Telefónica Kickstarts Spinoff of Some Assets

Spanish service provider Telefónica has started the process of spinning off its domestic infrastructure unit with a sale target date of mid-2016, according to a Reuters story on Monday.

Citing "a source familiar with the matter," Reuters reported that Telefónica was pursuing a "dual track" process to either list or make a trade sale by mid-year.

"The process has started, the new unit will be formally registered very shortly and Telefónica wants to move quickly on those plans," according to a Reuters source.

The plan includes Telefónica putting 11,500 towers that it owns in Spain into the newly created unit, as well as some subsea cabling and data centers. Telefónica sold off more than 1,000 towers to Cellnex several years ago, according to Reuters.

The new unit could be valued between €5 billion ($5.4 billion) and €6 billion ($6.5 billion), Reuters reported, and could include additional masts from Telefónica subsidiaries such as Brazil and Germany down the road. If the latter does occur, Reuters' source said the value of the new unit would be worth more than €10 billion ($10.9 billion).

Kepler Cheuvreux analyst Javier Borrachero told Reuters that creating the new unit would help cut Telefónica's debt of roughly €50 billion ($54.3 billion) while also monetizing some of its assets and adding value to its bottom line. The downside of creating the new unit, according to Borrachero, is that "you can be sending the message that you are in need of doing something."

— Mike Robuck, editor, Telco Transformation

Be the first to post a comment regarding this story.
Sign In