telxius

Telefonica shares surge 8.7% after American Towers deal

14 January 2021 | Melanie Mingas

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Shares in Telefonica were trading 8.7% higher yesterday, following confirmation the multinational telco will sell its Telxius Towers unit.

As Capacity reported, the €7.7bn spin off will see American Towers take on the 31,000-site Telxius portfolio and lease it back to Telefonica. American Tower has also committed to spend around $500 million constructing a "committed pipeline" of 3,300 new sites in Germany and Brazil by 2025.

As a result of the sale, Telefonica's slimline portfolio will be entirely located in the UK.

Proceeds from the cash deal will help Telefonica reduce debts, which currently total €4.6 billion and have developed as a result of network investments.

American Tower said it expects the assets to generate approximately $775 million in property revenue, approximately $410 million in gross margin, and approximately $390 million in Adjusted EBITDA at current foreign exchange rates, in their first full year in its portfolio, pro forma for contributions from the committed future build-to-suits.

Confirming the news earlier this week, American Tower CEO, Tom Bartlett, said: "This transaction is transformational for our European business and will establish American Tower as one of the largest independent communications infrastructure providers in Europe. It is also complementary for our Latin American portfolio and positions us to drive strong long-term organic growth across both regions while augmenting our new build programs and enhancing our relationships with key tenants.

"We are excited to broaden our partnership with Telefónica by acquiring a high-quality, well-located portfolio of sites that will further diversify our global footprint and enhance our ability to help provide broadband connectivity for billions of people."