United Internet explores deal with Tillman for German tower build-up -sources

By Nadine Schimroszik and Arno Schuetze

BERLIN (Reuters) - Independent German telecoms firm United Internet is exploring a deal with U.S. towers firm Tillman Infrastructure to build its own towers network in Germany, people close to the matter said.

United Internet's telecoms subsidiary 1&1 plans to roll out a fourth 5G network in Germany to compete with Deutsche Telekom, Vodafone and Telefonica Deutschland.

1&1, the mobile upstart run by billionaire Ralph Dommermuth, in 2019 bagged the 5G spectrum it needs to become Germany's fourth network operator.

Earlier this year, 1&1 agreed to expand its fibre-optic partnership with Deutsche Telekom and accepted an improved national roaming offer from Telefonica Deutschland.

But the terms of the 2019 spectrum auction stipulate that 1&1 also builds at least 1,000 towers itself by the end of 2022.

Dommermuth had said earlier that 1&1 would launch the tower build-up in summer 2021, employing the so called open-RAN-technology where hardware and software suppliers can be different firms.

That technology also helps telecoms firms avoid using technology from China's Huawei, which is facing a backlash in Europe and the U.S. over alleged national security threats.

1&1 is currently negotiating with Tillman Infrastructure and has asked the U.S. firm to provide part of the equity needed for the towers' construction. No financial details have emerged so far.

1&1's strategy follows that of other telecoms companies which are selling stakes in their infrastructure to investors to raise funds for investment elsewhere.

Vodafone earlier this year floated its Vantage Towers unit on the Frankfurt stock exchange and Deutsche Telekom has for years been pondering what to do with its own towers operations.

"1&1 is in advanced negotiations with various potential partners for the network construction. We plan to finalise these in the current quarter and will announce our partnerships as soon as the contracts are signed," an 1&1 spokesperson said.

Tillman Infrastructure was not available for comment.

(This story corrects spelling to Tillman in headline and first paragraph)

(Editing by Nick Macfie)