Telefonica has launched the initial public offering for its infrastructure company Telxius and looks to raise up to EUR 1.5 billion. The Spanish operator is offering 90.9 million shares or 36.36 percent of the capital of Telxuis to qualified investors in a bookbuilding process running 20-29 September.
The indicative price range for the shares is EUR 12-15 per share, meaning gross proceeds of EUR 1.09-1.36 billion and a market capitalisation of EUR 3.00-3.75 billion for Telxius. If demand is strong, Telefonica will sell additional shares to list in total 40 percent of the company, taking the proceeds to EUR 1.5 billion. Pricing of the IPO is planned for 29 September, and the shares are expected to start trading in Madrid on 03 October.
Telefonica plans to use the proceeds from the IPO for debt reduction. Telxius was set up early this year to control a number of the operator's network assets, from towers in Spain and at operating subsidiaries such as Telefonica Deutschland and Telefonica Brasil, to international cables owned by Telefonica around the world.
Telefonica reported pro forma revenues for Telxius of EUR 691 million in 2015, while OIBDA amounted to EUR 323.5 million and recurring cash flow was EUR 245.4 million. Just over half (57%) of revenues came from the cable business, and the remainder from towers. Around two-thirds of revenue comes from Telefonica, and the rest from third parties. The company had an order backlog worth EUR 4.7 billion at the end of June.
Telxius plans to pay an annual dividend of EUR 70 million in 2017 and to pay out at least 40 percent of recurring cash flow to shareholders in future. While Telefonica will retain majority control of the company, four of the nine board members at Telxius will be independent, and they will have the majority of the seats on the audit and nominating committees.
