Displaying items by tag: Telxius

Telefónica still in heavy debt following sale of Telxius

Written on Monday, 30 October 2017 08:33

Spanish telecoms giant Telefonica released its financial results for the January-September period, showing a profit of €2,439 million (+9.6 percent) and a free cash flow generation of €3,226 million (+ 39.2 percent). The company still faces heavy debt despite the sale of its infrastructure arm Telxius. Telefónica’s debt fell by €3.646 million to €45.947 million.

Telefónica confirmed in February it would sell up to 40 percent of its infrastructure unit Telxius to US investment fund KKR for 1.27 billion euros ($1.35 billion). The company, which has been burdened by heavy debt, failed last September to float the unit after not being able to attract enough demand for the share sale.

Telefónica said it would keep a majority stake and operational control of Telxius, which operates telecommunications towers and subsea fiber optic cables, and would continue to consolidate it into its accounts. The subsidiary manages 16,000 telecoms towers in five countries as well as 65,000 kilometers (40,000 miles) of submarine fiber optic cables.

Telefónica’s revenues decreased 2.5 percent year-on-year in Q3 2017 to €12,754 million (€38,846m in the first nine months; +1.4 percent). In organic terms, however, revenue growth accelerated to 4 percent (+2.9 percent in January-September), driven by improved contributions from Telefónica España, Telefónica Deutschland and Telefónica Hispanoamérica.

Handset sales had a year-on-year double digit growth in the quarter (+11.8 percent). Mobile data revenues increased by 16.3 percent year-on-year in organic terms in the quarter (+15.9 percent in January-September), representing 58 percent of the quarterly mobile service revenues.  

Telefónica has continued to focus on expanding 4G and UBB networks, and the simplification and digitalization of processes and systems, also reflecting integration synergies and including €502 million in spectrum and licenses.

Telefónica maintained its focus on accelerating digital transformation to contribute to improving its efficiency and growth to the maximum. In order to increase the value of network and connectivity, UBB rollout continued at a strong pace, 42.8 million premises passed with FTTx and cable, 18 million in Brazil (FTTx and cable), 18.6 million in Spain (FTTH) and 6.2 million in Hispanoamérica (FTTx and cable). 4G coverage increased to 69 percent.

Published in Finance

Spanish telecom giant Telefónica posted its Q2 results for 2017 showing strength in its South American subsidiaries and declines in Europe. The company showed “a general acceleration in growth in main financial and operational terms” as it moves to organically reduce its €48.5 billion debt pile rather than sell off assets.

The operator posted revenue of around €13 billion, an increase of 1.9 percent from the same quarter in 2016. Net profit for Telefónica reached €821 million, an increase of 18.4 percent from the same period in 2016. The company’s key revenue drives, it said, was mobile data revenue.

Telefónica was able to reduce its debt by €3.7 billion year-on-year, which will increase once the company completes the sale of its 40 percent stake in tower unit Telxius, which it’s selling for €1.3 billion. Telefónica moved to sell its O2 unit in the UK to help reduce its debt after it felt pressure from investors, but the company is now attempting to reduce its debt organically by improving cash flow.

“The strength and better business trends in the first half of the year, as well as being well-positioned to continue capturing sustainable growth in the coming quarters, allow us to upgrade our guidance for 2017,” commented José María Álvarez-Pallete, Executive Chairman of Telefónica.

Published in Finance

Spanish telecoms giant Telefónica confirmed it will be selling up to 40 percent of its infrastructure unit Telxius to US investment fund KKR for 1.27 billion euros ($1.35 billion). The company, which is burdened by heavy debt, failed last September to float the unit after not being able to attract enough demand for the share sale.

Telefónica said it will keep a majority stake and operational control of Telxius, which operates telecommunications towers and subsea fiber optic cables, and would continue to consolidate it into its accounts. The subsidiary manages 16,000 telecoms towers in five countries as well as 65,000 kilometers (40,000 miles) of submarine fiber optic cables.

Telefónica, under the agreement, will sell a 24.8 percent stake of Telxius to KKR for 790 million euros. KKR will then have the option to purchase an additional 15.2 percent stake in Telxius for at least 485 million euros. The transaction values Telxius at 3.2 billion euros or 12.75 euros per share.

