Both partners have asked JP Morgan and Guggenheim to find a buyer for a business that the market values at around €1,200 million. This figure implies a multiple below the double-digit levels paid for other telecoms infrastructure assets. The discount is thought to stem from exposure to Latin America.
Report by Renta 4
Telefónica and Pontegadea are reported to have begun the process of exploring the sale of the submarine cable business Telxius Telecom—70 per cent owned by the telecoms firm and 30 per cent by the company founded by the founder of Inditex—five years after an initial failed attempt.
Telxius deploys and manages data traffic via a submarine cable comprising over 100 km of international fibre-optic interconnection, linking Europe, the Americas and Africa.
The valuation of 100% of Telxius could be around 1,200 million euros, approximately six times the 2025 EBITDA.
However, at R4 we value Telxius at 10x 2025 EBITDA, a higher multiple than that currently being considered.
The sale of Telxius is in line with Telefónica’s strategy of selling non-strategic assets, allocating resources to its core businesses and markets, and reducing debt.
Recommendation: Hold, Target price of €4
