Telefónica announced on Thursday that it was forced to delay a planned €1.2bn IPO of its infrastructure unit, Telxius, due to insufficient demand for the share sale. The Telxius IPO was part of Spanish telecoms group’s plan to cut its €53bn debt.

Telxius was incorporated in Feb. 2016 as part of the optimization strategy for the Telefónica Group asset portfolio. The infrastructure assets which were initially brought together in Telxius include approximately 15,000 Telefónica telecommunication towers in Spain and other countries, as well as the Telefónica Group´s international submarine cable systems.

Telefónica was seeking to sell 40 per cent of Telxius. The  Telxius IPO was part of a plan for Telefónica to reduce its debt burden, but investors demanded a steep discount because of the spin-off’s undersea cable business. Telefónica said in a filing to the Spanish stock market regulator that it had decided to “abandon the offering” because the valuation of Telxius that was “implicit in the purchase orders” was “inadequate”.

Telefónica will continue analysing “strategic alternatives” with regard to its infrastructure business.

Telefónica also planned to sell O2 to CK Hutchison at €10.5bn, but the European Commission blocked that deal on the grounds that it would have led to higher prices and less choice in the UK. 

The failure on Telxius IPO and sale of O2 puts Spanish telecoms giant more difficult to cut its €53bn debt.