Thursday, 02 December 2021

Telefonica considers offering investors a piece of Spanish fibre unit

by Harry Baldock, Total Telecom
Wednesday 06 October 21

According to media reports, the Spanish operator giant is considering selling a minority stake in its fibre unit to capitalise on investor appetite for telecoms infrastructure

Back in 2019, Telefonica announced that it would be selling its various assets in order to help reduce the company’s considerable debt and fund expensive 5G and fibre rollouts. This enormous restructure included spinning off the majority of its units in Central and South America, leaving the company instead to focus on its core markets of Spain…

Back in 2019, Telefonica announced that it would be selling its various assets in order to help reduce the company’s considerable debt and fund expensive 5G and fibre rollouts. This enormous restructure included spinning off the majority of its units in Central and South America, leaving the company instead to focus on its core markets of Spain, the UK, Germany, and Brazil.

Since then, Telefonica has begun selling stakes in its fibre units in numerous markets around the world. Most recently, in August, Telefonica announced that it was in talks to sell a stake in its Peruvian fibre business, following a similar framework to that it has already used successfully in Chile, Colombia, and Brazil. 

Now, it seems that Telefonica is considering doing the same in its home market of Spain, with Bloomberg reporting that the company had spoken to potential advisors to explore the options of a minority stake sale.

“The market is interested, there's loads of interest from funds for a 15%-35% stake,” said an anonymous source. “They keep the stake for a few years and are asking for 7%-8% return on investment.”

At the end of June, Telefonica’s fibre network was reported as covering around 26.1 million premises, making it the largest fibre-to-the-home (FTTH) network in Europe. According to Bloomberg, the fibre unit is estimated to be worth around €15 billion. 

The source notes that no official decision has been taken at this time and negotiations around any potential deal will likely start in 2022 at the earliest.

Spain is one of the most competitive telecoms markets in Europe, with a large number of players, big and small, creating a fragmented, low-cost environment with very slim profit margins, both in the fibre and mobile spheres.

In fact, late last month Vodafone Spain announced that this hypercompetitive environment was a crucial factor in their decision to close all of its retail stores over the next year and lay off over 500 staff. Orange Spain announced similar plans earlier this summer, suggesting they would lay off around 400 staff members in efforts to reduce costs.

 

Is the Spanish telecoms market overdue consolidation? Find out how the experts view the market at this year’s live Total Telecom Congress 

Also in the news: 
NTT planning to issue $2.7 billion ‘green bond’
Pandora Papers dredge up Telia’s Uzbek scandal
WiFi 6, 5G, and tackling the digital divide

Since you're here...

...the Telecoms industry is characterised by constant change and evolution. That's why it's crucial for telecoms professionals to keep up-to-date with what is happening. Join 35,000+ of your peers and sign up to our free newsletter service today, to be in the know about what is going on. PLUS, as a member you can submit your own press releases!

See all membership options

Please enable JavaScript to view the comments powered by Disqus.

Newsletter signup

Quickly get on board and up to date with the telecoms industry