Other telecom tower operators like Cellnex and Inwit received a warm reception from investors. But Telxius, which has an indicative price tag of between 3 and 3.8 billion euros, also includes the harder-to-value undersea cable business. That warrants a discount.
Most telecom companies in Europe own their mobile towers, but this is relatively inefficient, since rival networks often overlap.
Telcos can raise cash and reduce costs by selling them to operators like Cellnex or Telxius that close down the redundant ones and increase the number of telco tenants per tower.
That provides operators with predicable cash flows based on long-term contracts, with added growth potential.
This is standard practice in places like the United States, where EBITDA per tower is more than twice that of Europe, according to analysts at Barclays.
The snag for Telxius is that towers only make up about 43 percent of sales.
The rest consists of thousands of kilometres of submarine cables connecting networks in the United States, Europe and Central and South America.
That part is more capital intensive, and there are no quoted peers. Level 3 in the United States operates some subsea cables.
It is valued at around 9 times forward EBITDA, though its margin is lower than Telxius cable's 50 percent. Zayo, a fibre infrastructure operator with similarly higher margins, is on 10.5 times.
Apply a multiple of 10 times to the estimated cable EBITDA and Cellnex's 15 times multiple for the mast business.
That gives an enterprise value of 3.9 billion euros. Subtract estimated net debt and Telxius would be worth around 3.2 billion euros - in the bottom half of the range before applying any IPO discount.
Telefonica has arguments to push for more, but there is no reason to get greedy.
It is also mulling an IPO of its British unit O2 after European Union authorities nixed a planned sale to Hutchison. That could be much bigger: more than 9 billion pounds including debt, according to estimates by Macquarie.
A successful Telxius debut would set a nice precedent.