Telefónica sees M&A options in Latin America

As part of its strategy to sell non-strategic assets and focus on its core markets Brazil, Spain, the UK and Germany, the Telefónica group is mulling different divestment options for its Hispanic America region.

"We continue to explore and work on different alternatives for mergers and acquisitions. There are several options for the group, so the possibility is there", Telefónica’s chief financial and control officer (CFCO), Laura Abasolo, told analysts in a results call.

On Thursday, it was reported that Argentine Grupo Olmos is interested in Telefónica Uruguay assets, having hired former Telefónica Spain president Luis Miguel Gilperez to lead the negotiations.

Telecom Argentina has previously also expressed interest in the Uruguay assets, but said the move depended on regulatory changes in the neighboring market.

In the meantime, Telefónica continues to double down on partnerships for capital-intensive investments, such as fiber optics, across the region.

The company concluded deals with American Tower Corporation and Andean Tower Partners (ATP), the latter of which is expected to see regulatory approval this quarter.

Telefónica also sold 60% of its Chilean fiber operation to KKR for a new JV the company expects to be operational in the second half of the year.

In Brazil, Telefónica closed a deal with Canadian fund CDPQ also for a fiber JV, already approved by antitrust regulators. 

Meanwhile, the acquisition of Oi Mobile assets is seen getting approval by year-end, Telefónica said. Oi’s CEO Rodrigo Abreu, in turn, sees such a nod coming only in 2022.

This week, the Spanish group also announced the sale of four datacenters to Nabiax, which had already acquired 11 of its datacenters, in exchange for a 20% stake.

The deal includes facilities in Spain and Chile, operating with a combined capacity of 9MW.

Telefónica HispAm also transferred its satellite signal management and transport business to Hispasat. According to the telco, this agreement will allow greater operational and financial flexibility with capex and opex savings.

PERFORMANCE

In its results presentation, the company said its HispAm unit continued maximizing efficiencies in operating expenses and capex, reporting a 31.5% organic increase in operating cash flow (Oibda-capex) in the first quarter.

The company saw operational improvements mainly in Colombia, as well as in Chile and Peru.

HispAm revenues came to 1.93mn euros (US$2.33mn), down 12% as reported and 0.2% on an organic basis. The region accounted for 19% of Telefónica’s total Q1 revenues.

Telefónica reported over 109mn HispAm customers by March, up 0.4% year-over-year. On the fiber front, the company said it had 12.5mn premises passed with fiber in its HispAm region.

The telco also upheld its previous guidance for the full-year: a capex to sales ratio of up to 15%. In Q1, that rate was 13%.