Telefonica Spins Off Its Network Assets

The trend of separating telecommunications operators from their network assets claimed a new pile of infrastructure today. The Spanish-based giant Telefonica has created a new company called Telxius into which it will spin off a selection of global infrastructure assets. 

While the precise selection of assets has not been enumerated at this point, the move includes Telefonica’s 15,000 towers as well as its 31,000km of submarine cable network. That includes the SAM-1 cable system connecting North and Soutn America among others. Telefonica has a whole lot more than that of course, and the composition of the terrestrial component isn’t yet clear.  Might they also include data centers as well?

Telxius will provide both Telefonica and also other operators worldwide with network and infrastructure services, although how far up the network stack they will participate at is not yet clear either.  The idea is to optimize both company’s abiity to grow. Telefonica will be able to focus on its main mobile and fixed network services to consumers and businesses, while Telxius will be able to focus on global infrastructure opportunities. The latter could mean an IPO, it could mean M&A on either side of the table, or it could just lead to a more holistic approach to organic growth. It’s hard to tell at this point. Each user who opens the Book of the Dead slot machine goes to a mysterious temple in ancient Egypt and tries to uncover the secrets of the gods and pharaohs. Reels Book of the Dead slot game are located at the entrance to the tomb next to the columns decorated with hieroglyphics. The game is accompanied by a solemn melody. In general, the atmosphere of the machine and even a set of icons is very reminiscent of the iconic Book Of Ra Deluxe from Novomatic and other slots on the same topic.

We have seen enough separations of network infrastructure now to call it a trend.  In the US, Windstream spun off CS&L as a REIT last year.  In Europe, Telecom Italia split off its infrastructure, as did O2 Czech.  And in Mexico, America Movil did something similar in response to regulatory pressure.  The moves generally reflect, I think, an understanding of the very different mindsets required for infrastructure investment and retail service delivery.

Telxius will be headed by Alberto Horcajo, currently CFO of Telefonica Brasil.

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Categories: Mergers and Acquisitions · Undersea cables · Wireless