KKR’s head of Spain, Jesus Olmos, said in a Telefónica statement: “The combination of Telefónica’s industrial expertise and KKR’s financial and operations support will help Telxius as it continues to scale and grow.”

Telefónica had asked for 12-15 euros per share for Telxius when it tried to float the unit last year but the offers it received were too low. The move seems to be the “most logical outcome given the great difficulties in finding investors for the subsidiary in the past, combined with Telefónica’s refusal to sell it at any price,” said Bankinter, a Spanish bank, in a research note.

Telefónica’s debt was at 49.9 billion euros at the end of October last year, according to an AFP report. Therefore, the company is eager for cash, hence the sale of its infrastructure subsidiary, and is also considering a possible listing of its British unit 02, after the European Commission blocked its sale to Hong Kong group Hutchison.

Published in Finance

In early September, Telefónica, the Spanish multinational broadband and telecommunications provider, said it was prepping for a public offering for Telxius, its telecoms infrastructure subsidiary. By the end of the month, the company announced that it was cancelling the public offering, after demand from investors proved inadequate.

The Spanish company said in a statement it will continue “to analyze strategic alternatives” for Telxius. The decision to cancel the IPO was agreed upon with the banks that were managing the IPO, the company said. Telefónica and its advisers were said to be struggling to rescue the deal, and considered lowering the price or reducing the size of the deal because of low demand for the stock.

Investors were reportedly taken aback by the asking price of 12 euros to 15 euros a share, and the company and its banks were unable to find a solution, Bloomberg reported. Telefónica is well-known to be financially in-debt, and the cancelled sale leaves it with few options to significantly reduce its 52.6 billion euro debt pile, while sustaining its credit rating and maintaining dividends.

Telefónica is now on the hunt for cash and it is also considering a possible listing of its British unit O2, after the European Commission blocked its sale to Hong Kong group Hutchison over fears of the impact on prices for consumers.

The company had hoped to raise up to 1.5 billion euros from the Telxius listing, which was scheduled for October 3. It had planned to float up to 40 percent of Telxius, which manages Telefonica's infrastructure assets, including over 31,000 kilometers (19,000 miles) of sea-floor fiber-optic cables and 15,000 telecom masts in Spain.

Published in Telecom Operators

Telefónica, the Spanish multinational broadband and telecommunications provider, is said to be prepping an initial public offering (IPO) for Telxius, the company’s telecommunications infrastructure subsidiary which provides wholesale services. Telefónica plans to float about 25 percent of Telxius later this year, but plans to remain its majority shareholder.

The IPO was delayed because of market turmoil following the UK’s planned exit from the European Union. Earlier this year, Telefónica said the IPO would happen as early as July. The company intends to apply for the listing of its shares on the Barcelona, Bilbao, Madrid and Valencia stock markets, and complete the operation before December, according to Rapid TV News.

Telxius’ consolidated revenue value (on a proforma basis) was 691 million euros in the year to end-December 2015, and its consolidated OIBDA (also on a proforma basis) was 323 million euros. Its assets include around 16,000 wireless towers in Spain, Germany, Brazil and Chile, as well as extensive submarine fiber cables from a network of about 65,000 kilometers and 71 points of presence in 19 countries.

The company’s growth has been attributed to the strong global demand for data according to Telefónica. Telxius’ customers include the likes of global carriers, wholesale and retail operators, and over-the-top (OTT) providers in several regions, reports Mobile World Live. The company says its reach extends across both developed and emerging markets. BBVA, Caixabank, Goldman Sachs and JP Morgan have been announced as the joint global coordinators and joint book-runners of the IPO.

Published in Telecom Operators

Telefonica's Telxius considers IPO

Written on Sunday, 05 June 2016 06:00

Telefonica is pressing ahead with IPO plans for Telxius, its global infrastructure business, reports Bloomberg. CaixaBank and Banco Bilbao Vizcaya Argentaria have been added as global coordinators, along with Goldman Sachs and JPMorgan Chase, said sources. The sale could take place as soon as July, they added.

The sale of Telxius, which includes Telefonica’s cellular towers and network assets such as submarine cables, is central to the group’s debt reduction strategy, particularly since the European Commission blocked the sale of its UK business to CK Hutchison.

The IPO could raise between €4 billion and €5 billion, a helpful amount as CEO Jose Maria Alvarez-Pallete contemplates a €50 billion debt pile. Last month, Telefonica said Telxius had 2015 revenue of €680 million and OIBDA (Operating Income Before Depreciation and Amortisation) of €300 million.

