Telefonica Deutschland said it has finalised a deal to sell its passive infrastructure of around 10,100 mobile sites to Telxius for EUR 1.5 billion. The assets include 10,000 rooftop sites and up to 80 tower sites, while the active radio technology remains in the hands of Telefonica Deutschland and will continue to be used to operate the mobile network.
The company said that valuations for network infrastructure are currently "attractive". The transaction is subject to the approval of the responsible authorities, especially the Federal Cartel Office.
Telxius also agreed to build 2,400 more sites for the installation of active radio technology over the next four years and lease these to Telefonica Deutschland.
The passive infrastructure will be spun off to two subsidiaries of Telefonica Deutschland founded for this specific purpose. The transaction will take place in two steps, with about 60 percent of the locations first being transferred to one of the two companies by August, and a subsequent transfer to Telxius before the end of 2020. The other 40 percent of the sites will be transferred to the second company in mid-2021, and then transferred to Telxius in August 2021.
Telefonica Deutschland will lease the space for the installation and operation of its active radio technology. The leasing rate includes the basic rent of the transferred tenancy agreements and the price for the infrastructure. The initial term of the lease is eight years. Telefonica Deutschland has the unilateral option to extend both lease agreements three times for five years each time.
Under the term of the transaction, Telefonica Deutschland will provide Telxius with services related to the operation of the passive infrastructure at cost-based rates plus a customary mark-up for a transitional period of up to three years. In addition, Telefonica Deutschland will provide maintenance services at rates derived from existing procurement contracts for up to eight years.
Telxius said the deal will increase the size of its portfolio by around 50 percent, to over 30,000 sites. In Germany, the deal leads to a six-fold increase in sites, to nearly 15,000. The company plans to finance around 90 percent of the takeover price with a capital issue subscribed pro rata by existing shareholders.
