Telefonica plans to IPO regional units
As part of broad restructuring to cope with the eurozone crisis, carrier will IPO in Germany and Latin America
Published: 1 June, 2012
READ MORE: M&A | Americas | Germany | Telefonica
Telefonica has been undergoing a major reorganization as it deals with the eurozone crisis and an accelerating shift of growth towards its Latin American business. It has established a UK-based division to drive new digital services, initiated cost cutting programs, and is now looking to IPO its German and Latin American units.
The plan would raise cash to reduce its debt and protect itself from the financial storms buffeting the eurozone, and its home base of Spain. The carrier said it was "accelerating the disposal process of non-core assets" in order to increase its financial flexibility and boost shareholder value. In light of those goals, there is some logic to given the higher growth Latin American business greater freedom of action.
The firm's German unit, O2 Germany, is its second largest European operation after Spain and is valued at about €8bn. In Latin America, it is active in many markets in the region, including the largest - Mexico and Brazil. It did not specify which divisions it might IPO or sell off. The LatAm assets are valued at over €40bn in total.
According to Bloomberg, Telefonica's market value has slumped by almost €50bn over the past 18 months and the carrier had net debt of €57.1bn at the end of March. This is raising fears that the company might be pressurized to sell assets at below their market value because of its exposure to the Spanish crisis.
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