Telefonica is considering spinning-out its Colombian subsidiary in a move that could help it further reduce its €51.2bn debt pile by up to €900m if it sold a 20% stake.
The Spanish incumbent is looking to float Telefonica Colombia this year –…
Telefonica is considering spinning-out its Colombian subsidiary in a move that could help it further reduce its €51.2bn debt pile by up to €900m if it sold a 20% stake.
The Spanish incumbent is looking to float Telefonica Colombia this year – which it owns a 70% stake in while the government owns the remainder – according to reports. Spanish news site El Confidencial, which first broke the story, said the move was part-motivated by interest in the Latin American country from institutional investors. It said that BofA Merrill Lynch had been mandated to prepare a flotation, citing banking sources.
Telefonica would need approval from the Colombian government to launch the IPO and formal talks on this are yet to take place, various reports said.
Telefonica declined to comment.
The flotation of 20% of Telefonica Colombia could generate between €600m and €900m according to an equity analyst speaking to TelecomFinance. Another analyst, who valued the unit at around €3.4bn, felt that Telefonica could raise around €680m by selling 20% of the business.
He said it was unlikely Telefonica would sell a larger stake in the business as it would want to maintain its majority shareholding.
The analyst was unsure as to whether or not an IPO would actually go ahead. He said that a sale of its stake in Telecom Italia-parent Telco was more likely to happen and that it would probably precede any Colombian flotation.
Last year Telefonica Colombia generated revenues of €1.77bn – which made up 2.8% of Telefonica’s total revenue for 2012 – and reported OIBDA of €607m. It has a 21.6% mobile market share and an 18.1% share of the fixed-line market.
Telefonica had previously mulled listing 15% of its entire Latin American business together – the operations were valued at around €40bn – but it shelved that idea in February.
The Madrid-based telco is looking to cut its debt by more than €4bn this year to below €47bn. Over 2012 it managed to pare its borrowings by more than €5bn. One of the many measures it took was a spin-off its German business, Telefonica Deutschland, in an IPO which raised €1.45bn.
Last week it emerged that Telefonica is considering another round of asset sales. It was suggested that its businesses in Ireland and Central America, and its stakes in its Czech unit and in China Unicom, could be divested.
In March Telefonica sold its remaining treasury stock for €975m, which equated to 2% of Telefonica.
