Telefónica Sells Telxius Stake in Debt-Reduction Drive -- 2nd Update
21 February 2017 - 10:11PM
Dow Jones News
By Jeannette Neumann and Ian Walker
MADRID-- Telefónica SA has agreed to sell up to 40% of its
Telxius infrastructure unit to KKR & Co. as the Spanish
telecommunications giant seeks funds to whittle down its debt.
Telefónica said KKR will pay EUR1.28 billion ($1.35 billion), or
EUR12.75 a share, for Telxius. The unit owns and operates around
16,000 telecommunications towers in five countries and around
31,000 kilometers (19,263 miles) of submarine fiber optic
cables.
The price values the entire Telxius business at EUR3.2 billion,
the bottom end of the EUR3 billion to EUR3.7 billion indicated
range the company had set on Feb. 10 when it announced that it had
received several offers to buy a stake in the telecommunications
tower business.
Telefónica said it would maintain a majority stake and
operational control of Telxius while continuing to consolidate the
unit's results in its accounts. Telefónica shares were down 0.1% in
midmorning trading in Madrid.
Madrid-based Telefónica had tried to float Telxius last year,
but was forced to cancel an initial public offering at the end of
September because of weak demand. Telefónica had also tried, and
failed, to sell its British mobile operator O2 as part of a
debt-reduction drive.
Telefónica had EUR50 billion of net debt as of Sept. 30, above
the company's market value of around EUR47 billion. The company
reports 2016 results on Thursday.
After those failed asset sales, Telefónica cut its dividend at
the end of October to appease investors who had been calling for
the company to trim its dividend to a more sustainable level, and
shift more cash toward paying down debt.
The Telxius deal is the sixth operation that KKR has funded from
its $3.1 billion global infrastructure fund, which closed in July
2015 and targets investment primarily in developed countries.
KKR also deployed some of those funds to purchase, for example,
a stake in a Spanish solar power developer and operator in July
2015 and to buy a company that provides gas and electricity meters
to energy suppliers in the U.K. in December 2016.
Jesús Olmos, KKR's global co-head of infrastructure and head of
Spain, said Tuesday that the investment firm aims to support
Telefónica's bid to grow Telxius.
"We are confident that the exploding demand for mobile data,
driven by the rise in 4K and virtual reality content, together with
the need for reliable internet infrastructure will help drive
strong growth in the business," Mr. Olmos said.
Write to Jeannette Neumann at jeannette.neumann@wsj.com and Ian
Walker at ian.walker@wsj.com
(END) Dow Jones Newswires
February 21, 2017 05:56 ET (10:56 GMT)
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