Telefonica Weighs Initial Public Offering for Tower, Cable Unitby
Share sale is among alternatives being considered for Telxius
Carrier carving out infrastructure unit as it reduces debt
Telefonica SA, Europe’s second-largest phone company, is considering an initial public offering of its newly created tower and submarine-cable unit Telxius.
Telefonica is “analyzing different strategic alternatives, among which is a possible initial public offering," the carrier said in a regulatory filing Thursday. The Madrid-based phone operator announced the creation of Telxius Wednesday and said it will initially consist of about 15,000 phone towers and an international submarine-cable network covering 31,000 kilometers (19,000 miles), with more assets being included gradually over the next few months.
Telefonica is seeking to raise cash and reduce debt, and a spinoff of tower assets would follow similar moves by America Movil SAB and Telecom Italia SpA. Telefonica is seeking to cut debt as weak currencies in Latin America weigh on earnings. Last month, the company announced a 2.9 billion euro ($3.3 billion) early-retirement plan to cut employment costs.
Telefonica’s towers outside Germany total about 46,000 units and could have an enterprise value of about 8.5 billion euros to 9.5 billion euros, excluding assets such as cables, Barclays Plc analysts led by Mathieu Robilliard estimated in a Nov. 26 note to clients.
Telefonica said it created Telxius to improve profitability and be able to participate more actively in growth opportunities, which could include buying assets. Alberto Horcajo, who was previously chief financial officer of Telefonica’s Brazilian unit, will run Telxius.