The Spanish telecommunications group Telefónica would apparently prefer to bring investors on board its submarine cable division than to sell large parts of it. With the sale, the Spanish company wanted to flush around two billion euros into the coffers in order to reduce debt. At the end of November, Telefónica commissioned the French commercial bank Société Générale and the investment bank Greenhill to prepare for the sale of the submarine cable division of the subsidiary Telxius.
Instead, the company could now carry out a partial sale and then bring the asset into an infrastructure division set up in 2019 called Telefónica Infra, said Telefonica COO Angel Vilá in an interview with [i]Bloomberg[/i ]. Telefónica wants the new department to work “like any other infrastructure investment fund,” said Vilá.
Telxius currently operates the fiber optic broadband network Telefónica in Germany. In Brazil, the company is negotiating a fiber optic joint venture. Under the name FiBrasil Infraestrutura e Fibra Ótica SA (FiBrasil), the new network is to be created in the South American country as a neutral and independent fiber optic backbone.
Debt repayment urgently needed
Bloomberg goes on to report that this new investment could add value to its assets and raise funds to reduce Telefónica’s € 35 billion debt. Injecting new investments instead of selling could be part of a new trend in which telecommunications companies are attracting investors into their own infrastructure in order to increase returns.
Telefónica has to service debts. In January, Telefónica sold a large part of its radio towers for 7.7 billion euros to the American Tower Corp. The announcement of the planned Telxius sale in November 2020 did not come as a surprise. Telefónica had previously used the infrastructure company as a source of liquidity. In 2017, 40 percent of the shares went to the US investment company Kohlberg Kravis Roberts & Co. (KKR) and 10 percent to Pontegadea. That brought in more than 1.2 billion euros at the time.
There was also speculation last year about an attempt to list Telxius on the stock exchange. A first attempt was called off in 2016. Telxius maintains and markets several submarine cables worldwide, including the transatlantic submarine cable Marea, which was commissioned by Microsoft and Facebook and completed in 2017.