KPN and ABP Launch TowerCo Joint Venture

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Dutch telecommunications operator KPN has announced a partnership with pension fund ABP to form a new joint venture, temporarily named TowerCo. This entity will manage and operate 3,800 mobile towers and rooftop sites. KPN will hold a 51% stake in the venture, with ABP controlling the remaining 49%.

This collaboration marks the second joint venture between KPN and ABP. Their first venture, initiated in 2021, is focused on investing €1 billion over five years in FTTH (fiber to the home) deployments across smaller towns and villages.

TowerCo will encompass about 60% of KPN’s mobile infrastructure, alongside over 800 sites managed by Open Tower Company (OTC), a company predominantly owned by ABP. Additionally, the joint venture will acquire Novec, a significant independent provider of passive infrastructure in the Netherlands, from electrical grid operator TenneT. Novec operates over 2,000 telecoms, broadcast, and high-voltage masts and holds a minority stake in OTC. KPN has agreed to pay Novec and OTC shareholders €120 million in cash as part of the deal.

A master-service agreement has been arranged, ensuring KPN will continue to utilize TowerCo’s infrastructure for the next 20 years. The company has also committed to a 10-year plan to develop new sites.

KPN CEO Joost Farwerck emphasized the strategic advantage of the partnership, highlighting the enhanced control and flexibility over KPN’s mobile infrastructure and the potential for a more sustainable cost model.

Financially, KPN anticipates that TowerCo will contribute approximately €30 million to its 2024 EBITDA after leases (EBITDAaL) and €20 million to its operating free cash flow. This is significant in the context of KPN’s 2023 EBITDAaL of €2.4 billion and free cash flow of €886 million.

The formation of TowerCo results in two major passive infrastructure providers in the Netherlands, a market with only three mobile network operators. The other major provider, Cellnex Netherlands, was created in 2021 following a merger with T-Mobile’s Dutch tower footprint.

It remains to be seen whether VodafoneZiggo, the country’s third mobile operator, will follow suit and monetize its infrastructure assets, which currently do not fall under Vodafone’s tower business, Vantage.

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