Telefonica is reportedly mulling the sale of part of its fixed line network in Spain, as the company looks to lower debt and boost declining stock market value.
Sources cited by Spanish publication El Confidencial said the company’s board of directors proposed selling part of the company’s infrastructure to curb a recent slump in stock market value, which has dropped 9 per cent this year.
Since Jose Maria Alvarez-Pallete was appointed as chairman in March 2016, its total value has dropped 25.7 per cent, added the publication.
In 2017, Telefonica sold 40 per cent of its submarine cable and tower unit Telxius to private equity company KKR, in a move the Spain-based operator said was part of its strategy to reduce debt. Telefonica, however, still maintains a controlling stake in the business. In the last two years, the company invested around €3 billion to expand its fibre optic network and many infrastructure funds are thought to be interested in its domestic fixed-line unit.
El Confidencial added some directors believe a partial sale of the unit would enable Telefonica to cut debt more aggressively, as well as bring in a new partner to make additional investments.
In its Q1 financial results, Telefonica said it had reduced net debt 9.8 per cent to €44 million, its first reduction in net debt in a first quarter in the last four years.