This week Telefonica has been one of the main protagonists of the Spanish stock market. Firstly, it confirmed to bourse regulator CNMV that it will launch an IPO of between 25% and 50% of its infrastructure affiliate Telxius. And secondly, that it is finalising the partial sale of its UK subsidiary O2.
The other piece of news, announced by its chairman, is that Telefonica is developing a technology platform to allow its clients to charge Facebook or Google for using their information.
The market reaction was very positive, given that the company reiterated it will maintain its current dividend policy – one of the most generous amongst the large Ibex 35 companies – despite its large debt pile. Telefonica’s shares started off the week with a 1.17% rise, three times the gains posted by the Ibex 35.
New company chairman, José María Álvarez-Pallete, is continuing with the all-out war against the Internet firms which his predecessor started.
“Our company has more information about its users than any Internet firm. They use algorithms, but we have data on real consumption, of what they buy, of how much they spend, their preferences…But unlike these companies, Telefonica is not going to sell this information. It’s going to put it in the hands of its owners, from whom it has been obtained, so that they can decide using precise network and software tools what to do and how to capitalise on this data,” Álvarez-Pallete said.
Telefonica has always highlighted the unfair competition of the big Internet companies, who hardly pay any tax and don’t invest anything in infrastructure.
In any event, investors are focusing more on the company’s strategic decisions with regard to cutting its debt. With the Telxius IPO, the group can raise up to 2.5 billion euros, according to analysts’ estimates. This would go towards reducing its debt (over 52,000 billion euros).
With the same objective of reducing its gearing, Telefonica is studying various options (the partial sale to an investment firm or an IPO) for its UK subsidiary O2. The European Commission blocked its sale to Hutchison Whampoa earlier this year. Analysts believe that Telefonica should also limit its current dividend of 0.75 euros per share, implying a cost of 3.8 billion euros, for next year. But management maintains that the company has enough resources to meet its commitments.