January 23, 2021

Telefónica sells its telecommunications towers to ATC for 7.7 billion


Telefónica detaches itself from its telecommunications towers. Its subsidiary Telxius, owned together with KKR and Pontegadea (Amancio Ortega), has sold its telecommunications towers division in Europe (Spain and Germany) and Latin America to American Tower Corporation, for 7,700 million euros in cash, with which the company You will continue to reduce your significant financial debt.

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Specifically, Telefónica disposes of 30,722 telecommunications tower sites in two separate operations: one for assets in Europe and the other for Latin America. ATC is committed to maintaining employment in the subsidiary and the operators of the Telefónica group will maintain their current tower leasing contracts signed so far with Telxius. ATC is one of the largest telecommunications infrastructure groups in the world and its main shareholders include Vanguard and Blackrock management companies.

Telefónica celebrates in a press release the economic figure of the agreement and estimates that it achieves capital gains of 3,500 million euros with the operation. Once the transfer of towers agreed with ATC is completed, the group’s financial debt will be reduced by approximately 4,600 million euros. The company points out that this operation is part of the strategy of “creating value and accelerating, at the same time, reducing organic debt.” As of September 30, Telefónica’s financial debt exceeded 36,600 million.

The president of Telefónica, José María Álvarez-Pallete, pointed out that “this is an operation that makes strategic sense within our roadmap. American Towers was our second supplier after Telxius ”and added that“ after this great operation we will continue to focus on our most ambitious objectives: the integration of O2 with Virgin in the United Kingdom, the purchase of Oi’s mobile assets in Brazil and the reduction of Debt”. After this operation, American Tower became the first supplier of Telefónica both in Europe and in Latin America, and maintains its status as a partner in strategic projects in Brazil, Argentina and Colombia.

A little over a year ago, the company began a reorganization of its businesses and assets and made progress in its willingness to sell any of them in whole or in part. As the company explains in a statement, the agreement meets “the main objectives of the roadmap”, among which it stands out “to promote opportunities for greater growth potential, leveraging the value of our infrastructure; efficiency, and creating value with a long-term sustainable model, achieving operational excellence “.

During this reorganization, Telefónica Infra was created, whose main asset was 50.01% of Telxius. In recent months, the company was looking for partners to sell a stake in this subsidiary that it has together with KKR and Amancio Ortega, in order to reduce its stake and lose control. Finally, the operation has been the sale of the tower portfolio, Telxius’ main business and which had been growing in recent years with the incorporation of the infrastructures of the different subsidiaries of the company. The last of these operations, in 2020, was the acquisition of the towers from Germany. According to Telefónica, Telxius will continue to focus on the development and management of towers, distributed antenna systems, data centers, and fiber and submarine cable projects, among others. The group had already started the sale of these last assets a few months ago.

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