Spanish incumbent Telefonica has halted the process of spinning-out its Latin American business, according to media reports.
Unfavourable valuations were the main reason for the decision, El Confidencial reported, citing sources close to the…
Spanish incumbent Telefonica has halted the process of spinning-out its Latin American business, according to media reports.
Unfavourable valuations were the main reason for the decision, El Confidencial reported, citing sources close to the board.
Speaking to TelecomFinance, an industry banker pointed out that Telefonica had not yet appointed advisers on the IPO. He said that in his view the idea had not been called of as such. Rather, Telefonica had realised that it needed more time to consider its options.
He noted that a float of the LatAm operations was more complex then last year’s listing of O2 Germany due to the number of assets in different Latin American countries and with different structures.
Meanwhile Bloomberg said with reference to people familiar with the matter that the IPO had been put on hold as Telefonica’s funding needs had been relieved.
The Bloomberg report referred to the flotation of Telefonica Deutschland, which raised €1.45bn last year, and a €1.5bn eurobond issue at the beginning of January as easing the company’s finances.
Telefonica had mooted an IPO of the LatAm business late last year as a measure to further cut its debt.
A LatAm IPO could raise up to €6bn (US$8bn), Telefonica’s Brazilian CFO Gilmar Camurra had said in December.
Today’s reports suggested the plan would only be revived if there was strong investor appetite or more pressure from rating agencies.
A spokesperson for Telefonica refused to comment on the reports.
The telco had net debt of €56bn at the end of Q3 2012, down from €58bn at half-year results.
The company has said it aimed to reduce its net debt to €50bn by the end of 2012 – it plans to release its full year results on 28 February.
As part of its debt-cutting measures Telefonica scrapped its dividend last July, refinanced and issued bonds, reduced its stake in China Unicom and sold Hispasat, as well as floating its German unit.
