Spanish telecoms incumbent Telefonica is planning to raise up to €3bn (US$3.41bn) through a rights issue to fund its previously-announced acquisition of Brazilian broadband provider GVT, the company said earlier today.
Telefonica agreed to buy GVT…
Spanish telecoms incumbent Telefonica is planning to raise up to €3bn (US$3.41bn) through a rights issue to fund its previously-announced acquisition of Brazilian broadband provider GVT, the company said earlier today.
Telefonica agreed to buy GVT from French conglomerate Vivendi in September last year in a US$9.3bn cash-and-stock deal.
The company announced the rights issue during the presentation of its FY 2014 results, which were negatively affected by the write-downs of its Venezuelan assets, resulting in a €2.2m(US$2.4bn) reduction in its fourth quarter revenues.
Last week, the Madrid-based telco said that it had lowered the value of its Venezuelan assets due to the devaluation of the country’s currency, the bolivar.
The operator posted €50.37bn(US$57.2bn) in annual revenues with a €15.51bn OIBDA, while net debt stood at €45.08bn following its acquisition of German operator E-Plus.
As part of the payment for GVT, Vivendi will receive a 7.4% stake in Telefonica’s Brazilian mobile player Vivo, as well as the Spanish incumbent’s 5.7% stake in Telecom Italia (TI). The deal was recently granted preliminary approval by Brazil’s antitrust authority, Cade.
Telefonica is also negotiating the sale of its UK mobile unit O2 to smaller rival 3, owned by Hong Kong group Hutchison Whampoa, in a £10.25bn (US$15.4bn) deal which would create the UK’s largest mobile network operator. Telefonica expects to complete sale in the first half of 2016, pending regulatory approval.
Commenting on the results, MUFJ analyst Rick Mattila said: “Telefonica is seeing some pressure on its domestic market share in both mobile and fixed services. Competition is likely to remain intense as Telefonica will face an improved customer offering from Orange following the pending acquisition of Jazztel”.
He argued that further consolidation in Spain – including an acquisition of the country’s fourth-largest player Yoigo by rivals – would be welcome.
