KPN jumps on the towerco bandwagon

It has struck a deal with pension fund ABP to create a joint venture – dubbed 'TowerCo' for now – that will manage and operate 3,800 mobile towers and rooftop sites. KPN will own 51 percent; ABP will control the remaining 49 percent.

TowerCo's formation marks the second JV between KPN and ABP. The first one, established in 2021, is in the midst of a five-year plan to spend €1 billion on FTTH deployments in smaller towns and villages.

This new venture will see around 60 percent of KPN's mobile infrastructure footprint folded into TowerCo, along with the more than 800 sites managed by Open Tower Company (OTC), which is majority owned by ABP.

The JV will also take over Novec, a passive infrastructure provider owned by electrical grid operator TenneT. Novec is one of the Netherlands' largest independent operators of neutral infrastructure, boasting a footprint of more than 2,000 telecoms, broadcast and high-voltage masts. It also holds a minority stake in OTC. Under the transaction, KPN has agreed to pay Novec and OTC shareholders €120 million in cash.

KPN has agreed a master-service agreement that will see it continue to use TowerCo's infrastructure for the next 20 years. It has also made a 10-year built-to-suit commitment that covers the deployment of new sites.

"We have built up a very good position with our mobile network in recent years. We want to maintain and further expand this in the future, also in view of the ever-growing data traffic," said KPN chief exec Joost Farwerck, in a statement in Dutch. "With this collaboration we gain more control and flexibility at a large number of locations of our mobile infrastructure and at the same time we realise a more sustainable cost model."

KPN expects TowerCo to add around €30 million to its 2024 EBITDA after leases (EBITDAaL), and €20 million to operating free cash flow. To put that into context, KPN's EBITAaL in 2023 weighed in at €2.4 billion, and free cash flow reached €886 million.

The new joint venture leaves the Netherlands with two large-scale passive infrastructure providers serving a market of just three MNOs.

The other one, Cellnex Netherlands, was established in 2021 when Cellnex agreed to combine its Dutch tower footprint with that of T-Mobile – which has since become Odido following its sale – creating a player with more than 4,000 sites.

It will be interesting to see if the Netherlands' other mobile operator, VodafoneZiggo, makes any attempt to monetise its infrastructure.

Its assets are not part of Vodafone's tower business, Vantage, and it doesn't look like that is about to change any time soon. Liberty CEO Mike Fries was quoted back in 2021 as saying that monetising VodafoneZiggo's infrastructure was a work-in-progress, but it's hard to find evidence of any progress since then.

Now the country has two big passive infrastructure providers vying for supremacy, it's not too much of a stretch to consider that one of them might be interested in adding to its footprint.