Telefonica to sell its Irish operations to Three for $1.1 billion
Think you're carrying a tad too much debt? Spanish telecom giant Telefónica wants to reduce its red ink to 47 billion euros ($62 billion) by the end of the year, so it's decided to sell its Irish mobile and broadband business to Hutchison Whampoa's Three for 850 million euros ($1.1 billion). If regulators approve the deal, it'll let Telefónica hack about 750 million euros of debt from its books, while giving Three a 37.5 percent share of the nation's mobile business and a strong number two position behind Vodafone. The deal follows a £200 million ($273 million) sale of Telefónica's fixed phone line business to Sky. Considering the whopping level of debt, though, that may be just the start.
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TELEFONICA AGREES THE SALE OF ITS OPERATING BUSINESS IN IRELAND TO HUTCHI SON WHAMPOA FOR 850 MILLION EUROS
This transaction is part of Telefónica's policy of proactive management of its asset portfolio and the initiatives to increase the company's financial flexibility.
Madrid, 24th June 2013 - Telefónica today reached an agreement with Three, the Irish subsidiary of Hutchison Whampoa, to sell its 100% stake in Telefónica Ireland. This transaction – which is subject, among other conditions, to obtaining the relevant competition approvals – will create a new competitive dynamic in the Irish market.
The total consideration for the acquisition is 850 million euros, with 780 million euros in cash payable on completion and a further additional deferred payment of 70 million euros dependent upon achievement of agreed financial objectives.
This transaction is part of Telefónica's ongoing policy of proactive management of its asset portfolio with the aim of increasing the company's financial flexibility. Without considering the additional deferred payment it is expected that this agreement will reduce Telefónica's net debt position by approximately 780 million euros, accelerating Telefónica's deleveraging process and bringing the Company closer to its stated goal to reach a net debt level below 47 billion euros ($62 billion) in 2013.
