Monday, March 27

Telefónica will create a company for fiber in empty Spain with an investment partner

Telefónica announced this Thursday its intention to create a subsidiary in Spain that retains all the fiber optic assets in the emptied Spain. The CEO of the company, Ángel Vilà, has indicated that the objective is to cover nearly five million homes throughout the country with this company, in areas with lower population density. The goal that the company seeks is the subsequent sale of a part of this new company, while maintaining shareholder control.

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As it has done in other countries where it operates, such as in Germany, Telefónica wants to cash in on fiber optic assets. “We had a value that was not being recognized,” Vilà assured at the company’s results press conference. “It will aspire to have around five million homes, of which half are already active and the other half are under construction,” explained the ‘number two’ of the telecommunications group. “We have not yet started contact with investors, but we are ready to go to the market,” he stressed.

Telefónica justifies this move, and the value they expect to obtain from it, on several factors. The first is to try to participate in the consolidation of this business segment compared to today with “multiple operators”. The second is that they anticipate that it may have the capacity to attract new customers. With a highly developed fiber in urban environments, Telefónica sees in the rural environment the only one in which it can expand its customer base in this business. Lastly, as it is this type of service and in full development of European funds, it plans to obtain access to public aid to offer internet throughout the territory. “Spain has shown that it knows how to use European funds and we have to aim to reach that 20% of the territory with fiber and with 5G,” said the group’s president, José María Álvarez Pallete.

Vilà has avoided making an estimate of the value they hope to obtain from this operation, although he has indicated that he is confident of obtaining “high multiples”. To do this, they point out, they have studied other similar operations that have been taking place in other markets to copy the aspects that have helped those who have obtained a greater return. As has happened with telecommunications towers, some companies in the sector have been creating companies to transfer fiber optic infrastructure assets, in order to obtain millionaire injections from international investors.

It is not the only operation that Telefónica has on the table in Spain. In recent weeks, different information has pointed to the possibility that Movistar +, the pay television platform, will go on the market for the entry of new investors. Pallete has assured that the company is satisfied with the weight that this business has for the group, but has recognized that “things have happened” that have made it more difficult to access the premieres of the big international production companies, since they have been launching their own streaming platforms. The president of the company has linked this operation to a change in competition rules, against which he has charged again.

After the purchase of Digital + from the Prisa group, Telefónica is considered by the CNMC to have a dominant position. “We have to study all the scenarios, but first we have to know how we are going to be able to compete,” said Pallete, who is openly critical of this consideration that the company has and that forces it to certain limitations. “Before defining any alliance we have to know what our capacity to compete is, we do not want others to be regulated more, but rather to deregulate ourselves,” Pallete emphasized.

This same criticism has been poured on the football market. Pallete has criticized that the company is obliged to offer the content it acquires to interested operators, under conditions set by the CNMC. “We are no longer dominant operators”, both Pallete and Vilà have repeatedly stressed. In this field, Telefónica is negotiating with Dazn to also be able to offer the matches that the British platform acquired, with whom the last LaLiga auction was shared.

Telefónica has reported this Thursday that it has earned 8,137 million euros in the year 2021, which means multiplying its profits by five from the previous year thanks to the extraordinary ones achieved in the sale of Telxius telecommunications towers and the merger of its subsidiary British. The company has invoiced 39,277 million euros, an international decrease of 8.8% in absolute terms, but 2% more in organic terms, since the British subsidiary ceases to belong to the perimeter of the group and its impact on the accounts will be seen reflected via dividends, according to data sent to the National Securities Market Commission (CNMV).

Regarding the specific business in Spain, Telefónica celebrated this Thursday that it “returns to growth”, since it closed the year with a slight increase of 0.1% compared to last year’s data. Although, this growth has not been produced by the improvement of its activity, whose income fell by 1%, but by the sale of mobile phones to its customers, whose income has skyrocketed by 51% during the last year. As far as customers are concerned, the results show that it has fallen by 1.1 million ‘accesses’, especially in mobile and landline, although they gain in fiber.