Telefonica May List Mexican Unit to Help Fund O2 Regulatory Costs
November 11 2015 - 1:29PM
Dow Jones News
By David Roman
BARCELONA--Telefonica SA [TEF] may list its Mexican unit to
raise funds in case regulatory hurdles prove too steep to complete
the planned sale of its U.K. unit O2, a top company official said
Wednesday.
The Spanish telecommunications company considers the Mexican
unit--now in a phase of growth after years of stagnation--as
"absolutely" core to the company, Chief Financial Officer Angel
Vila said at a business event here.
However, he added that an initial public offering of part of the
unit would be one of several options in case the agreed $14 billion
sale of O2 to rival CK Hutchison Holdings Ltd is axed by Europe's
top antitrust regulator.
"We're growing very nicely in Mexico. We think it's a business
that could be attractive, even for an IPO," Mr. Vila said.
Last week, Telefonica officials said they remained confident
that the European Commission would approve the deal, days after it
started a full-blown probe. Market observers, meanwhile, have
expressed concern about the deal getting through.
This is because U.K. market regulator Ofcom has been vocal with
its criticism of it, and because the European Commission--the
European Union's executive arm--itself has vowed to take a harder
stance against in-market consolidation than in recent years.
The commission is now looking into whether the sale of O2, which
would create the largest mobile operator in the U.K., may
potentially lead to higher prices and less choice for
customers.
For Telefonica, completing the sale of O2 is a fundamental part
of a strategy focused on cutting debt, while maintaining a strong
dividend policy that is a top draw for institutional investors such
as pension and investment funds. Telefonica's net debt, which
peaked at 56.3 billion euros ($60.4 billion) in 2011, has dropped
slowly and stood at EUR49.7 billion as of Sept. 30.
The commission has until March 16 next year to investigate the
proposed acquisition and to decide whether to approve it, or ask
the companies for concessions.
Telefonica last week said that it was considering alternate
options to raise funds in case the sale is cancelled, including the
sale of other assets like telephony towers.
Write to David Roman at david.roman@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
November 11, 2015 13:14 ET (18:14 GMT)
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