Telefónica, Pontegadea acquire submarine cable company Telxius

Telefónica and its financial partner Pontegadea, the investment vehicle of Spanish billionaire Armancio Ortega, acquired for 215mn euros (US$213mn) the remaining 40% stake in Telxius Telecom, the telecom infrastructure and submarine cable company in which both players are core investors.

The companies bought the remaining stake from Taurus Bidco, an entity managed by US fund KKR, as reported by Telefónica to Spanish securities and markets regulator CNMV.

As a result, Telefónica subsidiary Pontel, previously 83.35%-owned by the former and 16.65%-owned by Pontegadea, is now the sole shareholder of Telxius. 

Pontegadea also increased its holding in Pontel to 30%, with Telefónica now holding 70%, the telco reported.

The formalization comes after the announcement of a deal by the two partners in February 2022.

Telefónica’s report to CNMV also comes one day after Telxius and América Móvil announced a new submarine cable that will connect Boca Raton in the US and Puerto Barrios in Guatemala.

The 190Tbps cable, dubbed AMX-3 by América Móvil and Tikal by Telxius, will start operations in 2025.

The transaction, which is still subject to regulatory approval, also marks a turnaround for Telefónica’s Telxius strategy.

After reducing its participation in the unit, Telefónica in 2020 was reported mulling entirely divesting its part of a broader asset disposal plan.

This disposal plan advanced in Central America and the Caribbean, with Telefónica also selling control of terrestrial fiber optics networks in Brazil, Chile and Colombia, among others.

But Telxius, like other submarine fiber companies, regained importance after demand for bandwidth and global interconnection surged during the pandemic.

Currently, Telxius has 12 systems comprising over 94,000km of cables, in addition to 93 points of presence and 27 landing stations in 23 countries, mostly in Latin America.

The company’s wholly or partially controlled cables connecting Latin America and the US and Europe include Unisur (live in 1995), South America-1 (live in 2001), Pacific Caribean Cable System (live in 2015), Marea (live in 2018), Brusa (live in 2018), and the newest, Mistral/South Pacific Cable System, activated in 2021.