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* Deutsche Telekom, Vodafone also spinning off masts
* Orange aims to retain control of mobile mast network
* Shares fall sharply on firm's minimum dividend offer
(Adds more comments from CEO and details about new strategy)
By Mathieu Rosemain
PARIS, Dec 4 (Reuters) - Orange said it planned to
carve out its mobile towers in most European countries to shore
up the group's value, but the move was overshadowed by the
French telecom firm's modest dividend outlook, sending its
shares lower.
The company is following similar moves by other European
firms that are looking to sell mobile networks as infrastructure
valuations surge on interest from investors such as U.S. private
equity firm KKR and Spain's Cellnex.
The infrastructure sale aims to beef up its valuation as
tough regional competition hampers Orange's growth and margins.
Bigger rivals Deutsche Telekom and Britain's
Vodafone have separated their mobile tower assets and
are seeking to sell part of them via a listing or private sale.
Vodafone's shares jumped when it announced spin-off plans.
"Today, we believe that the value of all of our networks
isn't reflected in our stock prices," Orange Chief Executive
Stephane Richard said.
But Orange shares still fell by about 4% in early trade,
with traders citing disappointment about the dividend outlook
after Orange said it would pay out a minimum annual dividend of
70 cents per share over the period.
The company also said that, as part of its news strategic
plan, it would not start cutting back capital spending until
2022, after initially aiming for spending to peak in 2018.
The CEO said the dividend could rise later depending on cash
flow, but analysts and investors remained cautious.
"Investors will need to wait until 2021 and beyond to see
more tangible positive results," Bryan Garnier analyst Thomas
Coudry wrote in a note after the mobile mast move was announced.
Although the new tower firm aimed to show the value of
infrastructure, there was a "very limited" opportunity to turn
this into cash, investment bank Jefferies wrote in a note,
adding that the "dividend floor is not raised".
RETAINING CONTROL
Orange's mobile towers could be worth around 10 billion
euros ($11 billion), analysts have estimated. Citi said their
value may reach 13 billion euros, or 20 times the operating
results generated by towers.
France's former telecoms monopoly said it owned about 40,000
towers for its network on the continent. The first "TowerCos"
will be created in 2020 in France and Spain, Orange's two
biggest markets.
The Paris-based company will retain control over the new
entities with the aim of merging them into a European company in
future that would also be majority-owned by Orange.
The group also said it was selling 1,500 mobile masts to
Spain's Cellnex for 260 million euros.
The divestments were part of Orange's five-year strategic
plan, which it said included sharing the deployment of
high-speed fibre broadband technology with other operators via
dedicated firms that could be opened up to outside investors.
($1 = 0.9073 euros)
(Reporting by Mathieu Rosemain;
Additional reporting by Sudip Kar-Gupta
Editing by Louise Heavens)
