Telefónica trims down net financial debt by €1.45 billion with Colombia merger

MADRID | Telefónica reported Monday to the Spanish financial regulator CNMV about the final completion of the merger process of Telefónica Móviles Colombia and Colombia Telecomunicaciones.

The joint society will be owned by the Spanish company, which retains a 70 percent participation, and the Colombian State, with the remaining 30 percent.

Telefónica explained that at the end of the second quarter of this year, this deal would cut its consolidated financial debt by some €1.45 billion. The merger sets up the second largest operator in Colombia, with much improved competition profile and growth expectations.

At the end of March 2012, Telefónica's net financial debt amounted to €57.131 billion. The increase in this figure with respect to December 2011 (+€828 million) can be explained,

on the one hand, by greater payments due to commitments, financial investments and s

hare buybacks, these three concepts totalling €625 million,” the corporation said.

“On the other hand, the appreciation of Latin-American currencies with respect to the euro and other impacts explain a debt increase of €285 million. These factors compensate the free cash flow generation during the first quarter.”

The leverage ratio for the past 12 months (net debt over operating income before depreciation and amortization or oibda, adjusted by the provision related to the redundancy programme in Spain) stood at 2.55 times as of the end of March 2012. If net commitments related to workforce reduction are considered, the ratio of total net debt plus commitments over oibda (excluding results on the sale of fixed assets and adjusted by the provision related to the redundancy program in Spain) stood at 2.74 times.

During the first quarter of 2012, Telefónica’s financing activity, excluding short-term commercial paper, stood at around €7.5 billion, and the main focus was on financing in advance debt maturing in 2012, and smoothing the debt maturity profile for 2013 at the holding level. Net debt maturities for 2013 amount to €7.1 billion euros and for 2014 to €7.7 billion.

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