Telefonica Brazil proposes two-step, six-month split to reduce operating and administrative costs

Telefonica Prosegur

Link Securities | Telefonica’s Brazilian subsidiary has initiated a process of grouping and then splitting its shares in order to reduce operating and administrative costs and be more efficient in distributing profits to the firm’s shareholders, digital portal Bolsamania.com reported on Friday. According to the company, which operates under the name Vivo, the move will be put to a vote at an extraordinary general meeting on 13 March.

If approved, the split will be carried out in two steps and must be completed within six months. First, there will be a 40:1 reverse split, i.e. every 40 shares will be equivalent to one new Telefónica Brasil share. Thus, the number of shares will be reduced to 40,766,092.4. Subsequently, these shares will be multiplied by 80 in a split, increasing Telefónica Brasil’s outstanding capital to 3,261,287,392 shares. At present, the volume of the company’s shares amounts to 1,630,643,696, half of the total.

According to the company, a shareholder with 80 Telefónica Brasil shares will hold two in the first phase and, finally, 160 once the split is carried out. In addition, shareholders whose position is not a multiple of 40 will have a period of no less than 30 days to adjust their position. In the event that fractions of shares remain after the reverse split, the company explained that they will be grouped into whole numbers and sold at an auction to be held on the Brazilian Stock Exchange. The proceeds will be distributed on a pro rata basis to the owners of the fractions.

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