KBRA Assigns Preliminary Ratings and Publishes Ratings for DFMG Holding GmbH

KBRA Europe (KBRA) assigns its BBB+ preliminary ratings to DFMG Holding GmbH’s EUR [•] senior secured notes. KBRA also publishes the issuer rating of BBB and senior secured ratings of BBB+ for DFMG Holding GmbH. These ratings were assigned on an unpublished basis on 2 December 2025. The Outlook is Stable.

GD Towers Holding GmbH (GDT) is a leading European tower company (towerco) that, through its wholly owned subsidiary DFMG Holding GmbH, owns and operates approximately 44,600 mobile sites in Germany and Austria. Its primary business activities include the acquisition, leasing, construction, maintenance, and management of passive network infrastructure for mobile communications.

Key Credit Considerations

(+) Strategically Important Infrastructure

Towers are essential for day-to-day communication and for MNOs’ business activities. They represent a small fraction of MNO operating expenses but are business critical to their ongoing operations. MNO demand for access to tower infrastructure is driven by increasing capacity, quality, and coverage requirements as data flows continue to increase. Demand is also driven by 5G rollouts and carrier aggregation. MNOs are competing aggressively on data offerings, which underpins demand for supporting infrastructure. Capacity constraints mean MNOs need additional points of presence to densify networks, which in turn underpins strong demand for towerco assets.

(+) Stable, High-Quality Revenues 

In 2025, approximately 73% of recurring revenues were largely availability-based, index-linked, and derived from the anchor tenants TDG and TMA under medium- to long-term (eight-year renewal) MLAs. These revenues are further complemented by framework agreements with other investment-grade MNOs such as Vodafone and Telefonica. This allows the business to maintain revenue growth and stable and/or improving adjusted EBITDA.

(+) Dominant Position in Core Markets of Germany and Austria

GDT has an oligopolistic market position as one of three or four providers of wireless telco infrastructure in its key markets of Germany and Austria, reinforcing the critical nature of the service for the implementation of the national digital strategy of both countries.

(+) Demonstrated Resilience in EBITDA Margins Through Economic Peaks and Troughs

GDT has maintained margins of approximately 55%-65% over the last number of years (including the start of the Russia-Ukraine war) demonstrating the defensive nature of the business and its ability to pass through costs. This is notwithstanding some one-off costs linked to the carve-out of the new business in 2023, which caused some margin volatility (still within the 55%-65% range) in that year.

(+) Strong Credit Quality of Sponsors/Tenants

The bulk of revenues and cash flows are derived from an investment-grade tenant Deutsche Telekom AG (DTAG) (through its 100% subsidiary Telekom Deutschland GmbH). DTAG, which is also the ~49% sponsor, is highly experienced in the sector. The other ~51% sponsors have also amassed significant experience in managing infrastructure-like businesses. Therefore, the credit quality of other key parties does not constrain the rating.

(+/-) Regulatory Environment

The regulatory environment in Germany and Austria is underpinned by the EU’s desire to encourage digitalisation. While the regulatory environment has been broadly supportive, KBRA notes that the German regulator, BNetzA, has previously intervened in the market—most recently in an antitrust dispute between Vodafone, Vantage Towers, and new entrant MNO 1&1. While these actions have not impacted DTAG or DFMG, they demonstrate that BNetzA can and does intervene in the market.

(+/-) High Codependence on Relationship With Deutsche Telekom AG

The relationship with DTAG (as ~49% sponsor and material provider of revenues under anchor MLA contracts) has been and will remain fundamental to the viability and sustainability of GDT’s business and financial performance. KBRA expects DTAG to remain firmly committed to maintaining its interest in GDT and to renew MLA contracts as they expire on existing or improved terms. Similarly, any weakening in this relationship with DTAG, which leads to less robust future cash flows, could materially affect the borrower’s credit quality.

(+/-) Contracts With Non-Anchor Tenants

The company has exposure to contracts with third parties (including non-anchor tenants) that are exposed to more market risk. Economic growth conditions, market dynamics, and regulatory factors can influence the pace and quantity of macrosites required, which in turn affects third-party demand for OpCo’s infrastructure. This is partially mitigated by investment-grade quality of the tenants (eg Telefonica and Vodafone in Germany)—a factor that reduces codependence risk with DTAG.

(-) Exposure to Higher Input Costs Because of Factors Beyond the Borrower’s Control

Inflation in some operating expense categories (eg labour costs)—particularly with non-anchor tenants, some of which lack inflation indexation in their contract—and the renewal of ground leases at higher costs could pressure future earnings and margins. Inflation indexation under key revenue-generating contracts (the MLAs with TDG and TMA) is capped at 3%. If costs increase materially above the cap, the borrower could face pressure on absolute earnings and margins. That said, GDT has established a track record of robust and relatively stable EBITDA margins.

(-) Liquidity Risk Associated With the Capex Programme

While execution risk associated with the delivery of the 2,400 sites that need to be delivered to their anchor tenant (under the TDG MLA), as well as capex linked to the other third-party contracts, should not be material, there may be delays in delivery that, in turn, could delay EBITDA generation, putting additional pressure on GDT’s liquidity position, particularly if capex costs prove higher than currently anticipated. That said, broad comfort can be taken, as GDT is not expected to undertake any speculative capex, and capex incurrence is expected to occur only once a contract is signed. While some capex is contracted (under MLAs), other capex can conceivably be deferred if GDT were to experience financial pressure, and there is also some ability to pass on unexpected costs.

(-) Leverage and Refinancing Risk

In the rating case, average leverage (defined as total financial debt to earnings before interest, taxes, depreciation, amortisation, and after leases (EBITDAaL)) could be considered relatively high at 7.00x-7.50x, with leverage expected to be maintained at this level throughout the forecast period but are not unreasonable. The Group also has a significant bullet maturity profile and will remain dependent on continued access to debt capital markets to refinance its bank and institutional debt over time. The proposed issuance, together with the Group's existing liquidity facilities and staggered refinancing plan, provides flexibility to address upcoming maturities. KBRA considers the remaining refinancing requirements manageable given the Group's strong operating performance, adequate liquidity and the time available to execute further refinancing transactions.

Outlook

The Stable Outlook reflects GDT’s leading market position in its core markets of Germany and Austria as a provider of strategically important telecommunications infrastructure, recurring predictable cash flows, and a supportive regulatory environment. The Outlook also reflects KBRA’s view that the Group will complete its build-to-suit (BTS) programmes without material deviation from plans while maintaining financial metrics adequate for the rating category. The Outlook also reflects KBRA's expectation that the Group will maintain adequate access to funding markets and execute its staggered refinancing programme without material deterioration in funding costs or liquidity.

Rating Sensitivities

KBRA could raise the rating if GDT is able to increase cash flows beyond its current business plan, facilitating meaningful deleveraging and resulting in an improved overall financial risk profile. Upward pressure could also occur should debt refinancings take place on more favourable terms than projected, which would positively impact financial metrics.

Downward rating pressure could occur if the relationship with key tenants weakens, leading to less robust future cash flows that negatively affect the borrower’s credit quality. Additionally, downward pressure could arise should the Group adopt a more aggressive financial policy than currently envisaged under our rating case, leading to leverage above 8.0x. This could include, inter alia, a more aggressive distribution policy or the Group embarking on a mergers and acquisitions (M&A) strategy not currently anticipated. Finally, any adverse changes in the regulatory, competitive, ownership, or country risk environment could also lead to negative rating actions.

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Methodologies