Telefonica set to sell 23% of German business for EUR1.5B - Mobile World Live

Telefonica set to sell 23% of German business for EUR1.5B

16 OCT 2012

Telefonica provided further details of the planned initial public offering of its Telefonica Deutschland unit, stating it intends selling up to 23.17 percent of the business.

At the mid-point of its proposed price range, this will be worth around EUR1.5 billion.

Bloomberg reports that Andres Bolumburu, an analyst with Banco de Sabadell, had said the valuation is lower than expected. He also noted that if Telefonica gets more than EUR6 per share (the range is EUR5.25 to EUR6.50), it will be “an attractive transaction and will help it gain more financial flexibility”.

The offer period for the shares starts tomorrow, and is scheduled to end on 29 October 2012. Listing on the Frankfurt Stock Exchange is planned for 30 October.

The offering comprises of a public sale to institutional and retail investors in Germany and Luxembourg, and private placements in certain jurisdictions outside of these countries.

“Our strong revenue growth over recent years as well as our internal efficiency enhancement initiatives has enabled us to increase cash flow which we will use to drive further growth and deliver attractive shareholder returns,” said Rene Schuster, CEO of Telefonica Deutschland.

Schuster also provided a little guidance on the company’s Q3 performance, stating that he is “content with our performance through this period, which is in line with internal expectations”.

Wireless service revenue is expected to grow, although at a slower rate than previous quarters, with the company noting a particularly strong result in the year-ago period.

Telefonica is looking to dispose of the stake in Telefonica Deutschland in order to reduce its debt burden. The company is also particularly exposed to the weak Spanish market, which has been identified as potential problem.

It recently suspended its dividends, paused its share buyback programme, and announced a plan to cut director pay, in order to improve its financial position.

The company is also reported to be planning to IPO stakes in its Latin American business.


Steve Costello

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