Telefónica is continuing with its plans for cutting group debt – estimated at 50 billion euros – by divesting stakes in some of its subsidiaries and ruling out any major new acquisitions.
In an interview with the Financial Times, Telefónica chairman José María Álvarez-Pallete said the company is still preparing to list a minority stake in its UK mobile subsidiary O2 towards year-end. The chairman flagged that the spectrum auction in the UK gives the company the opportunity to actively participate in the UK market, strengthening its position.
Álvarez-Pallete added that Telefónica’s investments in the UK increased 31% to 193 million pounds in the first quarter of 2017 from a year earlier, which shows its commitment to the country, despite Brexit. He ruled out making any major acquisitions since he believes that, with 350 million clients, Telefónica is one of the 10 largest global telcos and is a big enough platform from which to see what is happening in the world.
The chairman made the final point that O2’s rivals in the UK are not particularly active in the mobile business. So they don’t see any trends which would lead them to consider a merger with a fixed line operator in that market.
Furthermore, amongst possible divestments Telefónica is considering to help reduce its debt is the sale of Telefónica Argentina. In fact, taking advantage of investor appetite for Latin American assets, Telefónica could be considering various options, like network sharing agreements with other operators. No decision has yet been made.
Investors have responded to the call of the region’s second largest economy thanks to the widespread reforms its president Mauricio Macri has implemented since he arrived at the Casa Rosada in 2015. As a matter of fact the Merval, the benchmark index for Argentina’s stock market, has posted an accumulated rise of 61% since December 2015.
Argentina is the second biggest market in Latin America for Telefónica, accounting for almost 6% of total group revenues. The company is going to bid for new mobile frequencies in the country, as well as in Costa Rica and Colombia.
