Telefonica Deutschland Holding AG, the leading mobile operator in the German market, has announced an agreement to sell about 10,100 telecom sites to the group’s majority-owned tower infrastructure arm Telxius Telecom for EUR 1.5 billion. The acquisition deal includes 10,000 rooftop sites and up to 80 tower sites, as well as an obligation to build 2,400 new sites (BTS). This move will ensure the company’s exceptional future growth in Germany, Europe’s largest telecom market, where a robust deployment by operators is expected to improve mobile broadband coverage and secure the future deployment of 5G.
Markus Haas, CEO of Telefonica Deutschland, said, “This is one of the largest and most important transactions in the history of Telefonica Deutschland. It represents an important milestone in focusing our business activities. We are pursuing a clear course based on our growth strategy. Within this strategy, we are focusing on further improving the quality of the O2 network for our customers, particularly in terms of area coverage.”
Telefonica disclosed that the agreement will see Telxius double the size of its tower portfolio to over 32,800 masts in the six countries where it currently operates, and will strengthen its position as one of the leading neutral infrastructure operators. Approximately 80 percent of Telxius’ sites are located in Europe (Spain and Germany), while the rest of the portfolio is in Latin America (Brazil, Peru, Chile and Argentina). Telefonica also noted that the active radio technology remains in the hands of Telefonica Deutschland, and will continue to be used to operate the mobile network.
Consistent with this agreement, Telxius will finance 90 percent of the acquisition costs via a capital increase and internally generated resources. The outstanding balance of 10 percent will be financed through incremental debt. Telxius said that the transaction is structured in two phases: Telxius will first acquire approximately 60 percent of the portfolio, and then the remaining 40 percent by August 2021.
Mario Martin, CEO of Telxius, said, “This agreement marks an important transformation of Telxius’ profile. It consolidates us as a leading infrastructure company and we significantly increase our exposure to both the tower business and the largest European market. In addition, we ensure an extraordinary growth profile.”
Additionally, this transaction will reduce Telefonica Group’s net debt by approximately EUR 500 million between 2020 and 2021, due to the contribution made by Telxius, net of the applicable tax impact. Telxius is owned by Telefonica (50.01 percent), KKR (40 percent), and the remaining stake (9.99 percent) belongs to Amancio Ortega’s investment fund, Pontegadea.