Telefónica, which has been under heavy debt, is Europe’s largest operator by market value and the company had plans to divest a stake in its Latin American unit due to poor operating conditions in its domestic market. However, latest developments suggest it was not under any pending pressure to proceed with a spin-off, and the company has since declined to comment.
Telefónica’s CFO said in November 2012 it would only press ahead with a float if it believed in a favourable financial outcome for investors.
Its plan to sell off its Latin American unit came after Spain’s sovereign borrowing costs hit an unprecedented high for the Euro-era, and led to an increase in borrowing from the country’s largest companies.
The Financial Times learnt of the company’s plans to list 10%-15% of its Latin American business at the end of last year, with analysts valuing the unit at €40 billion. Telefónica was reportedly hoping a strong position in affluent Brazil would offset a weakening position in its domestic market, but also considered the valuation as low.
