CK Hutchison Holdings, owned by Hong Kong billionaire Li Ka-shing, is set to sell its European wireless network assets to Cellnex Telecom for $11.7 billion.
According to a filing submitted to the Hong Kong stock exchange Wednesday, the company is now in advanced talks with the Spanish company regarding the divestment.
In its filing, the company said that it was negotiating to sell its entire 29,100 wireless network towers located in Italy, Sweden, United Kingdom, Austria and Ireland. CK Hutchison previously broke away its European wireless network business in August into a company called CK Hutchison Networks, which itself is under CK Hutchison Group Telecom Holdings.
In a separate statement, Cellnex Telecom confirmed that it was in advanced talks with CK Hutchison over the acquisition of its infrastructure assets. It added that no concrete decision has yet been made and that the terms of the deal could change at any time.
If the deal does push through, it would be the largest acquisition ever made by the Barcelona-based telecommunications company. It would also boost the company's coverage by an estimated 40%, increasing its cell towers to more than 100,000 sites. The deal will also allow Cellnex to enter new markets such as Denmark and Sweden.
CK Hutchison's wireless business faces bleak prospects in Europe due to the ongoing tensions between the U.S. and China. Mobile service providers in the region have been barred from purchasing new equipment produced by Chinese telecommunications equipment manufacturer Huawei Technologies starting January 1, 2021. This will then be followed by a mandate to remove all Huawei-made 5G equipment by 2027.
"The UK business faces tough prospects amid intensifying competition and the gradual swap out of Huawei Technologies' 5G equipment. We expect higher capex as the government's ruling requires removal of all 5G Huawei equipment from UK telco networks by 2027," analysts at Fitch Ratings said in a statement.
Over the past three quarters through September, CK Hutchison Group Telecom Holdings reported total revenues of over $8.9 billion. This represented a decline of 4% when compared to the same period last year.
