Telefonica has reached an agreement to sell its towers division Telxius to US infrastructure giant American Tower Corporation for EUR 7.7 billion in cash. The deal will see ATC take over a total of 30,722 tower sites in Germany, Spain, Brazil, Chile, Peru and Argentina, with the US-based company pledging to spend a further USD 500 million to build a committed pipeline of around 3,300 new sites in Germany and Brazil through 2025. It has also pledged to maintain employment levels as well as all current lease agreements.
The Spanish group has been mulling the sale of Telxius for over a year with advisers and investors, including 40 percent shareholder KKR and Pontegadea, the holding company of Zara founder Amancio Ortega, which owns a 10 percent stake. In a statement the operator said it intends to use the proceeds of the transaction, which include a capital gain of around EUR 3.5 billion, to reduce its net financial debt by EUR 4.6 billion. It added that the deal comprises two separate and independent transactions for the Europe and Latin American business, both of which are subject to customary closing adjustments with regulatory bodies.
Telefonica said the infrastructure unit generated an estimated OIBDAaL over the past 12 months of around EUR 190 million and that when adjusted to consider the full impact of the German portfolio acquired by Telxius in June, the implied multiple over OBIDAaL of the transaction would be 30.5 times on a pro forma basis. Telefonica’s chief executive officer Jose Maria Alvarez-Pallete said the deal "makes strategic sense within our roadmap [in that] American Tower was our second supplier after Telxius". He added that the company will focus going forward on the planned merger of O2 with Virgin Media in the UK, the purchase of Oi mobile in Brazil and the continued reduction of debt.
ATC, meanwhile, said it expects the assets to generate around USD 775 million in property revenue, USD 410 million in gross margin and USD 390 million in adjusted EBITDA at current foreign exchange rates, in their first full year in its portfolio. If the deal is cleared, it will become Telefonica’s leading supplier in both Europe and Latin America, while maintaining its current position as a partner in strategic projects in Brazil, Argentina and Colombia.
