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Telefonica flogs 30,000 masts to American Tower in €7.7 billion deal

Written by Thu 14 Jan 2021

Multi-billion deal marks first challenge to Cellnex dominance of Europe’s tower industry

Spanish telecom giant Telefonica is selling off its cell tower portfolio to American Tower in a €7.7 billion euro deal.

American Tower will take ownership of the 30,700 tower sites in Spain, Germany, Brazil, Peru, Chile and Argentina held by Telefonica unit Telxius Telecom, the companies announced in a press release.

Rise of the Towerco

American Tower is one of a rising number of “Towercos” – companies which focus purely on amassing a portfolio wireless infrastructure, typically by buying towers from the major mobile network operators who originally built them, before leasing usage back to multiple carriers. Telefonica’s towers, for instance, previously had as few as one tenant and a neutral host presence.

Towercos act much like data centre colocation providers, by taking care of site infrastructure and tenant management and leasing infrastructure back to those companies who historically built and managed it themselves.

Though major network operators once fiercely guarded network towers, the protectionist model has created a huge cost centre which telcos are increasingly unburdening themselves of, in part to finance costly 5G network upgrades. Through its tower sell off, Telefonica expects to net a capital gain of around 3.5 billion euros and cut net debt by about 4.6 billion euros.

Some telcos, like Vodafone, have siphoned tower infrastructure into spin-off entities to pursue a more profitable multi-carrier model, while others follow the Telefonica model of selling off infrastructure to new independents. Vodafone is working on an IPO for of its tower unit this year.

Europe’s largest independent tower operator is Cellnex, which owns a portfolio of 70,000 tower sites. Until now, American Corp been happy to operate in Africa, Latin America and India, allowing Cellnex to grow its European tower empire largely unchallenged. Importantly, American Corp is inheriting Telefonica’s German tower infrastructure, the one major European market where Cellnex hasn’t gained a foothold.

Tom Bartlett, American Tower’s Chief Executive Officer stated: “This transaction is transformational for our European business and will establish American Tower as one of the largest independent communications infrastructure providers in Europe.

“It is also complementary for our Latin American portfolio and positions us to drive strong long-term organic growth across both regions while augmenting our new build programs and enhancing our relationships with key tenants.”

We are excited to broaden our partnership with Telefónica by acquiring a high-quality, well-located portfolio of sites that will further diversify our global footprint and enhance our ability to help provide broadband connectivity for billions of people.”

Written by Thu 14 Jan 2021


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