Li Ka-shing’s CK Hutchison sells its European wireless towers to Spain’s Cellnex for US$11.7 billion
- The company, which is run by Li’s son Victor Li Tzar-kuoi, will sell 25,000 tower sites in the UK, Italy, Sweden, Denmark, Austria and Ireland, it announced late on Thursday
- The firm said it is considering using some of the proceeds for share buy-back programmes, which would boost the price of its stock
The company said it is considering using some of the proceeds for “on-market share buy-back programs”, after the completion of the deal, without giving specific figures.
The practice of rebuying shares usually leads to a surge in a company’s share price.
The sale of the towers will “unlock the value of the group’s telecommunications division, which the company believes has not been fully reflected in its share price in recent years,” CK Hutchison said in the filing.
The total value of the sale is €10 billion, including €1.4 billion in the form of a 5 per cent stake of new shares in Cellnex.
The company’s shares closed at HK$53.5 on Thursday, before the announcement, down 1.65 per cent.
CK Hutchison, which has businesses spanning multiple sectors including retail and logistics, hived off its European towers business into CK Hutchison Networks, a newly formed entity under CK Hutchison Group Telecom Holdings, in August, to manage the sites.
Cellnex aims to provide telecommunication infrastructure services to CK Hutchison and to roll out 6,700 additional sites across the six countries in the coming 15 years.
“We are pleased to gain a long-term partner in Cellnex while unlocking value in our telecom assets for our shareholders,” said Canning Fok, CK Hutchison’s co-managing director. “This will improve our operational efficiency and accelerate 5G roll-out.”
CK Hutchison Group Telecom recorded €7.6 billion in revenue for the nine months through September this year, a decline of 4 per cent when compared with the same period of 2019, according to a filing with updated third-quarter figures to the Hong Kong exchange on November 4.
“[The market] landscape remained challenging for most of 2020, with consumer sentiment impacted by the pandemic,” the company said in that statement.
The transaction announced on Thursday will be the largest in the history of Barcelona-based Cellnex, boosting its towers footprint by about 40 per cent to beyond 100,000 sites. It could pave the way for Cellnex to enter new markets such as Austria, Denmark and Sweden.
