Telefónica Seeks Partner or IPO for Latin America, According to Sources

RIO DE JANEIRO, BRAZIL – Telefónica (VIVT4) is considering seeking a strategic partner for its new unit in Latin America, or, as an alternative, launching an Initial public offering (IPO) in order to monetize its position in the region outside Brazil, according to sources in the field.

The telecommunications operator has started to talk to potential advisors about the options and is studying two ways: seeking an industrial investor or selling its stake through an initial public offering or distributing shares to existing investors, according to sources who preferred to remain anonymous.

Potential partners include AT&T, Millicom International Cellular and Liberty Latin America, sources said. The breakdown includes Colombia, Chile, Mexico, and Argentina – countries long considered fundamental to Telefónica’s growth prospects. Analysts at Jefferies estimate that the subsidiaries are worth a combined €10.9 billion (US$12 billion).

These plans are preliminary, and the advisors have not yet received mandates. Telefónica could also follow a different strategy, according to sources.

Representatives of Telefónica, based in Madrid, AT&T and Liberty Latin America did not wish to comment. A Millicom representative said the company is focused on current operations in nine Latin American markets, without providing further details.

Change of strategy

Last month, Telefónica announced a change in corporate strategy, with the setting up of a unit for assets in Latin America that does not include Brazil. The operator has placed less focus on the division – which is no longer a driver of growth – to focus on the operations in Brazil and Europe.

Chairman and CEO José María Alvarez-Pallete is trying to reactivate investors’ interest in the operator’s shares, which have halved their prices since 2015 and are underperforming the overall telecommunications sector this year.

When Pallete announced the plan for Latin America, he said all options were open, which could include alliances or the sale of Telefónica’s stake. The executives are already studying the next steps for the region.

Source: Infomoney