Telefónica to float cable and tower company, and looks again at O2 UK

Telefónica to float cable and tower company, and looks again at O2 UK

Telefónica is to float 25% of the shares in its newly created infrastructure and tower company, Telxius, by the end of 2016. But the company has also revived the idea of selling shares in O2, either to outside investors or through a share flotation.

José María Álvarez-Pallete, chairman and CEO of Telefónica, said the Telxius flotation “is expected to take place during the second half of 2016”, but that Telefónica will remain the majority shareholder.

Telxius intends to apply for the listing of its shares on the Barcelona, Bilbao, Madrid and Valencia stock exchanges, as well as their inclusion in the Spanish Continuous Market, said the company.

Telefónica set up Telxius to hold its infrastructure assets – including subsea cables as well as towers – in February 2016.

Telxius took over Telefónica’s network of 65,000km of subsea fibre cable, of which 31,000km is directly owned by Telxius, including SAM-1, a cable that connects the US with Central and South America. Telxius has 71 points of presence in 19 countries.

It also owns 16,000 towers in Spain, Germany, Brazil, Peru and Chile.

Telxius’s revenues in 2015 – before it was officially split from the group – was €680 million.

But Álvarez-Pallete has also raised the possibility that Telefónica is looking again at the future of O2 UK, which it had hoped to sell to CK Hutchison’s Three UK for £12.5 billion until the European Commission blocked the deal.

Speaking to reporters, Álvarez-Pallete said that Telefónica is considering “a listing or the entry of new shareholders in O2 UK”, and added that the decision will be made “in the coming weeks”.

After the Commission blocked Hutchison’s takeover, it is known that the existing management of O2 UK looked at a variety of deals, including a flotation or a partial sale, but in June appeared to have decided to hold on to the business.

Meanwhile former CEO of O2 UK, Ronan Dunne, has been appointed president of Verizon Wireless.

However Telefónica is highly indebted, to the tune of €53 billion, which means the company is looking for ways to reduce that figure.

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