ACS and Mundys, on alert for the tax blow to Abertis in France

The French government is contemplating tripling the tax on toll road operators to generate 1.4 billion euros annually. This move, implemented through the "Tax on Long-Distance Infrastructure" (Teitld in French), has created significant challenges for Abertis, a company heavily reliant on the French market. Abertis, which has operations in France, Spain, and Italy, experienced a 85 million euro decline in sales and a 2% decrease in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2024 due to the tax.

With the proposed increase in the tax rate from 4.6% to 12.2% from January 2027, the fiscal cost is expected to surpass 100 million euros annually. This surge in fiscal burden, coupled with the growing scope of Abertis' operations in France, poses a substantial economic and legal risk. Abertis has sought legal action against the French government over the tax, arguing that any modifications to the contract terms should be compensated.

The company's French subsidiary, Abertis France, manages approximately 2,000 kilometers of highways, contributing 6.5% to the company's overall revenue in France, with an EBITDA of 800 million euros and a market dominance of over 70%. Abertis' debt associated with its French assets is valued at 4.892 billion euros. The company's ability to maintain its investment grade rating is crucial for financing growth and paying dividends of 600 million euros annually to its parent companies, ACS and Mundys.