Telefónica creates infrastructure company

Spanish and Latin American telecoms giant Telefónica has created a new global infrastructure company called Telxius to improve the profitability of its networks by renting out to third parties.

The company has put Alberto Horcajo in charge of the new unit. The idea is to give the company greater control over its assets, lease the infrastructure and add new infrastructure assets.

Telxius' infrastructure assets will initially include 15,000 towers in Spain and other countries, and a 31,000km fiber optic submarine network, including the SAM-1 submarine cable that connects the US and Central and South America.

Telefónica has a fiber optic network that connects 40 countries in Europe and the Americas. The Tier-1 transport network has a capacity of 4.5Tbps per year and offers telecoms services to Telefónica and other fixed and mobile operators, ISPs and content providers.

Telefónica's largest rival in Latin America, América Móvil spun off its infrastructure into a separate rental company, Telesites, which began operations in December.

América Móvil was forced to spin off assets in an attempt to shed the preponderant status imposed upon it by Mexican authorities as part of the telecoms reform approved in 2014.

The move made Telesites Mexico's largest tower rental company, controlling 10,800 towers and 43.2% of the market. American Tower is in second place with a 34.2% market share.

Reports of Telefónica's intentions to create an infrastructure company surfaced a few months ago and in January the company grouped its submarine cables into the company Submarine Telecommunications and its mobile infrastructure into the firm Wireless Towers.

There is also speculation that the infrastructure units could be sold as Telefónica is keen to reduce its 50bn euro (US$56bn) debt burden.

Barclays estimated that the value of the mobile assets alone is between US$8n and US$9.4bn and that the infrastructure company could generate annual income of US$1.3bn, Spanish daily Cinco Días reported.

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