invest in digital infrastructure in markets that are experiencing a rising demand for connectivity and technological upgrades.”
It could be that it waited to announce the Germany deal until it had secured the necessary financing, or there could be more M&A on the horizon. Rivals like Cellnex have made it clear that the chequebook is firmly away for now, given the financial situation, but that doesn’t mean Phoenix won’t have an eye out for more deals, particularly of the scale of this latest buy.
And investors are still sniffing round. Last week Bloomberg reported that a consortium comprising BlackRock and Grain Management is in advanced talks to buy a stake of around 20% in Phoenix Tower International from funds managed by existing backer Blackstone. The newswire’s sources said the deal is worth around US$1.3 billion, which – if it comes to fruition, and there are no guarantees on that score – would value Phoenix Tower at $6.5 billion excluding debt.
Blackstone bought into the company just a couple of years ago, but for an undisclosed sum, so it’s tough to make a call on that price tag. That said, it serves as an indication that investors are still willing to plough billions into telecoms infrastructure, despite the fact the market has gone off the boil a bit over the past 12 months.
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