Operator will launch tender offer to buy 28.19% it does not already own in December
Telefónica Deutschland announced it will launch a public tender offer to acquire the 28.19% stake it does not own in its German unit, Telefonica Deutschland. The offer will be €2.35 per share in cash, amounting to about €2 billion in total.
Reuters says shares in Telefonica Deutschland closed at €1.7075 on Monday evening and have now been suspended after the tender offer was announced. Hence the offer price has a premium of. 37.6%.
The German opco has a market value of around €5 billion – its shares have fallen 26% this calendar year. The Spanish operator directly or indirectly owns the other 71.81% of Telefónica Deutschland.
Key strategic plank
Telefónica is due to outline its multi-year strategy tomorrow, Wednesday. The group has already indicated that is wants to shift its focus to generating cash after years of restructuring paying down debt, often by selling assets.
It was one of the first to cash in its tower infrastructure. Jose Maria Alvarez-Pallete, CEO of the Telefónica Group, has forecast free cash flow of €4 billion for the current financial year – seen as a key indicator of financial health.
The operator says the move to own Telefónica Deutschland outright reinforces its strategy to focus on its core markets – Brazil, Germany, Spain and the UK.
The offer period is expected to begin next month and run until mid-January 2024.
German market
According to Telefónica’s Q3 earnings report for 2023, O2 Telefónica continued the operational growth of the first half of the year and significantly increased the number of its customers. In the fixed network, the company gained 31,000 net fixed-line customers, driven by an increase in cable and fibre connections.
The number of mobile postpaid customers (excluding M2M) climbed by around 400,000 in the quarter. The monthly churn rate for the core brand O2 was a low 1%, below the previous year’s 1.2%.
The operator concluded that the success of its value-over-volume strategy is reflected in ARPU of contracted customers, which rose 2% compared to the same period last year.