Telefonica can't get enough of that sweet, sweet towers moolah

via Flickr © Gary Lerude (CC BY-ND 2.0)

via Flickr © Gary Lerude (CC BY-ND 2.0)

  • Telco wants to monetise up to 50,000 more towers in next 12 months
  • It might do this by incorporating more sites into its Telxius unit
  • Reckons up to €830m of revenue, €360m of earnings are up for grabs

Telefonica, one of the earlier movers in Europe when it comes to monetising towers, has said it is looking at ramping up this strategy over the next 12 months.

Of the 130,000 towers that Telefonica uses, it owns – either directly or through a subsidiary – 68,000. Its Telxius unit, created in 2016 to manage and cash in on the group's infrastructure, already controls 18,000 of those. That leaves 50,000 towers ripe for monetising; options on the table include incorporating some of these sites into Telxius.

Depending what Telefonica ends up doing, it reckons these towers could generate revenues of €830 million, and operating income before depreciation and amortisation (OIBDA) of €360 million a year, "based on comparable market benchmarks."

Cellnex would be one such benchmark. Europe's biggest towers company has around 45,000 towers and generated revenues of €901 million in 2018, and adjusted EBITDA of €591 million.

Telxius itself is performing well too. Revenue last year was €792 million, and OIBDA was €370 million. Although it is worth remembering that in addition to 18,000 towers, the company also manages 87,000 km of submarine cables.

Other players have since cottoned onto the excitement swirling around towers, and they are just as bullish about their own prospects.

Vodafone, which recently shared plans for monetising 61,7000 of its towers by creating TowerCo, expects annual revenues in the region of €1.7 billion and earnings of up to €900 million.

CK Hutchison quietly jumped on the bandwagon in August. Three's parent has created CK Hutchison Network Holdings, which will manage a portfolio of 28,500 towers spread across Europe. It has an option to add a further 9,300 towers in Asia further down the line.

As long as demand for capacity and coverage keeps growing – and there's nothing to suggest it won't given the clamour for data – then there will be demand for towers. Even with tens of thousands of operator-owned towers being made available to third parties, there is still likely to be healthy demand for sites, what with telcos ramping up their 5G rollouts based on mid-band and mmWave spectrum.

Telefonica itself said it isn't about to stop building its own sites. It said:

"Telefonica continues expanding its global portfolio and expects to deploy new macro sites over the next years across its markets and to continue growing its existing footprint of small cells to support its network strategy."

It looks like the towers bonanza could be set to continue for the foreseeable future.

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