The sale of Telefonica O2 would have raised £10.3 billion (€13.5 billion) but was recently deemed anti-competitive by the EC.

Telefonica set up Telxius to house its global infrastructure assets, with a brief to get involved with growth opportunities “including the possibility of incorporating third party assets”.

The business will be headed by Alberto Horcajo, currently CFO at Telefonica Brasil.

Initial assets include around 15,000 Telefonica telecommunication towers in Spain and other countries, as well as the Telefonica Group’s international network of 31,000 km of submarine fibre optic cable.

The creation of Telxius “is part of the optimisation strategy for the Telefónica Group asset portfolio,” the operator said, and will enable the management of the Telefónica Group’s infrastructure on a global scale with a more specialised and focused approach.

The idea is to offer more services to other operators, as well as improve the return on capital invested. In addition, the new move will allow Telxius “to participate in the growth opportunities that exist in the industry, including the possibility of incorporating third party assets”, which seems like a reference to M&A possibilities for the new firm.

In addition to is domestic towers and international undersea cable, Telefonica also has a backbone network connecting more than 40 countries in Europe and the Americas, including the US.

“Over the coming months, a number of newly created companies, including the aforementioned assets, will be gradually integrated into Telxius,” said the statement.

Published in Telecom Operators

Facebook and Microsoft have teamed up with Telxius, part of Telefonica’s infrastructure unit, to lay a subsea cable under the Atlantic Ocean. Construction of the cable is set to begin in August 2016 and expected to be completed by October 2016. Both Microsoft and Facebook have invested in trans-ocean cables in the past.

The cable will “help the growing customer demands for high speed, reliable connections for cloud and online services,” according to the companies involved. They also said that they hope to further the development of the next-generation of Internet infrastructure, supporting the “explosion of data consumption” around the world, and the rapid growth of their respective cloud and online services.

According to the companies, ‘Marea’ as the cable system will be called, will be the highest-capacity subsea cable under the Atlantic with eight fiber pairs and an estimated design capacity of 160Tbp/s.

The system will be the first to connect the U.S. to southern Europe, and other vibrant networks in Africa, Asia and the Middle East. It will be operated and managed by Telxius, according to Mobile World Live, serving as the operator of the system and selling capacity as part of its wholesale infrastructure business.

Facebook and Microsoft reportedly want the cable to be “interoperable” with a range of networking equipment. The partners believe that the cable’s “open” design will benefit customers, allowing lower costs and easier equipment upgrades, leading to faster growth in bandwidth rates since it will be able to evolve at the pace of optical technology innovation.

Facebook is “always evaluating new technologies and systems in order to provide the best connectivity possible,” says Najam Ahmad, VP of network engineering at Facebook. By creating a “vendor-agnostic” design, Ahmad says that Facebook “can choose the hardware and software that best serves the system and ultimately increase the pace of innovation.”

Ahmad also says Facebook wants to “do more of these projects in this manner – allowing us to move fast with more collaboration. We think this is how most subsea cable systems will be built in the future.”

Published in Telecom Vendors

Telefónica is creating Telxius, a new global company which brings together certain infrastructure assets of the Group and for which Telefónica has proposed the appointment of Alberto Horcajo as CEO. The incorporation of the new company is part of the optimization strategy for the Telefónica Group asset portfolio.

Telxius will enable the management of the Telefónica Group’s infrastructure on a global scale with a more specialized and focused approach, with the aim of increasing the services provided to other operators, improving the return on capital invested and allowing Telxius to participate more actively in the growth opportunities that exist in the industry, including the possibility of incorporating third party assets.

Telefónica currently manages a high capacity fiber optic cable network which connects more than 40 countries in Europe and the Americas, including the United States. This is an international Tier-1 network which carries more than 4,5Tbps of traffic throughout the year and provides telecommunications services both to Telefónica Group and other fixed and mobile operators, internet service providers (ISPs) and content providers.

The infrastructure assets which will initially be brought together in Telxius will include approximately 15,000 Telefónica telecommunication towers in Spain and other countries, as well as the Telefónica Group´s international network of 31,000km of submarine fiber optic cable, including SAM-1, a submarine cable that connects the United States with Central and South America.

Published in Telecom Vendors