EQT and Tillman are Preparing Competing Bids for a Stake in the French Tower Company TDF

Telecom Business Review | Wednesday, October 26, 2022

EQT and Tillman Infrastructure are vying to buy Brookfield's 45 per cent stake in French towers firm TDF–a business worth about seven billion euros USD 6.8 billion excluding debt. Three sources are familiar with the matter Reuters.

FREMONT, CA: According to three persons familiar with the situation who spoke to Reuters, EQT (EQTAB.ST) and Tillman Infrastructure are competing to acquire Brookfield's 45 per cent investment in French towers company TDF, which is valued at approximately 7 billion euros (USD 6.8 billion) before debt.

The sources, who spoke anonymously, stated that the two investment firms are conducting due diligence on the business and are anticipated to submit competing bids in November to displace Brookfield as TDF's sole significant investor.

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According to the sources, TDF's former owner Orange (ORAN.PA), is not interested in reinvesting in the French company through its tower arm Totem, and the only bidders in the process are Stockholm-listed EQT and New York-based Tillman. The French towers company, which also offers radio and television transmission services to French households, has an equity value of about 7 billion euros.

However, raising the necessary funds to complete a deal can take time due to the drying up of the debt capital markets. The transaction occurs during a wave of telecom tower deals in Europe, where financial investors bid for a piece of the greatest infrastructure networks in the region.

To purchase businesses that provide stable cash yield creation, inflation protection, and low volatility, EQT is attempting to use money from its Active Core Infrastructure fund, which was established in March.

Tillman Global Holdings, which owns Tillman Infrastructure, signed a collaboration agreement with American buyout fund Carlyle, committing up to USD 1 billion to help the company grow its telecom tower business. As a frequent investor in the European telecoms sector, Brookfield recently closed a deal to acquire a 51 per cent share in the towers business of Deutsche Telekom alongside DigitalBridge.

Deutsche Telekom charged around a 27 times earnings multiple for the sale of its GD Towers investment. TDF's portfolio contains broadcasting towers, which are less desirable to investors as viewers increasingly rely on internet TV to stream video material, which may make it difficult for TDF to reach a comparable price.

In 2014, Brookfield headed a group of investors that paid 1.78 billion euros to acquire control of TDF. APG Asset Management NV, Arcus Infrastructure Partners, a fellow Canadian investment company, and PSP Investments collectively own 45 per cent of TDF, with Credit Agricole Assurances holding the remaining 10 per cent.

Brookfield notified other investors of its desire to sell its TDF share earlier this year and hired banks to begin the auction process. PSP is reviewing its options with Lazard (LAZ.N), while APG has decided to keep investing in TDF because it views the potential for increased profits from the company, according to a prior report from Reuters. TDF announced half-year core earnings in June of 234 million euros, up 8.3 per cent from the corresponding period in 2017. Its net debt increased significantly during the last 12 months, from 1.7 billion euros in June of last year to 2.4 billion euros in June.

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