Orange plans to establish European mobile mast company
France’s Orange said on Wednesday it planned to carve out its mobile towers in most European countries where it is present. The move aimed at shoring up the telecom group’s value as tough competition in the region has hampered its growth and margins.
The telecoms operator is following similar moves by other European companies that are looking at selling mobile networks as in valuations for infrastructure assets sky-rocket amid growing appetite from investors, such as U.S. private equity firm KKR and Spain’s Cellnex.
Other key rivals Deutsche Telekom and Britain’s Vodafone have separated their mast mobile assets and are seeking to sell part of them via a listing or a private sale.
Shares in Vodafone, the world’s second-largest mobile operator, surged as much as 10 percent when it announced plans to spin off its mobile masts.
“Today, we believe that the value of our all of our networks isn’t reflected in our stock prices,” Orange’s chief executive Stephane Richard said.
Orange’s mobile towers could be worth around €10 billion ($11 billion), analysts have estimated, while Citi said their value may reach €13 billion, or 20 times the operating results generated by towers.
France’s former telecoms monopoly said that it had about 40,000 towers of its mobile network on the continent. The first “TowerCos” will be set up in France and Spain, the company’s two biggest markets, in 2020.
The Paris-based company will retain control over all these new entities and is seeking to eventually merge them into a European company. This entity will also be majority-owned by Orange.
It also said it was selling 1,500 mobile masts to Spain’s Cellnex for €260 million.
The divestments were part of Orange’s five-year strategic plan, in which it said it would share the deployment of high-speed fibre broadband technology with other operators via dedicated companies that could be opened up to outside investors.
Orange shares dropped 3.8 percent in early trade, with some traders citing disappointment over the company’s dividend outlook. It stated that it will pay out a minimum annual dividend of 70 cents per share over the period.