By Arno Schuetze

FRANKFURT (Reuters) - Deutsche Telekom <DTEGn.DE> is preparing to sell thousands of German mobile phone masts in a potential 5 billion-euro ($5.5 billion) deal as it seeks to free up funds for investing in its European networks, two sources close to the matter said.

The German company has appointed Goldman Sachs <GS.N> and Morgan Stanley <MS.N> to organize an auction of the German masts, which it plans to launch in the autumn and which it hopes will value the assets at 4-5 billion euros including debt, they said.

Deutsche Telekom is planning to send out first information packages on the business to prospective buyers after the summer break and will, depending on their feedback, decide on whether it sells all or just a stake in the business, or ultimately decides to keep it.

Goldman Sachs, Morgan Stanley and Deutsche Telekom declined to comment.

The group, which in 2012 sold its U.S. towers business to Crown Castle <CCI.N> for $2.4 billion, is not alone among the mobile network operators selling such infrastructure to raise capital and cut debt.

Telefonica Deutschland <O2Dn.DE> <TEF.MC> in April agreed to sell its 2,350 towers to Telxius, which was set up by its Spanish parent Telefonica earlier this year to hold its 11,500 masts in Spain as well as some data centers and domestic subsea cables, with a view to a stock market listing or trade sale.

Telecom Italia said in May that it would decide within months on options for its remaining 60 percent stake in Infrastrutture Wireless Italiane (INWIT) <INWT.MI>.

And last year Carlos Slim's America Movil <AMXL.MX> spun off its wireless transmission towers and listed its shares on the Mexican stock market. The shares are down 14 percent since the IPO in late December.

Deutsche Telekom is expected to approach infrastructure investors as well as insurers and pension funds, whose appetite to buy regulated assets with secure cash flows has grown in the recent low-interest rate environment, the sources said.

Separately, Deutsche Telekom will approach private equity groups after having made good experiences with buyout groups in several situations, for example its online classifieds unit Scout24 <G24n.DE>, they said.

Groups specializing in managing mobile masts, such as American Tower <AMT.N>, Crown Castle <CCI.N> and SBA <SBAC.O> are also expected to be interested in the Deutsche Telekom sale, they added.

Deutsche Telekom is still in the process of separating out its German masts as a business and has not produced pro-forma standalone earnings figures yet.

"Despite certain shared usership agreements for individual sites, Deutsche Telekom has a certain freedom in defining how much it pays its towers subsidiary for the use of the service," one of the people said.

The person added that the details of the leasing contracts as well as the assessment of how easily additional users for the masts can be attracted will also be factors in determining a potential valuation of the assets, they said.

(This version of the story was refiled to delete duplicate sourcing in final paragraph)

(Additional reporting by Harro Ten Wolde and Peter Maushagen; Editing by Greg Mahlich)