Deutsche Telekom and Cellnex have combined their telecoms towers in the Netherlands in a deal that marks the latest passive infrastructure monetisation move from a major European telco.

Essentially, the deal will see the German incumbent integrate its 3,150 mobile towers in the Netherlands with towers specialist Cellnex’s 984 sites. With a further 180 new masts already in the pipeline, the enlarged Cellnex Netherlands will operate 4,314 sites, making it the largest independent mobile towers company in the country, the firms claim.

This is not a simple M&A transaction though. It’s more complicated than that.

The companies have set up a Digital Infrastructure Vehicle (DIV) in which they will both serve as anchor investors. The Vehicle is an investment fund focused on European digital infrastructure, looking at investments in fibre infrastructure, towers and data centres, with the aims of “delivering attractive, risk-adjusted returns.”

Deutsche Telekom operates its Dutch towers via an entity known as T-Mobile Infra. It will contribute that entity to the DIV, plus €250 million in debt – that means it receives a €250 million cash payment out of the deal – in exchange for an unspecified shareholding in the DIV. Its contribution equates to a €400 million capital commitment to the fund, while Cellnex has agreed to commit €200 million of capital.

Part two of the transaction will see the DIV contribute the T-Mobile Infra business to Cellnex Netherlands in return for a 38% stake, which it will hold as a seed asset.

“Its investment in Cellnex Netherlands aims to create value by gaining exposure to the growth derived from 5G adoption, as well as by realizing synergies resulting from the merger,” Cellnex explained. And looking further ahead, Cellnex and the DIV have brokered a deal that could see them partner of future transactions in the European towers sector in which Cellnext will have the right to co-invest with a 51% stake.

“The agreement with Cellnex underlines the high value of passive mobile infrastructure. We are creating a leading tower company in the Netherlands, which should unlock synergies and accelerate our 5G rollout,” said Deutsche Telekom CEO Tim Höttges.

“At the same time, DIV opens an innovative way to finance telecom infrastructure in partnership with institutional investors,” he added.

The firms are on the hunt for third-party investors. Deutsche Telekom says will retain a stake in the fund of around 25% following such investments.

The fund will managed by a team of investment and capital market experts led by Vicente Vento, co-founder of Deutsche Telekom Capital Partners (DTCP), the German incumbent’s VC arm.

With Deutsche Telekom having been one of the most vocal critics of Germany’s 2 GHz and 3.6 GHz spectrum auction last year, itself racking up a bill of €2.2 billion, its hardly surprising that it is looking for ways firstly to monetise its existing passive infrastructure and later to capitalise on the investment opportunity in that sector, as 5G rollout costs begin to mount.

On a first examination, this seems like a prudent move for Deutsche Telekom.