Private equity group KKR picks up 40% of Telxius for €1.27bn
Private equity group KKR is to buy up to 40% of Telefónica’s subsea and wireless infrastructure company Telxius for €1.27 billion.
The deal, which gives Telxius an enterprise value of €3.68 billion, comes nearly six months after Telefónica withdrew a planned sale of the infrastructure company’s shares. That would also have valued Telxius at about €3.7 billion.
Telefónica will maintain a controlling stake of Telxius and consolidate it in its accounts.
Guillermo Ansaldo, chairman of Telxius, said: “Our vision for Telxius is to capitalise on the exponential increase in data traffic forecast for the coming years by offering a first-class network in Europe and the Americas. We are delighted to have KKR on board as a long-term investment partner. We believe their solid track-record on the infrastructure business will help us achieving our common goals.”
KKR – formerly Kohlberg Kravis Roberts – has a number of investments in telecoms and data centre infrastructure projects. Last year it was one of two investors in French data centre operator OVH, which raised €250 million with KKR and TowerBrook.
Jesus Olmos, KKR’s head of Spain and the investor’s global co-head of infrastructure, said: “The combination of Telefonica’s industrial expertise and KKR’s financial and operational support will help Telxius as it continues to scale and grow. 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.”
Highly indebted Telefónica separated out its infrastructure operations into Telxius just a year ago in order to raise outside investment and reduce overall debt. The company owns towers in Spain and Latin America and took over Telefónica’s subsea cable network, including the BRUSA Brazil-US cable that is due for completion this year. It will manage Microsoft and Facebook's MOREA transatlantic cable.
Telefónica says that Telxius owns and operates nearly 16,000 telecommunications towers in five countries – Spain, Germany, Brazil, Chile and Peru. It manages about 65,000km of subsea cables, of which around 31,000km are owned by Telxius. Following the deal, Telefónica will remain the anchor client for Telxius’s tower and cable businesses.