Activist investor Constructive Capital pushed Telenor to spin off its mobile masts and increase debt, a move it believes could boost the Norway-based operator’s share price by up to 84 per cent.
In a letter seen by Financial Times (FT), Constructive Capital urged the operator to separate out its masts arm after major operators including Telecom Italia, Vodafone Group and BT were all linked to a similar move.
The investor, which reportedly owns an indirect stake in Telenor of below the 5 per cent disclosure threshold, believes spinning out infrastructure assets could boost share price and “create new growth opportunities for Telenor by enabling acquisitions using Telenor’s share price as currency”.
As part of the strategy shift, Constructive Capital also urged Telenor to switch NOK75 billion ($8.8 billion) of its funding from equity to debt, suggesting the operator could support high debt levels.
“The board currently has a unique opportunity to both facilitate this and at the same time create very lasting value for Telenor shareholders,” Constructive Capital stated in the letter.
FT noted operator shares have failed to keep up with the broader financial markets in recent years, despite once being lauded for delivering steady dividends to shareholders.
Telenor’s share price is down 3 per cent over the past year, standing at NOK164.25 at close on Friday (25 January), the same level as it was four years ago.
Responding to the letter, Telenor said: “The board and management welcome feedback from stakeholders. However, we won’t comment on specific details of this letter.”
Telenor, which is majority owned by the government, has stepped up its focus on the Nordics after selling operations in Russia, India and eastern Europe in recent years.Subscribe to our daily newsletter Back