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sold 15% above the market value

Phone has closed a big operation to strengthen their finances and very advantageous to their interests within the meaning of the ratings that he had on the table. Its subsidiary specializing in the management of telecommunications infrastructure Telxius Telecom –a company in which also participate, directly or indirectly, the investment fund british KKR (40%) and Pontegadea (9,99%), the society through which it channels its investments, the founder of Inditex, Amancio Ortega– confirmed yesterday an agreement with the company American Tower Corporation (ATC) for the sale of its division of towers telecommunications in Europe (Spain and Germany) and Latin america (Brazil, Peru, Chile and Argentina). The transaction has been sealed in 7.700 million eurospayable in cash, as reported by the Spanish multinational to the National Commission of the Market of Values (CNMV). The figure is well above the 5,000 million euros in the Caixa valued the towers or 6.400 and 6,500 in estimated value JB Capital and Alantra.

The amount of the transaction is also more than double the maximum of 3,750 million euros which is valued Telxius in 2016, when Phone tried to remove it to bag, attempt of which eventually left not to approach the interested the numbers they had hoped to get the operator. With a difference, in addition, that is not less than. In those 3.750 million euros were included in the business of submarine cables, the sale of which is not provided for in the transaction agreement with ATC. Telxius operates an international network of submarine fiber optic cable big capacity, including two systems of largest capacity in the world, Tide and Brusa, which will have an extension of 100,000 km in 2021. The company will also be considering parting with this asset, for which it has contacted with several advisors. This transaction is expected to reach 2,000 million euros. Today, analysts of Sabadell value all of Telxius 8,000 million euroswhich means that, to sell the business of submarine cable 2,000 million, Telefónica would gain 1,700 million more by the whole of the division of the value granted by the bank.

Relevance of the sector

The business towers of Telxius generated a gross profit (OIBDAaL) estimated during the last twelve months of approximately € 190 million. If this figure is adjusted considering the total impact of the portfolio German acquired by Telxius in June of 2020, the multiple implied OIBDAaL pro way would be to 30.5 times, record number, according to the Spanish company. In fact, Cellnex withdrew from this process of purchase, in which was present, given the multiples as demanding made in the operation, as reported to Efe sources knowledgeable of the negotiation. The market estimated that the sale price of these infrastructures ranged between 18 and 19 times OIBDAaL. Telefónica estimates that the capital gain attributable to amount, approximately, 3,500 million. Once the operation is complete, the net financial debt of the Telefónica Group will be reduced by approximately 4,600 million euros and the leverage ratio (net debt/OIBDAaL) in approximately 0.3 times.

The sale price achieved in the operation is a proof of the importance is giving the market to this kind of business of telecommunications infrastructure. The 5G and the liquidity needs of the operators are factors that have driven the telcos to get rid of its towers, and telecommunications in favour of operators in neutral type Cellnex, or of companies that have driven the operators themselves, as in the case of Telxius or Vantage Towers, at the expense of Vodafone.

Current network

The agreement between Telefónica and ATC provides for the sale of a number of, approximately, 30.722 sites of towers and telecommunications comprises two separate transactions, independent (of a part, the business of Europe and, on the other hand, the business of Latin america), with the respective locks once they have obtained the relevant regulatory authorizations. Among other aspects, the above-mentioned agreement of sale provides for a employment commitment on the part of ATC. In Telxius worked a 500 peopleof which is between 240 and 250 is dedicated to the part of the towers sold. These jobs will be protected in the transaction, according to sources from the Phone.

Although getting rid of the towers, the operators of the Telefónica Group will maintain the current leasing contracts of infrastructure signed with the companies sold to affiliates of Telxius Telecom, so that these operators will continue to provide their services on terms similar to the current. In this way, ATC will become the main supplier of Telefónica, both in Europe and in Latin America. The conditions for renewal do not include any clause of type “all or nothing” character additional.

Telefónica explained that the sale of its towers is part of its strategy, which contemplates, among other objectives, a policy active portfolio management of its business and assets, based on value creation and accelerating, at the same time, the debt-reduction organic. “This is an operation that makes strategic sense within our roadmap. American Towers was our second largest supplier after Telxius”, stressed the chairman of Telefónica, José María Álvarez-Pallete, who added that after this “big operation” the group will continue focused on your goals “more ambitious”: the integration of its subsidiary O2 with Virgin in the Uk, the purchase of the mobile assets of Oi in Brazil and the reduction of the debt.

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