Business consortium looking to acquire majority in Telefónica LatAm

A group of Latin American businessmen from multiple countries have banded together to present a plan to acquire a majority stake in Telefónica’s Latin American operation outside Brazil, according to a report in Spanish daily El Mundo.

According to the report, the consortium of businessmen has made a tentative offer to acquire a 51% stake in the LatAm operation that would place a value on it of at least €10 billion.

The group proposes to create a multinational holding company to acquire a majority stake in Telefónica HispAm as a whole, according to the paper.

According to El Mundo, the consortium has hired the Colombian subsidiary of Spanish law firm Cremades & Calvo Sotelo to facilitate negotiations on its behalf.

The paper said that, under the terms proposed, Telefónica would retain a stake of 20-25% in the operations.

Telefónica, which declined to comment to El Mundo, announced in November that it was initiating an operational spin-off of its subsidiaries in Spanish-speaking America ahead of a strategic review as part of a major restructuring of the Spanish telco to set it on a growth trajectory.

CEO José María Álvarez-Pallete identified Spain, Brazil, the UK and Germany as the operator’s main markets going forwards and said that conditions in the Latin American market had reduced that business’s contribution in recent years “despite the enormous effort of our local teams”.

Analysts at investment bank Jefferies said that the €10 billion valuation cited in the report appeared to be related to Telefónica’s majority stakes in the national operations in Latin America, which varies from country and which Jefferies itself valued previously at €9.3 billion.

While noting that any restructuring of the assets along these lines “could be politically sensitive at the individual country levels”, Jefferies said that such a sale “would reduce [Telefónica’s] exposure at a stroke and deliver cash proceeds that would be welcome if it can be really achieved”.

The analysts said that “such a solution would fulfil investors’ demands on [Telefónica to materially reduce its exposure to a collection of assets consistently depressed by macro, competitive and currency pressures, while allowing some level of strategic influence in the region to remain”.

Telefónica’s assets in Latin America include operations in Argentina, Chile, Venezuela, Ecuador, Mexico, Peru, Uruguay and Colombia.