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Historical operation in the world of telecommunications. Telefónica has sold all the towers it has with its Telxius division to the American giant American Tower Corporation for an amount of 7,700 million euros. In addition, the Spanish operator shares a shareholding in the subsidiary with KKR and Pontegadea (Amancio Ortega), which also benefit.
It’s about the second largest sale in its segment (after Cellnex), although Telefónica will continue to manage them. This has even caused it to skyrocket in the stock market by 10%. The magnitude is relevant, they are in conreto 30,722 the towers located in Europe and Latin America. Therefore, the sale has been closed in two phases, independently for both divisions.
Payment will be made in cash, taking into account that Telefónica owns 50.1% of Telxius shares, Pontegadea almost 10% and the US fund KKR 40%.
Keys to the operation
Once the operation is definitively completed, Telefónica will reduce its net financial debt by approximately 4,600 million euros, and the leverage ratio (Net Debt / EBITDA) at approximately 0.3 times. It is part of its strategy to achieve an active portfolio management policy for its businesses and assets., through an accelerated reduction of organic debt and creating value.
Amancio Ortega and KKR will also benefit from the operation. The founder of Inditex will receive more than double the price for which he acquired the 10%, which was 378 million. And KKR, which paid 1,275 million in 2017 for 40% of the shares, will pocket 3,100 million euros.
On the other hand, an employment commitment has also been agreed, so that American Tower is committed to maintaining it, and the buyer will have to invest $ 500 million in the construction of 3,300 new sites in Germany and Brazil by 2025. Telefónica will maintain the current lease contracts for the towers, which do not include additional clauses in the renewal conditions.
Who is American Tower?
This American giant, founded in 1995, is valued at almost 10 billion dollars in the stock market. It has an eNorme presence in the United States, with 41,000 towers, and in Latin America, in great contrast to the one it had so far in Europe. According to data from the company itself, they had 2,800 towers in France, 2,200 in Germany, and another smaller package in Poland.
It is not an unknown operation in the North American market, where the sale of telecommunications towers to independent managers by operators has previously taken place. With this one in particular, American Tower expects to obtain with these new assets some 775 million dollars in income, as expressed in a statement.
American Tower becomes Telefónica’s number one supplier in both Europe and Latin America, being also a partner in projects in Brazil, Argentina and Colombia.
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.