Passive infrastructure:Telefónica Deutschland sells mobile sites to Telxius for 1.5 billion euros

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Credits: Telefónica Deutschland
Telefónica headquarters in Munich
Telefónica Deutschland Holding AG has signed an agreement with Telxius Telecom S.A. (Telxius) on the spin-off and sale of its passive infrastructure. Approximately 10,100 mobile sites, which are mostly situated on rooftops, will be transferred to the infrastructure company at a purchase price of 1.5 billion euros. The active radio technology at the transferred sites will remain the property of Telefónica Deutschland and will continue to be used to operate the mobile communications network. As part of the transaction, Telxius will develop a total of 2,400 additional sites for the installation of active radio technology over the next four years and to lease space on these to Telefónica Deutschland. With this transaction, the company is taking advantage of the currently attractive valuations for constructional network infrastructure and strengthening its financial flexibility.

Credits: Telefónica Deutschland
Markus Haas
At the same time, Telefónica Deutschland is securing access to important locations via long-term rental agreements, also for the expansion of the 5G network that will start this year. Furthermore, the transaction ensures that Telefónica Deutschland has gained in Telxius a competent partner for the further expansion of its network infrastructure. The transaction is still subject to the approval of the relevant authorities, in particular the German Federal Cartel Office. "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. 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," said Markus Haas, CEO of Telefónica Deutschland.

Credits: Telefónica Deutschland
Markus Rolle
"In the current entrepreneurially challenging corona pandemic, we want to continue to shape our financial profile conservatively. The financial flexibility that comes with the sale significantly increases our entrepreneurial scope in the medium and long term," explained Markus Rolle, CFO of the company. Telefónica Deutschland launched an investment programme focusing on the network back in December 2019 with the aim of accelerating the company's growth. The focus is on increasing the coverage of rural areas, especially with 4G, and also accelerating the expansion of capacity in cities, in particular with 5G. As part of this investment program, the investment ratio will reach 17-18 percent in 2020 and 2021 and return to normalised levels as early as 2022. Telefónica S. A. indirectly holds 69.2 percent of Telefónica Deutschland Holding AG and at the same time indirectly holds a majority interest in Telxius, as it holds 50.01 percent alongside KKR & Co. Inc. and Pontegadea Inversiones S.L. with indirect shareholdings of 40 percent and 9.99 percent in Telxius, respectively.