Telefónica ‘working actively’ on Latin American consolidation plans

Telefónica is “working actively” on plans that could see consolidation and a change in the ownership structure of its struggling Latin American business.

Speaking to analysts after the company posted its year-end numbers last week, chief financial and control officer Laura Abasolo said that the telco was “analysing all inorganic alternatives” in the region and was “preparing for a potential financial carve-out” following its decision to separate the Latin American business operationally.

“This process is generating a lot of attention from third-parties so we are having multiple conversations with the potential for in-market consolidation synergies,” she said.

She said that Telefónica was “working actively on some of those alternatives” and would “decide [what to do] based on value creation and also certainty about the execution and timing” of any changes.

Abasolo said that despite challenges in the region, Telefónica is building its fibre and pay TV base, the latter via its Movistar Play OTT TV service, which she said now has 1.3 million customers, with two million registrations overall.

She said that Telefónica was “working on a sustainable business model” for the region.

Chief operating officer Ángel Vilá said that in Brazil – a market in which Telefónica is set on remaining present and sees as a strong growth opportunity – the telco was supportive of moves to consolidate and viewed this “as a positive, not only for competition but also for customers in Brazil, especially as there is still investment to be done in a country that has a continental size”.

He said that while “in-market consolidation should be possible”, currently “none of the three players would be capable of doing it alone”.

Telefónica announced in November that it was spinning off its Spanish-speaking Latin American subsidiariesahead of a strategic review, and would focus on Spain Brazil, the UK and Germany as its growth markets going forwards.

It was reported last month that a group of Latin American businessmen from multiple countries had banded togetherto present a plan to acquire a majority stakein the operations.