Telefónica looks to accelerate profits from tower estate

News

The operator group says it is speeding up plans to monetise its tower portfolio, after the strategy was presented at a board meeting this week.

Telefónica operates through a portfolio of 130,000 sites globally, and owns, directly or through its subsidiaries, a portfolio of 68,000 sites across 12 markets.

It calculates that the 50,000 mast sites it owns outside its infrastructure unit, Telxius, could generate approximately €830 million in revenues and €360m in OIBDA (operating income before depreciation and amortisation) and could require €25 million in maintenance capital expenditure on a full-year pro-forma basis.

Over 60% of these sites are located in Telefónica’s four major countries of operation (Spain, UK, Germany and Brazil).

Dedicated tower unit

In 2016, Telefónica created Telxius as a dedicated tower operator owning and managing a portfolio of sites across Europe and Latin America.

Telxius has a portfolio of 18,000 sites across six markets in Europe and Latin America. It also operates an international network of 87,000 km of high-capacity optic fibre submarine cables. 

In 2018, Telxius generated revenues of €792million, which was a rise of 8.4% year on year, and OIBDA of €370 million, a rise of 7.1% on the same period last year.

According to Telefónica, Telxius’ growth and cash flow generation are driven by, among other things, “the remarkable expansion of its third-party tenant base”, which has grown 40% since inception.

It has also carried out bespoke projects both for Telefónica Group as well as for other telecommunication operators.

Telefónica intends to monetise an additional portfolio of wireless telecom assets within the next 12 months.

Options and synergies

The company is analysing different monetisation options to deliver value for shareholders while retaining maximum operational and strategic flexibility.

One alternative could be scaling up Telxius by incorporating additional sites from Telefónica units, the company said.

Telefónica says it aims to “capture further synergies from network-sharing as well as capitalise on the interest for our infrastructure from both public and private market participants.”