Spain’s recovery is on its way, Telefónica’s chairman assures investors

By Julia Pastor, in Madrid | Telefónica’s president César Alierta devoted his speech during the company’s general shareholder meeting to claim that markets are not considering the company’s growth potential, as well as to defend that Spain is “a very solvent country.”

According to the data gathered by Link analysts, Alierta stressed Telefónica’s high dividend yield, which at current prices will be of 13,3% in 2012. In Alerta’s opinion, it is surprising that Telefónica’s stock prices are similar to those in 2005 given that the company has doubled the number of clients, multiplied the net income by 1.7, and its profit per share by 1.8. He also pointed out that even though the price has not behaved as desired by all, it has been compensated with a shareholder remuneration via dividend, which still makes a substancial difference, not only compared to the sector but also in the markets.

In a day in which Spains’ risk premium climbed towards the 500 bp, the president of the leading Spanish company in terms of capitalisation defended the government reforms, assuring that new regulations will take the country’s economy onto the recovery trail much more quickly and earlier than foreign observers expect.

In a clear reference to the European Commission and the IMF, Alierta announced that the nation-wide competitiveness council CEEC (Consejo Empresarial de Competitividad, in Spanish), integrated by presidents of the big Spanish multinationals, is to publish a report next week which will prove Spain’s solvency is “better than they say.”

Today Renta 4’ s note to investors highlighted that Telefónica’s shareholders will receive €0.53 per share in cash from May 18. Furthermore, every shareholder will be assigned free rights over shares valued by €0.285 per share. That is, they will need 38 free rights over shares to obtain a new share.

It will be issued a maximum number of €120.1 million in shares (2.63% of capital). This figure could be lower, since it will depend on the number of rights to be acquired by Telefónica. The dillutive effect will be even lower (0.79%), because the company already holds €84.2 million of Treasury shares that will be recovered.

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