Telefonica is in talks with international investors on the possible sale of its undersea cable network with a view to cutting debt, according to unnamed sources cited by business daily Expansion. The network is run by the company’s telecommunications infrastructure subsidiary Telxius, which was integrated into Telefonica Tech last year. Telefonica is reportedly valuing the submarine-cable business at around 10 times its current EBITDA, equivalent to some EUR 2 billion, said the sources.
The news comes after Telefonica’s Chief Operating Officer and Telefonica Infra chief Angel Vila mentioned the possibility of divesting the company’s undersea cable network following the publication of third-quarter figures. He also revealed that Telxius had signed new five-year cable contracts with Telefonica’s subsidiaries in exchange for fixed price reductions, allowing the company to consider alternative strategies for its submarine cable business.
Earlier this year Bloomberg reported that Telefonica had begun discussing the move 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. The report said separating submarine cable assets from the rest of the Telxius infrastructure would allow Telxius to focus solely on mobile phone towers.
Telefonica Infra recently reported third-quarter revenues up 2.0 percent year on year on an organic basis to EUR 194 million, with the cable segment experiencing a sustained growth in traffic due to the impact of Covid-19 of over 30 percent year on year. The unit comprises Telefonica’s stakes in communications towers and other telecommunications infrastructure vehicles, above all its 50.01 percent stake in Telxius.
