Telefónica ditches Telxius IPO as investors baulk at asking price

cell phone tower

Telefónica dropped a planned initial public offering (IPO) of its Telxius Telecom tower business, citing an “inadequate valuation” of the company.

In a statement e-mailed to FierceWireless:Europe, the Spain-headquartered operator explained that it “and the Joint Global Coordinators have decided to abandon the offering”.

The operator added that it “will continue analysing strategic alternatives” regarding the tower operating business.

Telefónica announced the cancellation a little over a week after confirming it had received clearance to proceed with a floatation from the Comisión Nacional del Mercado de Valores (CNMV), the agency responsible for supervising Spain’s stock markets. At that time, the operator said it was seeking to list up to 40 per cent of Telxius, at a price of between €12 ($13.42) and €15 per share. That price range valued Telxius at between €3 billion and €3.75 billion, the operator said.

When it announced the CNMV’s approval, Telefónica said it aimed to finalise the sale price by Sep. 29 and that it aimed for trading to begin on Oct. 3.

After it became clear that investors considered the asking price to be too high, Telefónica and investment banks hired to advise it on the sale considered dropping the price or the amount of stock put up for sale in an attempt to save the IPO before dropping the sale, Bloomberg reported.

Cancellation of the sale represents a further blow to Telefónica’s efforts to reduce a debt mountain that Bloomberg noted stands at €52.6 billion.

The operator in June abandoned plans to sell its O2 UK division to CK Hutchison’s mobile business Three UK as part of its attempts to cut the debt pile.

A Telefónica spokesperson on Monday confirmed that the operator has engaged public-relations advisor Finsbury as part of a broader strategic review of its O2 UK business. The spokesperson also confirmed a previous Telefónica statement that an IPO is one option being considered for the UK business.

For more:
- see this Bloomberg report

Related articles:
Telefónica appoints adviser to support possible IPO for O2 UK
Telefónica confirms IPO as one option on table for O2 UK
Report: Telefónica could list Telxius tower unit in July