Telefonica has become the latest European telco to take advantage of third-party interest for mobile infrastructure and agreed a deal to sell its European and Latin American masts to the American Tower Company (ATC).
The €7.7 billion sale of its Telxius subsidiary includes 30,772 masts across Argentina, Brazil, Chile, Germany, Peru and Spain but not the UK where O2’s masts are shared with O2 as part of the Cornerstone joint-venture.
The deal includes arrangements for Telefonica’s operators in each country to continue to use the infrastructure and ATC immediately becomes Telefonica’s leading supplier in both regions.
Telefonica mast sale
Telefonica had already indicated it planned to reduce its presence in Latin America outside of Brazil as part of a wider strategic shift. It plans to focus on its core European markets and to become a more sustainable business.
The proceeds from the sale will be used to reduce Telefonica’s debt as it seeks growth opportunities, most notably the planned joint-venture in the UK with Virgin Media.
“This is a deal that makes strategic sense within our roadmap. American Towers was our second supplier after Telxius,” said José María Álvarez-Pallete, Telefonica President. “After this great operation we will continue to focus on our most ambitious objectives: the integration of O2 with Virgin in the United Kingdom, the purchase of Oi mobile in Brazil and the reduction of debt.”
Several European operators have moved to sell their passive mobile infrastructure in the past year, hoping to raise capital. Private equity firms value the predictable, stable revenues promises by masts and demand for 5G services means there is scope for growth.
This long-term view contrasts with the short-term pressures that network investment imposes on mobile operators who are in the middle of expensive network builds. An independent operator would also be able to agree deals with multiple operators, increasing revenues.
Three’s parent CK Hutchison has sold its mast assets across Europe to Cellnex for €10 billion, while Vodafone has spun off its towers into an independent subsidiary that is expected to float later in 2021.