Spanish incumbent Telefonica is contemplating another round of disposals as it looks to trim its net debt by €4.2bn by the end of 2012, reported Bloomberg citing people familiar with the matter.
It is considering divesting its Irish business and its…
Spanish incumbent Telefonica is contemplating another round of disposals as it looks to trim its net debt by €4.2bn by the end of 2012, reported Bloomberg citing people familiar with the matter.
It is considering divesting its Irish business and its operations in Central America – comprising Costa Rica, El Salvador, Guatemala, Nicaragua and Panama – and stakes in its Czech unit and China Unicom, the report said.
Telefonica declined to comment on the report.
When it published its annual report for 2012 Telefonica said it planned to decrease its debt from €51.2bn to below €47bn this year.
One equity analyst told TelecomFinance that together the asset sales could raise up to €4.2bn. However, some of the assets might be difficult to sell.
The analyst said the Madrid-based operator could sell its remaining 5% stake in China Unicom for €1bn to €1.2bn, after it sold a 4.96% stake in the Chinese operator last summer for €1.1bn, and could likely divest 20% of Telefonica O2 Czech Republic for €900m. However, there is a lower probability it would be able to dispose of 100% of its Irish and Central American units for an acceptable price. The analyst suggested Telefonica would be looking for €1.2bn for the combined Central American business, and €900m for Telefonica Ireland.
In its full-year report for 2012 Telefonica said its Irish business generated revenues of €629m but that it took a €527m write-down last year. It has a third of Ireland’s wireless market.
Meanwhile its Czech business, which it holds 69% of, has 38.6% market share and reported revenues of just over €2bn for 2012.
At the end of 2012 Telefonica reported net debt of €51.2bn, down from €56.3bn at the end of 2011.
To pare its debt the operator scrapped its dividend last July, refinanced and issued bonds, reduced its stake in China Unicom and sold Hispasat and Atento, as well as floating its German unit. However it chose not to pursue an IPO of its Latin American businesses, shelving the idea for the time being.
At the end of March it sold all of its treasury stock – equating to 2% of the company – to investors for €975m. Today it was reported the telco’s German subsidiary was preparing to issue a minimum €500m benchmark eurobond to allow Telefonica to take advantage of lower borrowing costs in Germany. It is said to have hired banks for the offering.
