By divesting its radio tower business, the A1 Group will lose one billion euros in debt in one fell swoop, which will be transferred from A1 to the new infrastructure company EuroTeleSites.
The financing of EuroTeleSites has already been completed, Funkturm CEO Ivo Ivanovski told analysts at the Capital Markets Day in early September. A bond will amount to 500 million euros, plus a loan of 500 million euros and a credit line (RCF) of 75 million euros. The spin-off must be worthwhile because in the future the infrastructure will increasingly be leased to other mobile operators in addition to the A1.
Trading starts Friday
The reference price for the shares of the radio tower activities of Telekom Austria, spun off into EuroTeleSites, is 4.95 euros per share. The partially state-owned telecommunications company announced this on Thursday after the stock exchange closed. Starting tomorrow, Friday, EuroTeleSites shares will be listed separately from the parent company in official trading on the Vienna Stock Exchange (Prime Market). Shareholders of Telekom Austria will also receive one share certificate from EuroTeleSites AG for every four shares.
On Friday there will be a discount on Telekom shares of the spin-off EuroTeleSites. The first real price of the EuroTeleSites share will then be determined, and thus how investors will assess the radio tower business.
Since the spin-off was announced, prices have increased
Whether shareholders can trade their EuroTeleSites shares from Friday depends on the depository institution, i.e. their own broker or bank. In Thursday evening’s broadcast, Telekom Austria pointed out that the EuroTeleSites shares would not be deposited until next week, on September 26.
Since the announcement of the IPO of subsidiary Funkturm at the end of June, Telekom Austria’s share price has risen by 12 percent to 7.59 euros. The ownership structure of EuroTeleSites is similar to that of the parent company: the Mexican telecommunications company America Movil owns 56.55 percent, the state holding company ÖBAG has 28.42 percent of the shares and 15.03 percent is in free float.
1000 new transmission towers planned
According to the company, EuroTeleSites’ annual turnover currently exceeds 230 million euros. “We expect revenue growth of 4 to 6 percent per year in the coming years,” said Lars Mosdorf, CFO of EuroTeleSites, at the Capital Markets Day. Two-thirds of the growth will be driven by anchor tenant A1 and its 5G expansion, which currently accounts for around half of A1’s infrastructure investments.
About 1,000 additional locations are planned. New transmission towers would only be built if contracts were already in place with future tenants.
A1 is allowed to use transmission towers for a long period of time
A1 and EuroTeleSites will remain closely linked in the future. The contract for the use of the transmission towers is in principle unlimited, but can be canceled by A1 after the 8th, 16th and 24th contract year. EuroTeleSites cannot terminate the contract until after 24 years at the earliest.
Both contract partners then have the right to withdraw from the contract at the end of each year, although this must be announced three years in advance. The rent can be increased by 85 percent of the price increase, with a maximum increase of 3 percent per year.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
