Telefónica is planning an initial public offering of its German O2 unit as a move to raise cash to pay-down debt and protect the company against América Móvil’s efforts to expand its presence in Europe. In addition it would help Telefónica’s finances during the Eurozone crisis, especially in Spain. Latin American units could be next, as the telecom giant stated that it is analyzing the potential listing alternatives for Latin American businesses.
The proposed German O2 IPO was approved by Telefonica’s board. Telefónica noted that the “measures reflect the company’s commitment to increase its financial flexibility and reach a leverage ratio (measured as net debt/OIBDA) below 2.35x in 2012, while maintaining an attractive remuneration for its shareholders.”
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The board of directors said it will manage the company’s asset portfolio, including launching preparations for an IPO of Telefónica’s German unit; analyzing potential listing alternatives for Latin American businesses and selective asset monetization; and accelerating the disposal process of non-core assets.
The board of directors has released the distribution mix of 2012 shareholder remuneration, which will amount to $1.85 (1.50€) per share, including the payment of a dividend of $1.61 (1.30€) per share and a share buyback for the remaining amount (24 cents or 0.20€ per share), to be completed before May 2013.
Telefónica said it will maintain its shareholder remuneration commitments for 2013, which means a minimum total shareholder remuneration per share similar to the one for 2012 ($1.85 per share). The remuneration mix for the year 2013 (dividend, share buyback or a combination of both) will be decided taking market conditions and investor preferences into consideration at that time.
