European telco Tele2 has announced it will carve out its telecom infrastructure assets to create the first tower company to cover the Baltic region.

Swedish telco Tele2 has entered into a 50/50 JV with Global Communications Infrastructure LLC (GCI), a company backed by Manulife Investment Management, to establish the tower business.

Tele2’s announcement comes a few months after reports suggested the company was looking to spin off its tower assets.

According to Tele2, the agreement values the tower company at €560 million ($650m) on a debt-free basis.

Tele2 said it expects cash proceeds of around €440m ($510m) from its decision to spin off its tower assets.

The carrier stated that the JV will help the company unlock value in its mobile telecom infrastructure, while enabling continued growth and the rollout of mobile and 5G services in the region.

The towers will span the three Baltic countries: Estonia, Latvia, and Lithuania. Tele2 confirmed the unit will be based in Lithuania.

In total, the JV covers around 2,700 tower and rooftop sites across the three countries.

Following the transaction, Tele2 will be the anchor tenant under a 20-year Master Service Agreement (MSA), ensuring long-term and secure access to critical infrastructure.

“We want to develop our tower assets together with a partner who brings both capital and expertise. This is a way for us to create additional value from the assets we have, together with an experienced partner who knows this business well,” says Jean Marc Harion, president and CEO of Tele2.

Over the course of the next decade, as part of a 10-year investment plan, more sites will be built across the region, added Tele2.

Tele2 said it expects to finalize the spin-off by early next year.