Telefonica mulls IPO of LatAm businesses

Telefonica is weighing up whether to sell shares in its Latin American operations on the New York Stock Exchange, according to a report in Spain’s Expansion newspaper.

The various subsidiaries would be grouped into a Spanish holding company for trading sometime next year, reports the paper.

An IPO would help Telefonica (Madrid, Spain) to reduce its substantial pile of debt, which has continued to grow in recent years as the Spanish incumbent has expanded its international operations.

Telefonica is weighing up whether to sell shares in its Latin American operations on the New York Stock Exchange, according to a report in Spain’s Expansion newspaper.

The various subsidiaries would be grouped into a Spanish holding company for trading sometime next year, reports the paper.

An IPO would help Telefonica (Madrid, Spain) to reduce its substantial pile of debt, which has continued to grow in recent years as the Spanish incumbent has expanded its international operations.

The operator has not yet taken a decision but is likely to proceed with the IPO in the first half of 2013 should it need to raise more cash next year.

By registering the holding company in Spain, Telefonica would be able to lower its corporate tax payments, reports Expansion.

Telefonica recently floated about a quarter of its German subsidiary because of its need to raise cash, and said a Latin American listing was an option when it published third-quarter results earlier this year.

The operator aims to cut debt to about €50 billion ($65 billion) by the end of the year from €56 billion at the end of September.

Besides the German listing, it has recently sold its Atento call centre business, cancelled dividend payments and cut management salaries in an effort to lower its net debt to 2.35 times operating income before depreciation and amortisation (OIBDA) by year end.

The operator has also been able to renegotiate borrowings to cover debt maturities beyond 2014.

While its European operations struggle, Telefonica’s Latin American interests have performed well over the first nine months of the year.

On an organic basis, revenues between January and September were 6.4% higher than in the corresponding period of 2011, at €22.6 billion, while OIBDA was up 2.9%, to €7.9 billion.

By comparison, European revenues slid 7.7%, to €22.5 billion, with OIBDA falling 12.8%, to €8 billion.