Telefónica is starting the process of preparing a stock market listing for a stake in its currently fully-owned Argentine subsidiary.
In the upcoming AGM on April 16, it’s expected that authorisation will be sought from shareholders to go ahead with the share placement.
Telefónica’s Argentine subsidiary accounts for 6.7% of group revenues and 6% of EBITDA. Its estimated value would be around 4.5-5.0 billion euros.
Renta4 flags that the operation is part of Telefónica’s plans to cut its debt (this was 44.230 billion euros at end-2017) and finance the expansionof its fibre optic network. Whatsmore, the analysts recall the company is also looking at other similar operations in Colombia and Mexico with the aim of reducing debt and unlock these subsidiares’ value. At the same time it is continuing to work on a stock market listing of a minority stake in its UK subsidiary O2.
The stock’s dividend yield is around 5% and will continue to rise to over 6% in 2019. Furthermore, it drives away the fear of a cut in its rating (currently Baa3/BBB//BBB) which would mean a increase in financing costs.