Telecom Austria Tower Spin-off Notes

June 9, 2023 Update

Telekom Austria (TKA) stock is very cheap at 3.5x forward EBITDA. It’s at the low end of its historical valuation range. Further, it trades at 7x earnings and a 4.5% dividend yield (just 30% payout ratio).

The latest news is that it’s going to spin off its tower business. The company has 12,900 towers. At a valuation of $100,000 per tower, the new spin-off should be worth $1.3BN. The current market cap of TKA is €4.6BN and EV is €6.75N. Carlos Slim has a majority ownership stake in the business.

Question/Initial Thoughts:

  • Relatively mature market so not going to see crazy growth.
  • Valuation is cheap but not compared to Airtel Africa.
  • How much debt will go with the tower?

From the TKA Annual Meeting this month (June):