Telxius announced it has reached an agreement with Telefónica Deutschland to acquire approximately 10,100 sites for a total of €1.5 billion, after talks of the acquisition has been in circulation for just under two months.
The agreement includes the commitment to build 2,400 additional sites (BTS), ensuring exceptional future growth in Europe's largest market.
The transaction, subject to regulatory approvals, amounts to a total of 1.5 billion euros. The sale of these towers has been closed at a multiple of c.23x EV/EBITDA.
The agreement will see Telxius double the size of its tower portfolio to over 32,800. Approximately 80% of its sites are in Europe, while the rest of the portfolio is in Latin America.
"This is one of the largest and most important transactions in the history of Telefónica Deutschland. It represents an important milestone in focusing our business activities,” said Markus Haas, CEO of Telefónica Deutschland.
“We are pursuing a clear course based on our growth strategy. Within this strategy, we are focusing on further improving the quality of the O2 network for our customers, particularly in terms of area coverage.”
Telxius will finance 90% of the value of the acquisition via a capital increase, and through internally generated resources, and the remaining 10% will be financed through incremental debt.
Telxius is owned by Telefónica (50,01%), KKR (40%) while the remaining (9.99%) stake is owned by Pontegadea.
Mario Martín, CEO of Telxius (pictured), said: “This agreement marks an important transformation of Telxius’ profile. It consolidates us as a leading infrastructure company and we significantly increase our exposure to both the tower business and the largest European market. In addition, we ensure an extraordinary growth profile.”
The transaction will reduce Telefónica Group's net debt by approximately €500 million between 2020 and 2021, due to the contribution made by Telefónica’s partners in Telxius, net of the corresponding tax impacts.
The acquired portfolio is mainly made up of rooftops, with a current tenancy ratio of 1.04x and a wide presence in the main regions of the country, North Rhine-Westphalia, Baden-Wurtemberg and Bavaria, where 52% of the acquired sites are located.
Additionally, the portfolio is distributed in a balanced way between urban areas (45%) and semi-urban and rural areas (55%), effectively complementing the Telxius footprint in Germany, until now mostly rural (84%).
The agreement, executed in large part during the lockdown period, will allow Telxius to significantly strengthen its presence in Germany.
In the last few months, Telxius has completed acquisitions of towers in Brazil and Peru. The creation of Telefonica Infra was one of the five strategic decisions taken under the New Telefonica plan unveiled on November 27, 2019.
"In the current entrepreneurially challenging corona pandemic, we want to continue to shape our financial profile conservatively,” said Markus Rolle, CFO of Telefónica Deutschland.
“The financial flexibility that comes with the sale significantly increases our entrepreneurial scope in the medium and long term.”
The company launched an investment programme focusing on the network back in December 2019 with the aim of accelerating the company's growth.
