Telefonica is planning to list between 10-15 per cent of its Latin American operations, FT reports, citing Telefonica CEO Cesar Alierta. According to Alierta, Telefonica could float the stake in Latin America to “send the message that the sum-of-the-parts [of the businesses] is much higher than the valuation of Telefonica”.
The potential flotation of the unit is being worked on within Telefonica although has not been given board approval. There are no further major asset sales or flotations being prepared aside from the Latin American operations, with Alierta stating that there was “no intention to float our UK operations” in spite of recent analyst speculation.
According to Alierta, Telefonica is on track to bring down net debt to EUR 50 billion, from EUR 58 billion, following the offering of part of Telefonica’s German unit, which was the biggest European IPO this year. Telefonica has also sold a stake in China Unicom and the Atento call-centre division in recent months.
“We have an extremely comfortable liquidity position with covered maturities for a number of years,” Alierta said, addressing concerns about the company’s financial health. “We are on track to bring down net debt towards EUR 50 billion. People had doubted we could do this, so we reduced close to EUR 8 billion of debt,” Alierta said.
A flotation of part of its Latin American business would allow market visibility into the value of the group, Alierta added. “LatAm is a whole continent and has a value of parts benefit,” he said. “We have a much lower price/earnings than some competitors when our operations in Brazil are so much stronger”, he added.
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